WASHINGTON -- In an attempt to stop a steady stream of bad press over questions about his income, assets and tax rate, Republican presidential candidate Mitt Romney released one year of his tax returns and an estimate for his 2011 tax returns on Tuesday morning. The disclosure comes four days after Romney's big loss to Newt Gingrich in the South Carolina primary on Saturday and after weeks of escalating questions about when he would release his tax returns and why he would not promise to disclose them.
The returns show that Mitt and Ann Romney, who are worth from $190 million to $250 million, earned $21.7 million in 2010 and paid a 13.9 percent tax rate, lower than that of a person earning $50,000. The total amount the Romneys paid in taxes in 2010 was about $3 million.
Along with releasing their tax returns from 2010, the Romneys released estimates for their 2011 taxes, which have not yet been filed. The estimates show an income of $20.9 million, with the couple paying a tax rate of 15.4 percent, closer to the estimate that Romney gave at a January 17 press conference. The Romneys' income came entirely from investments, mostly from capital gains, which are taxed at a lower rate than other types of income.
Those investments are littered across a series of accounts in places stretching from America to the Cayman Islands and Luxembourg and even include a now-closed Swiss bank account. Many of these accounts hold few assets.
Also revealed in the tax returns is the amount the candidate gave to charity. In total, the Romneys in 2010 gave nearly $3 million to charity, with half of that going to the Church of Jesus Christ of Latter-day Saints, the Mormon church.
Gingrich, Romney's chief opponent in the Republican primary, released his tax returns on January 19 during a Republican debate. Gingrich's tax rate, 31 percent, is more than double that of Romney. President Barack Obama last year released his 2010 tax returns, which showed a 23 percent tax rate. Both Gingrich and Obama, while earning in the millions of dollars in 2010, made just a fraction of Romney's income.
The tax returns, while normally a routine side story to campaigns, have become a particularly salient issue over the past few weeks. The country is in the midst of the first full presidential election cycle since the financial meltdown of 2008 and the ensuing rise in unemployment and foreclosures, along with a decline in wages and economic security. The cumulative effect of these negative trend lines has led to increasing anxiety about growing income inequality and the fairness of the tax code.
Romney, one of the wealthiest men to run for president, initially refused to disclose his tax returns after being pressed by the media, President Obama's campaign and his Republican rivals in the primary race. In a January 16 debate Romney said he would "probably" disclose his tax returns, but "time will tell." Three days later Romney flubbed an entirely predictable question about the tax returns when CNN's John King asked Romney if he would follow the example of his father, onetime presidential candidate and Michigan Gov. George Romney, and release 12 years of his tax returns. Romney's boo-eliciting response was "Maybe."
The initial refusal to release his returns, followed by the drawn-out speculation about why he would not, damaged Romney's campaign, which has been premised on the argument that a very successful businessman is the only kind of person who can get America back to work. Being a very successful businessman, however, almost always means being a very wealthy businessman. At a moment when Americans are concerned deeply about the concentration of wealth in the hands of the few, Romney's tax returns and his low tax rate, are ripe to become symbols of the lack of fairness that too many Americans see themselves facing.
It isn't as though Romney is the first very wealthy man to run for president, but he has a way of highlighting his wealth in a way that brings to mind the famous quip by the former Texas Gov. Ann Richards about President George H.W. Bush: "He was born with a silver foot in his mouth."
Over the course of the 2012 primary campaign Romney has made a series of gaffes that have helped create a caricature of the candidate as an aloof plutocrat. He made a flippant $10,000 bet during a televised debate. He emphatically declared to a crowd in Iowa that "corporations are people." In a statement that has been somewhat taken out of context, Romney declared, "I like being able to fire people who provide services to me." When announcing that he had an estimated 15 percent tax rate, Romney glossed over the $374,327 he earned in speaking fees as "not very much."
The tax return issue is unlikely to go away for Romney. His father began the tradition of presidential candidates releasing their tax returns during his 1968 run for the Republican presidential nomination. As stated in the John King question that Mitt Romney flubbed before the South Carolina primary, George Romney released 12 years of tax returns in 1967. NBC's Brian Williams revealed in Monday night's debate that Mitt Romney had handed over 20 years of tax returns to the 2008 presidential campaign of Sen. John McCain (R-Ariz.) when he was auditioning as a potential vice presidential candidate.
UPDATE: 9:40 a.m. -- On a Tuesday morning conference call the Romney campaign sought to head off questions about a Swiss bank account reported in Mitt Romney's tax returns and other investments in funds located in offshore locations, including the Cayman Islands, Ireland and Luxembourg.
"Why is there a Swiss bank account listed on the Romneys' tax return? It is listed because I set that up for diversification back in 2003," Brad Malt, Romney's tax lawyer, explained. "It earns some income ... The tax is fully paid just as if this is a U.S. bank account ... I did close this account in early 2010."
Malt further elaborated on why he closed the account, saying, "I've previously said that I regularly review Governor Romney's investments. In my periodic reviews I decided that this account was not serving any particular purpose. ...It might or might not be consistent with Governor Romney's political views. ...It just wasn't worth it and I closed the account."
Romney's advisers and lawyers pushed back against reports in the press that he held money in offshore accounts by noting that these were investments in funds held in offshore accounts by other companies and that all taxes were paid.
"There have been reports that these investments are evading taxes," Malt said. "Again that is flatly wrong. ...The blind trust's investment in the Cayman funds is taxed the same as if Governor Romney made the investments himself."
On questions about Romney's investment in Freddie Mac and Fannie Mae, Malt said, "I'm not allowed to communicate with Governor Romney about these investments. ...There was no discussion about Freddie and Fannie investments."
During the call, Romney counsel Ben Ginsburg sought to portray continuing questions about Romney's tax returns as political machinations emanating from the campaign of President Barack Obama.
"It's an extensive disclosure that satisfies the public, if not the Obama research guys," Ginsburg said. "There are 26 people from the Chicago area listening in. So, that sort of gives you an idea of the state of play."
Browse through the Romneys' entire 2010 tax return below: