Republican presidential candidate Mitt Romney finally ended speculation and released his tax returns for 2010, plus an estimated return for last year. So, what’s in them?
First of all, the Romneys made $42.7 million over the last two years, but it wasn’t from wages; nearly all of it was investment income.
Romney and his wife Ann paid $3 million in taxes in 2010 and $3.2 million in 2011. Their effective federal tax rate -- the rate someone pays after adjustments for deductions and credits -- was just under 14%. That’s much lower than the 35% top-tier federal income tax rate, but still more than many Americans pay. Eighty percent of Americans have an effective rate below 15%. Romney’s political rival, Newt Gingrich, disclosed his tax rate last week. Gingrich made $3.2 million in 2010, with an effective rate of 31%.
Why the lower tax rate for money made on Wall Street? HLN Money Expert Clark Howard says it’s to incentivize Americans to take risks on ideas, businesses and investments.
Romney had some pretty big deductions on his returns. He and his wife gave away $7 million of their money to charity in 2010 and 2011. $4.1 million of it went to the Mormon Church.
The Romneys also gave $100 million to their sons legally, without paying any gift tax, Reuters tax columnist David Cay Johnston told CNN. Johnston says that kind of gift would usually incur a $35 million tax bill. The Romney campaign told Reuters that the $100 million trust didn’t require any gift tax because the Romneys used credits related to estate tax.
Another interesting item: Romney had several overseas financial accounts. The New York Times reports he recently closed an account in Switzerland, but had other accounts in Bermuda and the Cayman Islands.
The Romney campaign says it won’t be releasing any more of the candidate’s returns, including those from 1984 to 1999, when he worked at private equity firm Bain Capital.