The average full-time U.S. worker is making almost $40,000 a year; in 2010, Mitt and Ann Romney lost about twice that amount on fancy show horses.
In 2010, the couple took an almost $78,000 loss on Rob Rom Enterprises, a venture that buys and trains premium horses like Rafalca, a majestic mare who has pranced her way to a number of championships.
The Romneys are passive investors in the venture, so the loss didn’t do much to lessen their tax burden last year. That burden, however, was astonishingly light to begin with for one of the wealthiest presidential candidates in generations.
Of the Romneys’ $21.6 million in 2010 income, they handed over just 14 percent to the IRS, because a great deal of the money came from investments that were taxed at a lower rate than wages. The country’s top income tax rate is 35 percent.
In fact, the Romneys paid a higher tax rate to foreign countries, handing over 18 percent on the almost $375,000 that they garnered abroad. The former Massachusetts governor also shelled out almost $3 million to charity, roughly 16 percent of his post-tax haul.
“This is a fulsome release and we’re proud of it,” Ben Ginsberg, Romney’s campaign counsel, said of the documents yesterday.
The tax returns were unveiled as Romney struggled to stay on track and reign in Newt Gingrich, who gathered momentum with a huge win in the South Carolina primary Saturday.
Meanwhile, Romney’s challengers for office paid much higher tax rates. Newt Gingrich, who earned $3.1 million in 2010, surrendered 31.7 percent of his income to Uncle Sam, while President Obama paid a rate of 26.3 percent on $1.7 million of income.
Almost half of Americans don’t pay any federal tax, mainly because they don’t make enough money to qualify for the surcharge. The average tax rate is 11 percent, though millionaires typically pay at a rate of 25 percent, according to the Tax Foundation, a think tank.
Romney’s returns reflect his career in private equity. In the past two years, about $13 million of his income came from “carried interest,” a measurement of profit for those who buy and sell companies like stocks.
President Obama and a number of lawmakers have pushed to raise that rate, to no avail.
Though the Republican base argues that low rates on carried interest spur job creation and economic growth, it was GOP icon Ronald Reagan who raised the tax rate on long-term capital gains to 28 percent in 1986. President Bill Clinton cut taxes on investment income to 21 percent, before President George W. Bush’s administration slashed the rate to its current level.
Political analysts scrambled yesterday to determine how voters in the upcoming Florida primary might view the returns. However, they may have already hurt the one-time Republican frontrunner. Romney rebuffed calls to release his returns for several days immediately before his defeat in South Carolina.
Now, he turns to Florida, where he admitted at a Monday debate that he wasn’t overly generous with the IRS.
“I don’t think you want someone as the candidate for president who pays more taxes than he owes,” Romney said.
While none of the candidates illegally evaded taxes, together, their tax returns reflect the accounting loopholes that have become hot-button issues in this campaign.
Mitt Romney’s rate is relatively low because he made his living at Bain Capital, a firm that buys and sells companies like widgets. Thus, his income is taxed primarily as an investment, not wages. Some conservatives argue the lower rate on capital gains is fair because the businesses have already paid corporate taxes.
The higher tax rates of President Obama and Newt Gingrich more closely resemble those of the country’s most affluent, although they both benefited from breaks as well.
View the 2012 Presidential Candidates tax return graphic