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Blogs

Mitt Romney's Lose-Lose Tax Problem - Spectator Blogs

22 September 2012

11:04 AM

22 September 2012

11:04 AM

How rich is Mitt Romney? Wealthy enough to voluntarily pay $250,000 more tax than he needed to last year. That’s the most notable thing about the Romneys’ 2011 tax return released yesterday evening.

Mitt and Ann reported income of $13.7 million last year, most of it from investments. They gave $4 million to charity (most of it through the Mormon church) but “only” deducted $2.25 million of that sum from their taxable income. The reason for doing so is obvious: this ensured that Romney’s “effective” tax rate was around 14% of the couple’s income and not, as it might otherwise have been, a politically-embarrassingly low percentage.

This is, of course, all very noble. Or, if you prefer, cynical. But one can’t help but think that far from earning Mitt a slap on the back it actually draws attention to just how wealthy Romney is. When you can can give the federal government $250,000 more dollars than you really need to because doing so has a basically negligible impact on your wealth you’re pretty much in the hyper-rich class.

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And that’s fine! We all knew Romney is massively rich anyway and it seems churlish to hammer him for paying more than he needed to simply because doing so proved politically convenient this year.

Of course Romney was in a can’t-win situation. Manage his affairs in the most tax-efficient fashion and he’d be hammered for paying a lower effective tax rate than millions of ordinary, hard-working, members of the 53%. But manipulating his tax return to ensure he cleared a largely-meaningless, politics-inspired minimum threshold also only demonstrates how far he lives from Main Street.

Again, none of this is reprehensible and it’s hard to condemn a man who gives 30% of his income to charity (even in an election year). Moreover Romney’s record of charitable giving is longer and better than is generally appreciated. Often, as it should be, his philanthropy has been a private matter.

The mystery, really, is why Romney has not released this information before now. The optimal moment to do so, surely, was just after he had clinched the Republican nomination? Flushing all this out then would have avoided a summer of innuendo – much of it fuelled in characteristically shabby fashion by Senator Harry Reid – whispering that Romney paid no federal taxes at all.

As it is, Romney’s real problem is not the level of taxation he paid last year (or in the past) but the stubborn truth that his tax plans for the country benefit millionaires like himself rather more than they do the middle-class.

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