Mitt Romney paid $1.95 million in taxes on his 2011 investment income of $13.7 million, his campaign revealed Friday, making good on Romney’s promise earlier this year to eventually release his full returns for that year.
Romney, who made millions running Bain Capital, a private-equity firm, paid an effective federal tax rate of 14.1 percent, primarily because most of his income wasin the form of capital gains that are taxed at a lower rate than ordinary income. Romney has said that he has paid at least 13 percent in federal income taxes in each of the past 10 years.
For that claim to be true in 2011, Romney had to voluntarily take a smaller deduction than he was entitled to for his charitable deductions, his advisers said Friday.
Romney and his wife, Ann, donated about $4 million to charity in 2011 but claimed only $2.25 million as a deduction. The campaign said Romney’s tax liability would have been far lower in 2011 had the Romneys claimed the full deduction for their charitable contributions.
“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,” said R. Bradford Malt, Romney’s trustee.
It is possible, however, that Romney could still deduct the unclaimed amount of his charitable donations in future tax years, experts said.
The Republican presidential nominee, who released his 2010 tax returns in January, continues to refuse demands from President Barack Obama’s campaign and other Democrats to release multiple years of his returns. Obama has sought to portray Romney as an out-of-touch millionaire who used offshore accounts and accounting gimmicks to reduce his tax liability.
In an indication that the disclosure will not satisfy Romney’s critics, Brad Woodhouse, the communications director for the Democratic National Committee, posted the following message on Twitter: “Summaries? What is Romney hiding? This isn’t just abt rates - how about Swiss Bank Accts, Bermuda Shell Cos andCaymans Investments?”
But Romney released a letter later Friday from his tax advisers providing a summary of his tax liability for a 20-year period from 1990 to 2009. The summary says that Romney paid taxes every year during that period, that the lowest annual federal tax rate was 13.66 percent and that the Romneys gave an average of 13.45 percent of their income to charity during the period.
The bottom-line numbers provided by Romney’s trustee were the first to be reported. But answers to more detailed questions will take longer to discover in the many pages of documents released by his campaign.
Among the questions raised by Romney’s critics, including advisers to Obama’s campaign: How much money, if any, did Romney pay in foreign taxes in 2011? How much money, if any, remains sheltered in overseas accounts? What are his remaining ties to Bain Capital, the firm he founded?
The letter from Romney’s tax accountants appears to directly contradict unsubstantiated assertions from Sen. Harry Reid, D-Nev. Reid had asserted this summer that someone told him Romney paid no federal income taxes at all for 10 years.
Reid made the allegation in interviews and on the floor of the Senate but repeatedly refused to say who provided him the information. Romney angrily accused Reid of lying, saying that the top Democrat in the Senate should “put up or shut up.”
The letter released Friday from PricewaterhouseCoopers, Romney’s tax preparers, said Romney paid taxes every year from 1990 to 2009.
“In each year during the entire 20-year period, the Romneys owed both state and federal income taxes,” the company wrote. “Over the entire 20-year period, the lowest annual effective federal personal tax rate was 13.66 percent.”
Reid’s office did not immediately respond to e-mails requesting comment.
For months during the Republican primaries, Romney refused to release any information about the taxes he had paid, saying the information was not relevant despite a tradition of disclosure by presidential candidates that dates to his father’s 1968 bid for the presidency. George Romney released 12 years of returns.
In April, under pressure from his Republican rivals for the nomination and Democratic critics, Romney had estimated he would owe $3.2 million in taxes on $20.9 million in income during 2011. At the time, he promised to release the full returns before Election Day.
In an Obama television ad, a narrator mentions tax havens, offshore accounts and carried interest and then says: “Makes you wonder if some years he paid any taxes at all. We don’t know because Romney has released just one full year of his tax returns.”
Democrats have sought to link Romney’s personal tax returns to the tax policies he would pursue if he were elected president. Obama argues that Romney’s tax policies are designed to provide tax cuts to high earners, which would lead to tax increases for middle-class citizens.
“Gov. Romney’s tax plan would actually raise taxes on middle-class families with children by an average of $2,000,” Obama said last month at an event in New Hampshire. “Not to reduce the deficit, or grow jobs, or invest in education - but to give another tax cut to people like him.”
At a rally in Cincinnati earlier this week, Obama mockedthe complexity of Romney’s tax returns.
“I’ve actually done my own taxes,” Obama said. “I don’t know about some of these other folks, but I’ve done them, you know. ... So I know we can make it more simple and more fair.”
Romney’s campaign has argued that his personal wealth is not relevant to the broader debate about who is best able to lead the country out of a sluggish economy.
Last month, Romney said the continued focus on his personal tax returns by his Democratic opponents and the media was “small-minded” in light of the economic problems that the country faces. His wife, Ann, has said the campaign was resisting a disclosure that would go back years because opponents would use the information against Romney.
“The more we get attacked, the more we get questioned, the more we get pushed,” Ann Romney said in an interview on NBC’s Rock Center last month. “There’s going to be no more tax releases given. Mitt is honest. His integrity is just golden.”
But Romney had little choice but to release the full details of his 2011 tax returns, having promised to do so earlier in the year.
In an amended return, Rep. Paul Ryan, the vice-presidential candidate, told the IRS that he and his wife, Janna, had“inadvertently” failed to report $61,122 in income from 2011. That raised their total income to $323,416 and increased their taxes by $19,917 to $64,674, or 20 percent of adjusted gross income. They owed a penalty of $59 for the original underpayment.
They explained that they had overlooked their income from the Prudence Little Living Trust. Little, who died in 2010, was Janna Ryan’s mother.
Also, medical summaries by doctors who have regularly examined Romney and Ryan were released Friday and show both men to be healthy and fit. However, both have significant family histories ofheart disease and have been closely monitored for it.
Romney, 65, is a “vigorous man who takes excellent care of his personal physical health” and who “appears years younger than his age,” Dr. Randall Gaz of Massachusetts General Hospital and Harvard Medical School said in a statement.
Dr. Brian Monahan, the attending physician to Congress who has examined Ryan, 42, since he entered Congress at age 28, described Ryan’s health as “excellent.”
On the campaign trail, Obama accused Republicans of threatening the future of Social Security and Medicare while Ryan said only he andRomney are offering “honest answers” about how to preserve the programs.
Obama and Ryan on Friday addressed the biggest U.S. advocacy group for senior citizens as they made appeals for the votes of a constituency that traditionally goes to the polls on Election Day at a higher proportion than other groups.
The president, speaking via satellite to an AARP gathering in New Orleans, pledged to keep both programs solvent for current and future recipients and promised that over the next decade the average Medicare beneficiary will save $5,000 as a result of his healthcare law.
He said Republican criticism of the measure, passed by Congress “hasn’t been completely on the level” and that a plan Ryan has pushed for as House Budget Committee chairman would replace Medicare with a “voucher that wouldn’t keep up with costs.”
Ryan, speaking in person to the group in New Orleans after Obama’s appearance, drew some boos from the audience when he said he and Romney would work to repeal the health-care law.
“The first step to a stronger Medicare is to repeal Obamacare because it represents the worst of both worlds,” Ryan said. Responding to the boos, he said, “I had a feeling there would be mixed reaction, so let me get into it.”
He said the law “weakens Medicare for today’s seniors and puts it at risk for the next generation.”
In other developments, a plane carrying Ann Romneymade an emergency landing Friday afternoon in Denver after smoke filled the cabin. No injuries were reported.
An apparent electrical fire forced the detour on the flight from Omaha, Neb., to Los Angeles, campaign spokesman Andrea Saul said. The candidate and his wife spoke immediately after the incident, said Saul, who shared photographs on Twitter of firefighters boarding the private jet.
Information for this article was contributed by Michael D. Shear of The New York Times; by Julianna Goldman, Kate Andersen Brower and Joe Sobczyk of Bloomberg News; and by Nicholas Riccardi, P. Solomon Banda, Colleen Slevin, Steve Peoples and Philip Elliott of The Associated Press.
Front Section, Pages 1 on 09/22/2012