Loophole Romney Finally Releases His Tax Returns, Paid 14% Rate On $21 Million In Income
Long live the hedge fund/private equity tax loophole. This is an abomination.
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WASHINGTON—GOP presidential candidate Mitt Romney paid a 14% effective income tax rate in 2010 after making $3 million in tax-deductible charitable donations and drawing most of his income from investments, according to a summary of Mr. Romney's 2010 tax form provided by his campaign.
Mr. Romney reported $21.7 million in income. He paid $3 million in federal taxes, slightly more than the $2.98 million he made in charitable donations. At least $1.5 million of his charitable donations went to the Mormon Church.
Of Mr. Romney's 2010 income, he noted a capital gain of $12.6 million, taxable interest of $3.3 million, ordinary dividends of $4.9 million and smaller sums of gains and losses on business income, refunds and other income.
His 2010 return also showed that he had a financial account in Switzerland that was closed in 2010 and that he generated income from overseas investments. He also reported financial accounts in Bermuda and the Cayman Islands.
Mr. Romney's campaign plans to release his full tax filings for 2010 and an estimate for his 2011 taxes Tuesday. Late Monday, the campaign provided the Wall Street Journal with a preview of those forms.
In an estimate of his 2011 taxes, the Romney campaign said Mr. Romney would pay $3.23 million in federal tax on $20.9 million in total income. He said he would have itemized deductions of $5.7 million, including $4 million in charitable donations. About $2.6 million of the money that Mr. Romney gave to charity in 2011 went to the Mormon Church.
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Related story:
Jan 24, 2012 at 9:26 AM
Reader Comments (21)
Wonder if anyone will ask about what might have been politically embarrassing about the Swiss bank account (thank goodness Mr. Romney had an investment adviser to point that out).
Americans want to take money out of someone elses pocket for their benefit.
Americans want the jet setter life.
Americans would sell themselves,their neighbors, spouses, kids, siblings, and parents to have the life they think he's got. They do it often.
Americans are going to down in flames wanting the Romney wealth.
Vote BOTH parties out. All of them in 2012.
If you keep so much as one of them you'll have one virus that will mutate and infect everyone else. It always does.
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It was sarcasm. At least the first part. The tax loophole needs to be closed. I've seen estimates that closing the loophole would raise a few hundred billion annually for the treasury.
Inform the IRS that you are volunteering to have your retirement taxed, not at 15%, but at the 35% percent level. INstead of getting 85% of your retirement, bh happy with 65%. And if you had to pay 35% on some of it because you can only put so much of your income into retirement, then 35% out, you should be happy with you wonderful 30%
Give away your own money, do not use law and force of gummint to extract and coerce one's personal property away from them. They earned it, you did not, and you have no right to make such demands to it whatsoever.
The last thing the Treasury needs is more money to blow!
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I agree with this statement. But the rest of your comment jumps to conclusions. The hedge fund loophole allows billionaires to pay a much lower tax rate than Americans who make much less. This discussion is not about spending vs. revenues. It's about whether the very wealthy hedge funders and their ilk deserve to pay a lower rate than everyone else.
If your problem is with hedge funds, then the very last solution is another tax. Force the SEC to do its job, which it woefully ignored doing for some years now. Until then, hedge funds are legal. In addition, electing representatives who will stop this unholy alliance betweem gummint, banks, the Fed and Wall Street would benefit all and close loopholes. The gummint and unrestrained spending got us into this mess, not the billionaires. If you confiscated (stole) the total wealth of all American billionaires tomorrow, you would have enough money to keep gummint going for about 4 months.
Big whoops.
Anything else is a corrupt, gamed system, as we can see now by Romney's tax disclosures (See Caymans, Bermuda and Swiss accounts, charitable deductions and carried interest BS).
PS--It's good to be the Mormon church, apparently. Who are these people?
A flat tax rate should be computed at whatever level is necessary to maintain gummint as was intended by the Founders, and amount which, if you removed the 40% plus of the budget that pays the interest on all the money the politicians have squandered or given away in entitlements, would be far less than 10%. Let the politicians solve the debt by shrinking their spending and budgets, and not saddling us who do the working and living an tax-paying out here.
And if we actually did that, we could abolish both the IRS and the Income Tax in short order, and let those of us who work for a living and think we have a right to what is ours, become even more productive. Why gummint, anyone else, thinks they have an arbitrary right to what is mine, is beyond me. That they claim to do, and can take all I have if I do not recognize their authority to steal percentage of my labor, is beyond me.
But we have been stuck with this semi-mercantilist/semi-democratic/almost fascist nonsense for so long, that I can see little but a complete collapse before folks wake up and get it.
P.S. There is no such thing as "legal tax avoidance." EIther by law you owe tax, or you do not.
I agree with almost everything you say. I believe the fed gov't. is too large and we need to cut spending. I've outlined my ideas for spending cuts many times on this site. But that's not my beef here.
Read these 2 links. It is explained well here:
http://www.businessinsider.com/jim-cramer-goes-on-twitter-tirade-blasting-corruption-and-how-little-taxes-in-hedge-funders-pay-2012-1
http://articles.businessinsider.com/2012-01-21/news/30649999_1_capital-gains-hedge-fund-ordinary-income
Even cramer, a former hedge fund manager, agrees.
Here's a snip from Blodgett's op-ed:
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This loophole, which some think is one reason GOP front-runner Mitt Romney is scared to release his tax returns, is absurd.
To be clear:
There is no theoretical justification for it.
None.
The fact that the loophole exists is merely a function of the enormous power the financial industry has over Washington.
The argument that some hedge-fund moguls and their defenders make for the tax break is that, because they are paid based on the performance of their funds, their compensation somehow represents a "capital gain."
That is just ridiculous.
Anyone paid any form of performance-based bonus could make this argument.
Most hedge-fund and private-equity managers, including venture capitalists, are paid with a combination of a management fee (1%-3% of assets under management) and a performance-based fee (generally 20%-50% of the "gains" on their funds). The managers are generally paid these fees regardless of whether the gains are due to their own performance or simply the market going up. (Most hedge funds are a horrible deal for hedge-fund investors, but since investors are still dumb enough to line up around the block to put their money in, that's their problem).
In both cases, however, the fees the managers receive are compensation for service, not "capital gains."
The justification for lower taxes on capital gains is to encourage people to invest capital for the long term. Capital investments generally help the economy, by funding new companies and projects. The capital that is invested, moreover, has already been "earned" (and, thereby, taxed). So there are reasonable arguments for having lower taxes on long-term capital gains than on ordinary income.
But the management and performance-based fees paid to hedge-fund and private equity managers are NOT capital gains. They're ordinary income. Just because they don't arrive in a monthly paycheck and are based on performance doesn't change that.
http://articles.businessinsider.com/2010-05-23/wall_street/29970848_1_fund-managers-tax-loophole-private-equity
http://articles.businessinsider.com/2011-07-04/wall_street/30086365_1_fund-managers-capital-gains-ordinary-income
It's a loophole, plain and simple. These are not capital gains.
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Vernon
The beef is that his income is not capital gains. Read the links I provided above. I support a low cap gains tax. Hedge funds and private equity earnings are NOT real capital gains.
PS--"legal tax avoidance" = tongue-in-cheek. I get it. Not a tax lawyer, but I took tax law in law school. The issue, as DB points out, is not whether the LBO or Hedgie-related income is taxable (i.e., "by law you owe"); it's how does the law (and IRS) treat this taxable income. Capital gains (or so-called carried interest) is a farce...
Point taken, I stand corrected, and now better informed, on the tax status of hedge funds.
Yet, arrrrrrrrrrgh! what he did was still legal. Needs to be fixed.
Thanks again.
I bet Romney's advisors, attorneys, and accountants had to get very creative to show 14%, and I don't believe for a second 14% is truly accurate.
The money Mitt saved on taxes enabled him to start all sorts of new businesses which employ thousands and thousands of people!
Don't be so bitter, its not good for your health!
You're welcome. I enjoyed the discussion.
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Owen
Did you even read the links I provided? This tax loophole is utter nonsense. And this isn't a site filled with envious folk demanding that we soak the rich. We are simply demanding an end to a bullshit loophole that only exists b/c of the immense power of financial interests. Get educated before you spout nonsense.