Mitt Romney released his 2011 tax returns Friday, along with a brief summary of his 1990-2009 tax returns.
The Romney campaign is asking voters to take its word on the details of his previous returns, but the new information helps address some of the big questions surrounding his finances — like whether he once paid zero taxes. Other questions — like Romney’s offshore holdings — are still unclear.
Below is a guide as to some of the big revelations — and biggest remaining questions — in Romney’s latest disclosure.
What We Learned
• Harry Reid Was Wrong Sen. Harry Reid’s notoriously unsubstantiated claim that Romney paid no taxes for 10 years is not true.
In his latest return, Romney paid an effective tax rate of 14.1 percent. As for his previous taxes, Romney’s trustee, R. Bradford Malt, provided no primary documents but offered some basic details backed up by a letter from accounting firm PriceWaterhouseCoopers. Malt said Romney’s lowest effective tax rate was 13.66 percent and his average rate was 20.20 percent across the 20-year period.
•Romney Is Not The 47 Percent Romney is not a member of the “47 percent” of Americans who don’t pay income tax. His 1990-2009 disclosure letter begins by noting he “owed both federal and state income taxes” in every single year covered. The Republican nominee decried Americans who pay no income tax as hopelessly “dependent” on government in a leaked fundraiser video, but suggested in a January primary debate that he might have paid no income tax himself in recent years, since his fortune came from investments taxed at the lower capital gains rate. While Romney isn’t a member of the “47 percent,” his disclosure confirms once more that he paid effective tax rates that are similar to, or lower than, many middle-income Americans.
What We Didn’t Learn
• Did Romney Change Anything? Romney deliberately did not claim about $1.75 million in charitable deductions on his 2011 taxes in order to artificially keep his effective tax rate above 13 percent, Malt said in a statement Friday. This was to keep Romney’s taxes in line with a claim he made earlier this year that he had never paid less than a 13 percent rate — without this deliberate overpayment he’d have had an estimated tax rate of just 12.2 percent, the lowest he’s disclosed for any year. In doing so, Romney contradicted a July interview in which he said that he should be disqualified from being president if he ever paid more taxes than he owed.
Did Romney artificially inflate his tax rate using the same strategy in other returns? That’s the biggest question raised by the disclosure of his move to take fewer deductions in 2011.
The Romney campaign did not immediately respond to questions over whether Romney amended any of his previous returns.
• Romney’s IRA Mitt Romney has reported an IRA valued at upwards of $100 million, a huge number that’s especially difficult to achieve since there’s a $6,000 legal annual contribution limit. One possible route might be undervaluing investments put into the account that later yielded huge dividends. Another question about Romney’s IRA is whether it might have used offshore accounts in tax havens like the Cayman Islands, where the Republican nominee has investments, to avoid an obscure tax known as the UBIT (unrelated business income tax). Documents show that Bain Capital employed offshore entities known as “blockers” that could be used to avoid the UBIT, but it’s still unknown whether Romney took advantage of them for his personal taxes.
Romney’s campaign tiptoed around this question in statements, but Romney denied in a FOX interview that he benefited in any way from offshore havens. There’s still no documentation to back that up.
Benjy Sarlin is a reporter for Talking Points Memo and co-writes the campaign blog, TPM2012. He previously reported for The Daily Beast/Newsweek as their Washington Correspondent and covered local politics for the New York Sun.