US candidate Romney admits low tax rate
Leading Republican presidential candidate Mitt Romney, worth an estimated $250m, admits paying 15 per cent tax – much lower than average Americans.
Republican candidate Mitt Romney told reporters that his income tax rate is “probably closer to 15 per cent than anything”, suggesting he pays a much lower rate than most Americans, who pay up to 35 per cent in tax at the highest rate.
The former private equity executive and Massachusetts governor was put under pressure to release details of his earnings and gtax rate during a presidential debate in Myrtle Beach on Monday evening.
He resisted disclosure at the time, but then held a press conference while campaigning in South Carolina, where he is favourite to win, ahead of the primary election on Saturday.
Mr Romney said that most of his income came from investments and speaking engagements, adding that his fee was “not very much”. However, Mr Romney previously disclosed that he was paid $370,000 in speakers’ fees in one year.
Republican rivals called for Mr Romney to be more transparent about his finances. The White House said it showed that the leading Republican candidate is out of touch with typical Americans.
Capital gains tax
Romney’s estimate of his income tax rate suggests he earns a large chunk of his income from investments, much of it in capital gains.
In the US system, capital gains are generally taxed at 15 per cent – much lower than the tax rate on working wages.
The billionaire investor Warren Buffet drew attention to such disparity in 2010 when he said it was unfair that his tax rate was less than his secretary’s: he paid $6.9m in federal income taxes on $39.8m in taxable income – a rate of 17.4 per cent.
“Everybody who’s working hard ought to pay their fair share” of taxes, the White House said in a statement.
“That includes millionaires who might be paying an effective tax rate of 15 per cent when folks making $50,000 or $75,000 or $100,000 a year are paying much more.”
