Chicago Sun-Times
The scoop from Washington

Why Mitt Romney overpaid his federal income taxes

| No Comments

WASHINGTON -- Mitt and Ann Romney on Friday released their 2011 federal income tax return and here is what is noteworthy: They did NOT claim all their charitable deductions in order to inflate their tax rate -- so as not to be at odds with Romney's earlier statement that he paid at least 13 percent over the past 10 years.

My late mother, Ione Sweet, an accountant, would never counsel a client not to take a perfectly legal, proper, common deduction. The Romneys donated $4,020,772 to charity in 2011, but only claimed $2.25 million of those charitable contributions.

The reason, by now you guessed, is politics. Romney made the 13 percent comment in August, at a time when the Obama campaign increasingly portrayed him as a candidate who wants tax breaks for millionaires yet pays a lower tax rate than most middle-class workers.

The Obama team has been pressuring Romney to release multiple years of tax records -- a call that remains to this day.

The Friday release was Romney delivering on his pledge to release 2010 and 2011 federal filings -- and no more.

The Romney campaign was candid in explaining why the Romneys left on the table a deduction that could have saved the couple between $200,000 and $300,000 in taxes.

"The Romneys' generous charitable donations in 2011 would have significantly reduced their tax obligation for the year. The Romneys thus limited their deduction of charitable contributions to conform to the governor's statement in August, based upon the January estimate of income, that he paid at least 13 percent in income taxes in each of the last 10 years," the campaign said.

Some Romney 2011 federal income tax return top-line numbers:

♦ Their income was $13,696,951. Most of that income was from investments -- taxed at a much lower rate than earned income.

It may not seem fair that dividend and interest income and long-term capital gains are taxed less than income earned as a salary -- but the Romneys are not taking advantage of any tax gimmick here; that's standard U.S. tax policy for everyone. All money that flows to a person is not equal in the eyes of the IRS.

Romney also earned $260,390 as a director of Marriott International and $178,500 from the American Talent Group for speeches. They paid $15,211 in health-insurance premiums.

♦ The Romneys paid $1,935,708 in taxes.

♦ Their tax rate was 14.1 percent.

If the Romneys had taken their entire $4,020,772 charitable deduction, by their own admission their tax rate would have dipped below 13 percent. If that happened, the Obama campaign would have jumped all over them. The Obama team still might, since it does look as if the Romneys picked out a rate they liked.

The political problem for Romney is this: Because of U.S. tax policy, he is paying a lesser federal income tax rate than a person who earns a salary of between $8,500 and $34,500 a year. According to 2011 IRS rates, that money is taxed at 15 percent.

♦The charities: The Romney have their Tyler Charitable Foundation; they tithe to their Church of Jesus Christ of Latter-day Saints. The campaign statement wanted to de-emphasize the religious nature of the gift, noting the church funds a variety of humanitarian projects around the world.

Romney did take a stand about overpayment of taxes during a Republican primary debate Jan. 23 in Florida. He was against it. Said Romney then: "I pay all the taxes that are legally required and not a dollar more. I don't think you want someone as the candidate for president who pays more taxes than he owes."

Leave a comment

Get the Sweet widget

More widgets


Lynn Sweet

Lynn Sweet is a columnist and the Washington Bureau Chief for the Chicago Sun-Times.

Stay in touch

About this Entry

This page contains a single entry by Lynn Sweet published on September 22, 2012 12:06 PM.

President Obama official schedule and guidance, Sept. 22, 23, 2012. Milwaukee was the previous entry in this blog.

Republican National Committee video taunts Obama in advance of Milwaukee visit is the next entry in this blog.

Find recent content on the main index or look in the archives to find all content.