Wednesday, January 25, 2012
So now we have seen Mitt Romney’s tax return.
We already knew he was rich – now we know just how rich.
What did Mitt do? Certainly nothing illegal. He invested his money for the best return, as you or I would do. It is just that he has a lot more to invest than we do.
Did he participate in any shady tax dodges or shelters? Not that I can see. He invested in stocks and earned a ton of dividends, most of which were taxed at a special rate of 15%. And he his investments did well – resulting in humungous long-term capital gains. Did he do anything sneaky to get the special 15% rate? No. The Tax Code allows for a 15% tax rate for “qualified” dividends and long-term capital gains. If you or I invested in the same, or similar, stocks we, too, would pay 15% on qualified dividends and long-term gains. Actually some of us would pay 0% tax on all or part of the and capital gain income.
Romney also gave close to $3 Million to church and charity, about 1/7 of his AGI, which, being deductible, reduced his taxable income. Would he have given the same $3 Million away if he did not get a tax deduction? I think probably so, or at least almost as much. But the Tax Code allows for a deduction, under both regular tax and the dreaded AMT, for contributions to church and charity. You and I would get the same tax deduction.
Because he was a victim of the dreaded AMT he got no tax benefit for his substantial state and local income tax and real estate tax payments and his also very high investment expenses.
He paid $3 Million in income taxes! More than you or I did. More than anyone I have ever known did (I believe the most a client of mine has ever paid is a little over $1 Million). Again about 1/7th of his AGI. Almost half of Americans either paid absolutely nothing or actually made a profit from filing a tax return. Should he have paid more tax so a higher percentage could pay 0? Why?
His return was indeed voluminous – over 200 pages and attachments. And he filed forms and schedules that I have never even heard of in 40 years in the business, let alone ever prepared. But they were due to the nature of his investments.
Here is some more info on presidential candidate tax returns -
• The TAX HISTORY PROJECT provides links to the tax returns of Obama and Biden and Romney and Gingrich, as well as those of former Presidents and candidates.
• The WASHINGTON POST compares the basics of the tax returns of BO, Newt and Mitt in “Tales of the 1040s”.
• TAXGIRL Kelly Phillips Erb has reviewed Mitt’s return and tells us “Romney's Tax Returns are Remarkably... Unremarkable”. I agree with Kelly’s bottom line -
“The returns are – as predicted – remarkably unremarkable. Are we okay with moving on now?”