Romney returns show low tax rate; questions linger

Tue Jan 24, 2012 7:54pm GMT
 

By Steve Holland and Kim Dixon

TAMPA, Fla./WASHINGTON (Reuters) - Republican U.S. presidential candidate Mitt Romney bowed to political pressure and gave the public a glimpse inside his personal fortune on Tuesday, releasing U.S. tax returns showing he pays a lower effective tax rate than many top wage-earners.

Unlike Americans who rely on a paycheck, Romney earns most of his income from investment profits, dividends and interest. The returns for 2010 and estimates for 2011 showed that he will pay a total of $6.2 million (3.9 million pounds) in taxes on income of $42.5 million.

Romney and his wife Ann paid an effective tax rate of 13.9 percent in 2010 and expect to pay a 15.4 percent effective tax rate when they file their returns for 2011.

Those rates are far below the top income tax rate on wages, which is 35 percent, because the U.S. tax code in recent years has favoured investment income over wage income.

Targeting popular unease with rising U.S. income disparity, President Barack Obama on Tuesday night in his annual State of the Union speech at the Capitol will put efforts to make the tax code fairer at the center of his re-election campaign.

Obama will renew his appeal for a "Buffett rule" to ensure that the ultra-wealthy pay their "fair share" of taxes. This idea is backed by multibillionaire Warren Buffett. His assistant Debbie Bosanek - whom he says pays a higher tax rate than he does - will sit with First Lady Michelle Obama for the speech.

One of the wealthiest Americans ever to run for the White House, Romney did not release returns from the years 1984-1999, when he began making his fortune buying and selling companies as a private equity financier with Bain Capital, but those lucrative years did give him a special tax advantage.

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Republican presidential candidate and former Massachusetts Governor Mitt Romney listens during a roundtable discussion about housing issues in Tampa, Florida January 23, 2012.   REUTERS/Brian Snyder
 
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