(Bloomberg News) Republican presidential candidate Mitt Romney earned $21.6 million in 2010 and paid 13.9 percent of that amount in income taxes, using the preferential rate on investment income and charitable deductions to pay a smaller share of his earnings than top wage earners typically do.
The former private-equity executive and Massachusetts governor earned more than half of his income from capital gains and dividends, which are taxed at a top rate of 15 percent, rather than the 35 percent top rate for ordinary income. His campaign released the returns today.
"Oh, I'm sure people will talk about it," Romney said during a debate in Tampa, Florida, last night. "You'll see my income, how much taxes I've paid, how much I've paid to charity. You'll see how complicated taxes can be."
Romney's income puts him near the top of U.S. taxpayers. In 2008, according to the Internal Revenue Service, the median adjusted gross income was $33,048, which Romney earned in less than a day. Reaching the top 1 percent of taxpayers required $380,354 in adjusted gross income, about Romney's earnings in a week.
The Romneys received a $1.6 million refund after filing their 2010 return because they overpaid taxes during the year. They pay estimated taxes and at the end of the year, the tax return reconciles their payments. They had the refund applied to their 2011 taxes.
Estimate For 2011
The campaign also released an estimated tax return for 2011 showing that Romney had an effective tax rate of 15.4 percent on $20.9 million in adjusted gross income. That return hasn't been filed with the IRS.
The discussion of Romney's tax returns has reignited the political debate over the tax treatment of investments and particularly carried interest, or the profits stake that private-equity managers receive from successful investments even if they don't invest their own money. It is taxed at capital gains rates, and President Barack Obama and many Democrats want to reverse that policy, calling it unfair.
Romney's 2010 income included $7.4 million in carried interest, said Ben Ginsberg, national counsel for the campaign. Romney, a former executive at Bain Capital LLC, received $5.5 million in carried interest in 2011. Romney hasn't taken a specific position during this campaign about the tax treatment of carried interest.
"Governor Romney has paid 100 percent of what he owes," Ginsberg said. The carried interest income stems from his tenure at Bain, which ended in 1999.