Friday, September 21, 2012

Romney's 2011 income tax return

OK, so today Romney released his 2011 income tax return, plus a statement from his tax lawyer and another statement from PricewaterhouseCoopers (PWC), which has been his tax return preparer for the last 20 years.  What do we learn from all this?

First point: the 2011 tax return is NOT the big story here.  Rather, it's what seems to be disclosed, but mainly isn't, about his 1990-2009 tax returns.  I will get to that in a follow-up blog post.

In the 2011 return, he turns out to have paid about $1.9 million of taxes on $13.7 million of income, for an effective tax rate of 14.1%.

The amusing thing here is that he deliberately underclaimed charitable contribution deductions.  The Romneys donated just over $4 million to charity, but deducted only $2.25 million - even though they apparently would have been entitled to the whole thing - in order, as his tax lawyer's statement puts it, to "conform to the Governor's statement in August ... that he paid at least 13% in income taxes" for every year. The underlying glitch may have been that he expected more taxable income when he made the charitable contributions than he ended up with.  His estimated taxable income and tax payment exceeded the actual.  So his people may have over-estimated the size of the charitable deduction he could claim without violating the self-imposed 13 percent rule.

Some may have fun with the fact that Romney stated publicly in January that he pays every dollar in tax he owes, but not a penny more, and that he wouldn't be qualified to be president if he overpaid.  In fact, he deliberately didn't take $1.75 million in deductions to which he was legally entitled.  So by his own overheated terms, one could say that he is now established that he isn't qualified to be president.

But of course that's just a silly "gotcha," not anything that really matters particularly - except for one thing.  It certainly does show that 2011 is an atypical tax return year for him, reflecting the political scrutiny that he knew he would face from releasing it.  That's fine, but it means we can't infer much about pre-2010 returns from what he did in 2011.

Nothing more on the 2011 return for now.  I've started looking through it, but it's more than 300 pages.  Instead I will post a follow-up entry on what strikes me as the more important disclosure today - his lawyer's statement and the letter from PWC.


chrismealy said...

Wait, Romney's giving % of AGI? The guy had $100 million in an IRA. He can't be trusted. I don't believe for a second that his idea of AGI is legitimate.

Daniel Shaviro said...

The AGI is an actual number on the tax return. But yes, it would miss lots of off-return stuff, such as overvalued IRA contributions, in addition to being net of loss deductions.

Unknown said...

This oval should be filled in and a copy of the death certificate enclosed only if there is a refund due and the check needs to be issued to the decedent’s surviving spouse/civil union partner or estate. matawan income tax services

Srikanth said...

I hope you will post more Updates. Thanks for the post... Tax & Financial Planning in Vijayawada

Jon Sigurdsson said...

Thanks for the info. That was some interesting tidbit on Romney
Tax Checklists

Unknown said...

The blog was absolutely fantastic, Lot of information is helpful in some or the other way. Keep updating the blog, looking forward for more content…. Great job, keep it up.
Income Tax Refund in Vijayawada