Taking Romney’s Word: I paid at least 13% in taxes

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Romney's Word

Source: Cato

Despite his vice presidential running mate Paul Ryan’s surrender of more than two years in tax returns, GOP presidential candidate Mitt Romney continues to resist doing the same, even as he says he has never paid less than 13% of his income in taxes. Critics are saying he’s not being truthful. “Those with nothing to hide, hide nothing” said one of those critics on Thursday.

Romney told the media this week on a campaign stop in South Carolina,

I did go back and look at my taxes and over the past ten years. I never paid less than 13%. I think the most recent year is 13.6 or something like that. I paid taxes every single year.

Meanwhile, the allegations by Senate Democratic Leader Harry Reid that Romney paid no taxes in ten years is beginning to make some wonder the real reason Romney is resisting demands to turn them over. Democrats continue to demand that Romney give up more than his full tax returns for 2010 and a summary for 2011, which is all he’s provided.

It’s important to make the distinction between effective tax rates and top income tax rates. Effective rates are always lower than top income tax rates due to credits, deductions and exemptions that cancel out all or much of the income tax many Americans would otherwise owe. The Tax Policy Center reports 80% of Americans have an effective rate below 15%.

The question is, should Romney step up to the plate and give both the Dems and the media what they want? Many say he won’t for one reason: Households at the highest income brackets, including Romney’s, make a considerable amount of their money from tax-advantaged investments, such as capital gains and tax-free bonds. Then they take the itemized deductions route which lowers even further what they ultimately pay Uncle Sam.

In Romney’s financial disclosures, which are mandatory for a presidential candidate, it’s reported his net worth is as high as $264 million, which makes him one of the wealthiest candidates in history to seek the U.S. presidency.

Should Senator Reid take back his controversial accusations? That’s likely a political questions that will garner different responses, dependent on one’s political leanings. Still, Reid isn’t taking those accusations back and one of his spokesmen said,

We’ll believe it when we see it.

The Reid camp insists that until Romney releases his tax returns, it will continue to keep the media spotlight on him.

Meanwhile, Ryan turned over significantly more of his tax returns to Romney. Romney’s not releasing those to the media either.

Mitt Romney needs to show American voters at least the same number of tax returns that he asked Paul Ryan to show him when he was vetting him for vice president,

said Democratic National Committee Chairwoman Debbie Wasserman Schultz.

During an interview with ABC News, Tim Pawlenty, a former Minnesota governor who was at one time a potential Romney running mate, said he also had to submit several years of tax returns during the search for a Republican vice presidential candidate. When George Stephanopoulos asked, “So more than two?” , Pawlenty said, “Well, we don’t get into the details of the vetting process, but I gave him a bunch of tax returns,” Pawlenty replied. “I don’t remember the exact number of years.”

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About Author

David is a CPA and has spent the past decade as a financial adviser helping clients meet their fiscal objectives. With an appreciation for journalism, he has spent the past few years overseeing several financial columns as well as writing two previous finance blogs. He resides on the East Coast with his wife and two sons and has guided many through the recent recession while providing a no-nonsense approach to spending and saving.


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