Mitt Romney's reluctance to reveal his income and tax information received center-stage attention once again at last night's debate. After weeks of immense scrutiny and criticism from his opponents, Romney caved and agreed to release his tax returns from 2010 and the projections for his 2011 return.
"I pay all the taxes owed. And not a penny more," Romney said at the debate. "I don't think we want someone running for president who pays more taxes than he owes." Thanks to leaks from Reuters, we now know Romney's exact figure: $6.2 million over the course of 2010 and 2011. That's an unimaginable sum to most Americans, but it represents a pittance of Romney's annual earnings, which total more than $45 million over those two years. He paid an effective tax rate of just 13.9 percent last year, with the majority of his income taxed at the capital-gains rate of 15 percent. That's about the same level as a couple making less than $70,000 per year. To Romney's credit, he might not chip in his fair share to the federal government, but he does contribute significant funds to various charities; he apparently tithes the required 10 percent to the Mormon Church and donates significant money to other charities.
Romney has been called the epitome of the 1 percent ever since Occupy Wall Street brought that phrase into popular parlance last fall. But as these new figures show, that term is inadequate for showing just how disconnected Romney is from the average American worker. "In 2008, according to the IRS, the median adjusted gross income was $33,048, which Romney made in less than a day," Bloomberg's Richard Rubin writes. "Reaching the top 1 percent of taxpayers required $380,354 in adjusted gross income, about Romney’s earnings in a week."
Yet Romney pays the same tax rate as most regular workers, which will force many voters to confront the fact that our current tax code is not nearly as progressive as it appears. Yes, we tax direct income at different marginal rates, but the code is riddled with loopholes that allow high earners like Romney not to shoulder their fair share of the tax burden. It might not harm Romney among the anti-government zealots that dominate the Republican primaries. As Romney noted last night, Gingrich's plan—popular among the GOP base—to bring the capital-gains tax down to zero would allow Romney to pay almost no taxes. But the pride Romney displayed last night in fighting to keep each cent of his money won't play so well among the general electorate.