After weeks of hemming and hawing — and setting off a firestorm of criticism that certainly hasn’t helped his presidential prospects — Mitt Romney has finally released his 2010 federal tax returns.
But if the former Massachusetts governor and GOP contender thought the move would deflect negative speculation surrounding his financial dealings, it may have, in fact, done more harm than good.
According to his returns, Romney made $21.7 million in 2010 – but only paid $3 million in taxes, an effective rate of just 13.9 percent. For 2011, Romney estimates he will pay about $3.2 million on $20.8 million of income, for an effective rate of 15.4 percent.
Editors Note: Romney’s Secrets to Skirting the IRS Exposed in this Shocking Video. Click Here.
Why so little? Because none of Romney’s income came from wages, the primary source for most taxpayers. Instead, most of his income was derived from investments and much of it in capital gains.
Since capital gains generally are taxed at 15 percent compared with the top income tax rate of 35 percent on ordinary wages, those with significant income from capital gains often pay lower taxes than many Americans.
But while that explanation might make perfect sense on Wall Street, it may prove to be a hard sell on Main Street. At the very least, it reveals a disparity in the rates within the U.S. tax code.
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It also provides President Barack Obama with a potent campaign issue in this election year – namely his assertion that Congress needs to raise taxes on the wealthiest Americans to close the budget deficit.
Already one prominent advocate of Obama’s “tax the rich” proposal has weighed in on the controversy.
Multi-billionaire Warren Buffett, chairman and CEO of Berkshire Hathaway Inc., had this to say about Romney’s low tax rate: “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays. It’s the wrong policy to have.”
Buffet added: “He makes his money the same way I make my money. He makes money by moving around big bucks, not by straining his back or going to work and cleaning toilets or whatever it may be. He makes it shoving around money.”
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If perception is everything in politics, the release of Romney’s tax return isn’t exactly the best argument that the embattled candidate, whose net worth is estimated at as much as $270 million, is in touch with the experiences and concerns of average Americans.
But more significantly, it will surely enliven the debate over the fairness of existing tax laws and spark new claims of class warfare.
As an apparent beneficiary of those laws, Romney will have a hard time convincing voters that taxing the rich is “unfair,” but may still be able to make the case that it won’t help the economy.
That is … if he survives the fallout.
Watch the below interview to find out how you can pay zero taxes.
Editors Note: Romney’s Secret to Skirting the IRS
Despite raking in $21.7 million, Romney likely paid a lower tax rate than you did by exploiting these obscure tax secrets (Click here to see them)
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