Thursday, September 27, 2012

Romney's tax return: Too little, too late

The issue has never been Romney's 2011 tax return - in fact it is a distraction from the real issue.  All the important compliance and policy questions relating to Romney's personal tax matters relate to the past.
- Edward D. Kleinbard
Law professor, University of Southern California and former Chief of Staff of the U.S. Congress' Joint Committee on Taxation

After much urging, U.S. Republican presidential candidate Mitt Romney has finally released his 2011 income tax return.  Mr. Romney could have spared himself a great deal of criticism had he done so much sooner - and he is not out of the woods yet!  His 2011 tax return has sparked some more questions and some more criticism. Not only that, but the release of his 2011 tax return is not sufficient.  Romney has failed to release any tax return prior to 2010.  That's just not good enough for a man who aspires to be President of the United States and it has cast suspicion on his financial dealings  His opponents will not stop questioning him on the matter.

Romney and his wife, Ann, paid $1.94 million in federal taxes on an income of $13.7 million in 2011.  That's an effective tax rate of 14.1 per cent.  His tax rate of 14.1 per cent is less than many Americans because most of it is derived from capital gains.  Capital gains are taxed at 15 per cent.  The bulk of Romney's income is from investments held in blind trust.

President Barack Obama's tax return for 2011 showed that he and his wife, Michelle, paid $162,074 in federal taxes on an adjusted gross income of  $789,674.  That is an effective tax rate of 20.5 per cent.  The couple's income has plummeted from $1.7 million in 2010 and $5.5 million in 2009 due to declining sales of President Obama's best-selling books.

The point is that Romney's finances are a great deal more complicated than Obama's.  He is more wealthy and his investments are more spread out - particularly his offshore investments and his now-closed Swiss bank account.  In order to have a clearer picture, his pre-2010 tax returns need to be released.  By not releasing them, Romney has cast suspicion on his financial dealings.

Mitt Romney's own father, the late George Romney, released 12 years of tax returns prior to entering the 1968 presidential campaign. When asked why he was revealing so many years of tax information, the elder Romney replied, "One year could be a fluke, perhaps done for show."  Perhaps if Mitt had the good judgement and the integrity of his father, Americans would trust him more.

- Joanne

No comments:

Post a Comment