The frontrunner in the Republican presidential race, Mitt Romney, has finally bowed to pressure and released his tax returns for 2010 and 2011.
“I pay all the taxes that are legally required, and not a dollar more.” And if you’re Mitt Romney, that adds up to just over $6m over the last two years. On an income of some $45m, that’s an effective tax rate of just under 14 per cent, lower even than the 15 per cent figure that Romney estimated last week.
If the aim of this financial disclosure was to make Mitt more appealing to the average American, there isn’t much that’s average about his vast personal wealth – estimated at between $190m and $250m.
I pay all the taxes that are legally required, and not a dollar more. Mitt Romney
His financial holdings are held in three blind trusts, set up after he became the Massachussetts governor in 2003, run by an investment manager. Details released this morning show he had a string of foreign holdings in Bermuda, the Cayman Islands and a Swiss bank account that was closed down in 2010: according to Reuters, after an investment adviser suggested that it could be politically embarassing.
So what’s the problem? It’s not simply that Romney is incredibly rich. That’s hardly big news: and nowadays the sheer cost of a political campaign means that being a millionaire is practically a requirement for anyone running for national office.
Read more from Matt Frei on Americans’ attitude to Romney: “It is privilege, not wealth, that Americans abhor”
Romney has tried hard to appeal to the spirit of hard work and rewards fairly earned: we should be “lifted up by our desire to succeed, not dragged down by a resentment of success”, he’s declared. Plus there’s his noted philanthropy: he gave $7m to charities over the last two years, much of it to the Mormon church.
In normal times, in capitalist America, that kind of appeal might resonate. But these are not normal times. The spectre of recession haunts the world: the American dream lost in a ravaged landscape of foreclosed homes and shattered hopes. These are times when, pace the Occupy movement, the fat cats of Wall Street seem to be growing fatter still, on the backs of everyone else.
These are times when you can’t just be rich. You’ve got to play fair. Romney’s tax rate – mainly in the form of capital gains – is about what you’d pay on an annual income of just $60,000. By contrast, figures show that President Obama and his wife paid almost twice as much – 26 per cent – on their much lower joint income of $1.8m. Mitt’s main rival – former House Speaker Newt Gingrich – earned a little over $3m last year, and paid a tax rate of around 32 per cent.
A preface that reads: ‘We really wanted to keep this secret. But that didn’t work out’. Josh Marshall, Talking Points Memo
And you’ve got to look transparent, too. Romney’s reluctance to even engage with the tax issue just made it look like there was something to hide. Back in December, the Democratic National Committee was trying to push that button with a pre-Iowa campaign video “What is Mitt Romney hiding”.
There’s more. It’s that old flip-flop story, all over again. First, Romney he said he wouldn’t release any records till April – and then, only if he became the nominee. Then, asked whether he’d publish 12 years of details, like his father did when he ran for the presidency in 1968, Romney prevaricated some more. “Maybe. You know, I don’t know how many years I’ll release,” he spluttered, providing another gift for the DNC playbook.
On Sunday he admitted that his campaign made a mistake in delaying the full tax disclosure for so long. But news of that hastily closed Swiss bank account has managed to complicate his efforts to show genuine openness. As Josh Marshall put it in Talking Points Memo – “Now everything in these documents comes with a preface that reads ‘We really wanted to keep this secret. But that didn’t work out.'”
So many questions remain, though. Why were only two years of tax details made public – and not, say, the years covering the time when Romney was at Bain Capital – and the period after he left the company when he continued to receive an income as part of his departure agreement? You can bet his rivals are already on that one.
One more thing. Romney’s own tax plans would make him even richer, according to Citizens for Tax Justice, if he were elected to the White House, his own tax bill would be cut almost in half, compared to Obama’s plans to make the wealthiest Americans pay more.
Low tax rates, secretive offshore accounts and a personal fortune protected against the storm of economic turmoil. It’s not a good place for Romney, as those crucial Florida voters prepare to give their verdict, just a few days from now.
Felicity Spector writes on US politics for Channel 4 News