Today, Romney released his tax returns for 2011 and a notarized summary of his returns from 1990 to 2009. In 2011, the Romneys paid $1.9 million in taxes on $13.7 million in income, the majority of which came from investment. Annie Lowrey sums up how the Romneys' rates compare with the rest of ours:
The Romneys paid a higher effective tax rate than the average middle-income American, though a significantly lower rate than the average rich, or very rich, American. According to the nonpartisan Tax Policy Center, the middle quintile of taxpayers – earning between $33,542 and $59,486 a year – had an effective direct federal tax rate of about 12 percent in 2011. The top 1 percent of earners, making more than $532,613 a year, paid a direct federal tax rate of about 22.7 percent. And the top 0.1 percent of earners, making more than $2,178,886 a year, paid a direct federal tax rate of about 21.4 percent.
Yglesias explains why Romney's effective tax rate is so low. Meanwhile, Brad Plumer thinks it's kind of weird that, by only reporting $2.25 million of his $4 million in charity for deduction, Romney paid more in taxes than he needed to:
[If he had claimed the full $4 million, it] would have conflicted with his statement in August that he has paid at least 13 percent the past ten years. So Romney opted to limit his charitable deduction to just $2.25 million, essentially agreeing to pay the government more in taxes than he needed to. In the end, Romney had an effective federal tax rate of 14.1 percent.
There’s nothing wrong with voluntarily donating a bit more to reduce the federal deficit. Although there is this awkward quote from Romney during a primary debate in January: “I pay all the taxes that are legally required and not a dollar more,” he said. “I don’t think you want someone as the candidate for president who pays more taxes than he owes.”
An email to the Romney campaign account dedicated to responding to questions about tax returns, firstname.lastname@example.org, produced this response:
He has been clear that no American need pay more than he or she owes under the law. At the same time, he was in the unique position of having made a commitment to the public that his tax rate would be above 13%. In order to be consistent with that statement, the Romneys limited their deduction of charitable contributions.
Benjy Sarlin asks:
Did Romney artificially inflate his tax rate using the same strategy in other returns? That’s the biggest question raised by the disclosure of his move to take fewer deductions in 2011. The Romney campaign did not immediately respond to questions over whether Romney amended any of his previous returns.
Jacob Weisberg frames it another way:
Romney’s charitable contribution to the Treasury concedes this unfairness. The real reason Romney is overpaying is that it simply feels wrong to most people, if not also to him, for someone who earned $13.7 million to be paying less than 13 percent of his income in taxes when working people face a payroll tax of 13.3 percent on their first dollar of income. By yielding to political criticism and moral pressure about how little he pays, Romney implicitly accepts that under a fairer tax system, people like him would be required to pay more.
Meanwhile, important details on the tax returns from 1990 to 2009 are missing. The notarized letter claims that Romney paid an average of 20.20 percent over that time period. Greg Sargent notes that how that number was calculated could be problematic:
If Romney paid his lowest rates in a number of the higher income years, the overall 20 percent figure would overstate the rate he actually paid over the whole period. [The Tax Policy Center's Roberton] Williams provided the following purely hypothetical example: “Let’s say you have 10 years in which you paid 13 percent in taxes, and 10 years in which you paid 27 percent,” Williams told me. “If you average those rates, you’ll get an overall rate of 20 percent. But if the 13 percent years were high income years, and the 27 percent years were low income years, then his total taxes paid as a share of total income over the 20 years would be less, perhaps significantly less, than 20 percent….”
Williams concluded: “The only way we can know for sure what rate he actually paid is to see what his tax payment and his income was for each of the 20 years.”
The letter also states that "the lowest of any annual 'effective federal personal income tax rate' for any year during the period [of 1990 to 2009] is 13.66%," putting to rest at least some of the rumors about his 2009 returns that dogged the campaign throughout the summer. David Graham, meanwhile, wonders about the timing:
The campaign sent out Brad Malt's memo in midafternoon and posted the taxes at 3 p.m. That's late enough in the day to look like a Friday afternoon news dump but, paradoxically, probably not late enough to keep it from dominating the next 72 hours or so. Previously, the Romney team had said the candidate would release his returns by October 15. It seems they hope to dull any blowback by putting more time between the release and the election. What's more, it's coming at the end of an awful two weeks for Romney. As long as the night is already pitch dark, what's one more cloud in the sky? Might as well get it over with, right?
(Photo: US Republican presidential candidate Mitt Romney speaks at a campaign rally at the Ringling Art Museum in Sarasota, Florida, on September 20, 2012. Nicholas Kamm/AFP/GettyImages)