Romney campaign touts his tax return transparency

By The Associated Press

TAMPA, Fla. (AP) — Republican presidential candidate Mitt Romney paid about $3 million in federal income taxes in 2010, having earned more than seven times that from his investments. Those earnings, $21.7 million, put him among the wealthiest of American taxpayers. Romney’s campaign said Tuesday he followed all tax laws.

At the same time, Romney gave nearly $3 million to charity – about half of that amount to the Mormon Church – which helped lower his effective tax rate to a modest 14 percent, according to records his campaign released early Tuesday.

Romney’s income puts him in the top 0.006 percent of Americans, based on the most recent Internal Revenue Service data, from 2009. That year, only 8,274 filers reported income above $10 million.

His campaign advisers said the release of more than 500 pages of returns, schedules and worksheets was in “full compliance” with U.S. tax laws and was an effort to provide maximum transparency to the American public.

The documents were released as President Barack Obama prepared to deliver his State of the Union message, in which he is expected to talk about economic fairness. Asked during a round of television interviews Tuesday about Romney’s relatively modest tax rate, given that he’s a multimillionaire, White House adviser David Plouffe said: “We need to change our tax system. We need to change our tax code so that everybody is doing their fair share.”

Romney had refused to disclose any federal tax returns, but then hinted he would only offer a single year’s return in April. But mounting criticism from his rivals and a hard loss in last week’s South Carolina primary forced his hand.

For 2011, Romney will pay about $3.2 million with an effective tax rate of about 15.4 percent, the campaign said. Those returns haven’t yet been filed yet with the Internal Revenue Service. In total, he would pay more than $6.2 million in taxes on $45 million in income over the past two years, his campaign said.

“Gov. Romney has paid 100 percent of what he owes,” said Benjamin Ginsberg, the Romney campaign’s legal counsel. Ginsberg and other advisers insisted Romney did not use any aggressive tax strategies to help reduce or defer his tax income.

The advisers acknowledged that Romney continues to earn money from investments from Bain Capital, the Boston-based private equity firm the candidate founded and managed between 1984 and early 1999. Under an agreement with the firm when he left, Romney continued to earn “carried interest” on new Bain investments as a former partner in the firm even though he no longer ran the operation.

Romney earned $7.5 million in Bain earnings in 2010 and expects to make $5.5 million in 2010, Ginsberg said.

The former Massachusetts governor had been cast by his GOP opponents as a wealthy businessman who earned lucrative payouts from his investments while Bain slashed jobs in the private sector. Rival Newt Gingrich released his 2010 returns last Thursday, showing he paid almost $1 million in income taxes – a tax rate of about 31 percent.

Romney’s advisers acknowledged Tuesday that Romney and his wife, Ann, had a bank account in Switzerland as part of her trust. The account was worth $3 million and was held in the United Bank of Switzerland, said R. Bradford Malt, a Boston lawyer who makes investments for the Romneys and oversees their blind trust, which was set up to avoid any conflicts of interest in investments during his run for the presidency.

In 2009, UBS admitted assisting U.S. citizens in evading taxes, and agreed to pay a $780 billion penalty as part of a deferred prosecution agreement with the U.S. Justice Department.

Malt said the account was closed for “diversification” in early 2010. He said he made the decision to close the Swiss account because it “just wasn’t worth it.” Malt sidestepped a question about whether he closed the account because it could be a political liability, saying it “might or might not be inconsistent with Gov. Romney’s political views.” Malt has sold off other accounts in recent years – including investments in firms that did business with Iran and China – because of possible political inconsistency or embarrassment with Romney’s political positions.

Malt also confirmed that some of Romney’s investments are routed through affiliate funds set up in the Cayman Islands. But he insisted there were no actual offshore accounts, and added that Romney paid the same amount of U.S. taxes using the Cayman affiliates as he would have if the investment funds were set up in the U.S.

Romney’s campaign confirmed the details of his tax information after several news organizations saw a preview of the documents. He had said he planned to release his returns in full Tuesday morning.

“You’ll see my income, how much taxes I’ve paid, how much I’ve paid to charity,” Romney said during Monday night’s debate in Tampa. “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.”

Romney’s 2010 returns show the candidate is among the top 1 percent of taxpayers. The returns showed about $4.5 million in itemized deductions, including $1.5 million to the Church of Jesus Christ of Latter-Day Saints.

Romney’s charitable giving is above average, even for someone at his income level. In 2009, more than 37 million filers claimed charitable deductions averaging more than $4,000. Among those making more than $10 million, the average charitable deduction was about $1.7 million, according to the IRS.

Before the tax records were released, Romney’s old investments in two government-backed housing lenders stirred up new questions at the same time his campaign targeted Gingrich for his work for Freddie Mac.

Gingrich earned $1.6 million in consulting fees from Freddie Mac. Romney has as much as $500,000 invested in the U.S.-backed lender and its sister entity, Fannie Mae.

The fight over releasing the tax information highlighted an argument that Democrats are already starting to use against Romney – that he is out-of-touch with normal Americans. And it probably hurt him in the South Carolina primary, where he lost by 12 percentage points to Gingrich after spending several days resisting calls to release the returns.

In Monday’s debate, Romney would not answer questions from moderator Brian Williams of NBC about just what pieces of his tax returns could cause political headaches. But they will shine the spotlight on a fortune estimated at between $190 million and $250 million, and could raise questions about where he keeps his money and how he earns it.

It’s clear that Romney’s campaign is bracing for an onslaught of criticism of his personal fortune. His wife, Ann, has started talking about the returns during campaign appearances. She told supporters at a Florida rally Sunday: “I want to remind you where we know our riches are. Our riches are with our families.”

Most of Romney’s vast fortune is held in a blind trust that he doesn’t control. A portion is held in a retirement account.