It is a long-standing tradition for Presidential candidates to make their income tax return history public. To the right is Franklin D. Roosevelt’s tax return for 1913, the first year the United States assessed an income tax having passed the 16th amendment, two decade before he become President. This tradition is important since it gives the public the transparency it needs to understand possible conflicts of interest their chief executive might have.
Gov. Mitt Romney (R-MA) has resisted calls to do so, but even his supporters have urged him to reconsider. Gov. Chris Christie (R-NJ) spoke on Morning Joe this morning:
“I’ve released all of my tax returns…and I released them every year after I filed them, right after I filed them, to the public of New Jersey so they can see everything. And I think that’s the right way to go and that’s what I would tell Gov. Romney to do.”
Mitt Romney may not have a job right now (as he famously pointed out to a group of unemployed Floridians, but he does have plenty of income from his stake in Bain Capital and his other investments amounting to $190 million to $250 million. The politically embarrassing thing is that his investment income is only taxed at 15% while the tax rate for wages goes up to 35%.
“It’s probably closer to the 15 percent rate than anything. My income comes overwhelmingly from some investments made in the past, rather than ordinary income or earned annual income.” – Mitt Romney
In addition, having no “earned income” the millionaire Romney probably pays no Social Security and Medicare payroll tax whatsoever while “Joe Schmoe” probably pays an additional 15% if he is self-employed or 7.5% if he is employed with his employer making up the difference.
Warren Buffett recently deplored how unfair our tax system is when millionaires pay a lower tax rate than ordinary Americans. A Spectrem Group survey shows that 68% of millionaires agree. Being the poster child for the inequity in our tax system is certain a political liability for Romney. Speaker Newt Gingrich (R-GA) has proposed a flat 15% tax, but Romney’s tax plan maintains the current disparity against earned income and in favor passive investment income.
At Monday’s Debate, Romney was pressed on this tax issue. He still would not commit but suggested that he might release his 2011 tax return once he becomes the Republican nominee.
Kelly Evans (Wall Street Journal economics correspondent): Governor Romney, Speaker Gingrich, Senator Santorum — and now vocally tonight Governor Perry — are calling for you to release your tax records. The Obama campaign is asking for the same thing. Governor, will you release your income tax records?
Mitt Romney: You know, I looked at what has been done in campaigns in the past with Senator McCain and President George W. Bush and others. They have tended to release tax records in April or tax season. I hadn’t planned on releasing tax records because the law requires us to release all of our assets, all the things we own. That I have already released. It’s a pretty full disclosure. But, you know, if that’s been the tradition and I’m not opposed to doing that, time will tell. But I anticipate that most likely I am going to get asked to do that around the April time period and I’ll keep that open.
Evans: Governor, you will plan then to release your income tax records around April?
Romney: I think I’ve heard enough from folks saying, look, let’s see your tax records. I have nothing in them that suggests there’s any problem and I’m happy to do so. I sort of feel like we are showing a lot of exposure at this point. And if I become our nominee, and what’s happened in history is people have released them in about April of the coming year and that’s probably what I would do.
Why not release them immediately?
Why not release the entire record and not just the upcoming return which is due in April?
Mitt Romney’s father Gov. George Romney (R-MI) ran against Richard Nixon for the Republican Nomination in 1968. He released a full 12 years of income tax records almost a year before the election. Why doesn’t his son do the same?
Does Romney fear that there is something in his tax return which would jeopardize his chances in the Republican primary? Is that why he wants to wait until his victory is fait accompli?
Is Romney, concerned with anti-Mormon bigotry, worried that detailed records of his tithing to the Church of Jesus Christ of Latter-day Saints might derail his campaign?
According to Sam Younman of Reuters,
Tax analysts say Romney may have good reason to be reluctant to release his returns.
His vast fortune is invested in dozens of funds linked to Bain Capital LLC, the powerhouse private equity firm he co-founded and led for 15 years. Several Bain funds have offshore connections and take advantage of tax breaks used only by the U.S. financial elite.
His tax returns could shed light on how Romney and Bain use offshore strategies to avoid taxes, said Daniel Berman, a former U.S. Treasury deputy international tax counsel and now director of tax at Boston University’s graduate tax program. Bain funds in which Romney is invested are scattered from Delaware to the Cayman Islands and Bermuda, Ireland and Hong Kong, according to a Reuters analysis of securities filings.
With these tax shelters in place is his tax rate really even 15%? Accordingly, John Marshall suggests the Romney is working on unwinding some of these tax shelters for his 2011 Tax Return so that his tax rate will not be so embarrassingly low.
Time’s Adam Sorensen believes this the “the perfect campaign issue” for Democrats:
It lies at the intersection of the personal, professional and political identities they plan to foist on Romney in the general election: the privilege they hope will make it hard for voters to relate to Romney, the erstwhile career in private equity that they hop will taint him as a economic predator rather than a turnaround artist, and the regressive tax policies they hope can drive a wedge between the Republican party and the middle class.
Chris Clizza at the Washington Post’s The Fix contrasts Romney and Obama:
The political problem for Romney in all of this is not that he’s wealthy. (President Obama is quite wealthy in his own right thanks to the success of his books.) It’s that the way Romney talks about money can make him seem drastically out of touch with average people — an issue that is exacerbated by the fact that he is running for president in a time of incredible economic hardship… Being rich isn’t the problem. Being unaware that lots and lots of other people aren’t (and what that means in real terms) is.
Video comparing the tax cut of the top 1% to the total income of the bottom 99% after the jump.