WASHINGTON -- Republican presidential nominee Mitt Romney on Friday announced that he will not take all the charitable deductions to which he was entitled for his 2011 taxes, in order to keep his tax return from falling below a threshold that would falsify an earlier assertion that he'd never paid lower than a 13 percent tax rate.
"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% in income taxes in each of the last 10 years," his trustee Brad Malt said in a note accompanying the return.
The choice to not take the deduction allowed Romney to inflate his tax rate to 14.1 percent. The difference between his charitable giving of more than $4 million and his claimed deductions of $2.25 million increased his tax bill by several hundred thousand dollars, as he paid taxes he didn't have to on nearly two million dollars.
Luckily for Romney, after the election he can recoup that money. If the American people reject him at the polls in November -- and even if they don't -- Romney would be fully within his legal rights to file an amended return, requiring the Treasury to cut him a substantial check.
"It's noble," said Boston College tax law professor Brian Galle of Romney's generous, if temporary, gift to the Treasury. "It also doesn't prevent him from taking that deduction in an amended return if he were to file it after the election."
Romney has asserted that he does not believe in paying more taxes than required.
"I don't pay more than are legally due and frankly if I had paid more than are legally due I don't think I'd be qualified to become president," Romney has previously said. "I'd think people would want me to follow the law and pay only what the tax code requires."
UPDATE: 9/22/12 10:55 a.m. -- Where did Romney's charitable giving wind up? It's not entirely clear. According to the tax returns, he gave $1,115,485 to the Mormon church and $214,516 to the Tyler Charitable Foundation, which is Romney's own tax-exempt nonprofit he established. His returns also list a gift of $920,573 in "noncash contributions," though it doesn't specify where those went. Noncash contributions are typically gifts of stock. By shifting the stock from his own account to his nonprofit, he is able to avoid paying taxes on the unrealized capital gains, and is also allowed to write off the value of the gift. The return isn't clear as to where the remaining roughly $2 million of charity went -- the gift he hasn't yet taken a deduction for -- but a likely candidate is his Tyler Charitable Foundation.
In 2010, Romney avoided a tax hit by giving to Tyler stock in Sensata, a company with a factory in Illinois that Bain Capital is closing and moving to China, costing the town 170 jobs.