Total Pageviews

Friday, September 21, 2012

Romney\'s Taxes Compared With Everyone Else\'s


The Romney campaign revealed Friday afternoon that Mitt Romney and his wife, Ann, paid a 14.1 percent effective federal tax rate in 2011, paying $1.9 million in taxes on $13.7 million in income, much of it from investments. (That $13.7 million in income most likely puts him in the top 0.01 percent of earners, by the way.)

Where does that effective tax rate put him in the universe of taxpayers? The Romneys paid a higher effective tax rate than the average middle-income American, though a significantly lower rate than the average rich, or very rich, American.

According to the nonpartisan Tax Policy Center, the middle quintile of taxpayers â€" earning between $33,542 and $59,486 a year â€" had an effe ctive direct federal tax rate of about 12 percent in 2011. The top 1 percent of earners, making more than $532,613 a year, paid a direct federal tax rate of about 22.7 percent. And the top 0.1 percent of earners, making more than $2,178,886 a year, paid a direct federal tax rate of about 21.4 percent.

(We're just using income, employee-side payroll and estate taxes in this comparison. A fuller picture would include state and local, employer-side payroll and corporate taxes.)

Still, the Romneys revealed that they paid more taxes than they really owed, pushing their effective federal rate higher. The couple made more than $4 million in charitable donations in 2011, but claimed a deduction for only $2.25 million of those donations “to conform to the governor's statement” that he “paid at least 13 percent in income taxes in each of the last 10 years.”

Some back-of-the-envelope math suggests that had the Romneys claimed the full deduction, their effectiv e tax rate would have fallen to about 9 percent.

In light of that, expect Mr. Romney to take some heat for this statement, which he made to ABC News in July: “ 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. I'd think people would want me to follow the law and pay only what the tax code requires.”