Mitt Romney released his 2011 federal tax returns yesterday in keeping with his promise back in January that he would eventually release them to the public.
Something is off, though: the man who is running on a platform of business experience and savviness with money has left out $9 million in income from his 2011 return.
Back in January of this year, Romney said that he estimated he would pay around $3.2 million in taxes for 2011 for an effective tax rate of 15.4%. What he didn’t say (and what anyone with an elementary education can figure out) is that 3.2 million is 15.4% of $20.78 million. That seems normal: anyone who saw his 2010 return could see that he paid $3M for an effective tax rate of 13.9%, which makes his total taxable income for 2010 $21.58M.
From the 2010 return and the 2011 estimate, it’s safe to say that the Romney family brings in around $20-21 million per year.
But when they released their 2011 returns, the numbers were way off. Specifically, the 2011 return reported $1.94 million in taxes paid for an effective rate of 14.1%, making the 2011 taxable income $13.7 million.
That’s a difference of $9 million from what Romney said was his income just seven months ago.
So let’s lay this out:
- In 2010, Romney paid taxes on $21.58 million.
- In January, 2012, Romney estimated that he would pay taxes on $22.7 million.
- In September, 2012, Romney disclosed that he paid taxes on $13.7 million.
This is the businessman. This is the CEO of the Republican party. This is the poster boy for fiscal responsibility and conservative budget ideas. How did he overestimate his own taxes by $9 million?
There are two possible answers, and neither look good for Romney.
First, the taxable income was deliberately changed in order to appeal to 1) his promise of never paying less than 13%, and 2) the American people who would tear him apart if his tax return showed the amount he should have paid.
- His accountants made a good faith payment of $3.2 million in 2010 for his 2011 tax return. This is common for high-rollers who need longer to file their tax returns, because it tells the IRS that the filer has every intent to comply with federal tax code. If his accountants paid $3.2 million in 2010, then surely they would have projected his 2011 earnings to be around what his 2010 earnings were (3.2 is 15.4% of $22.7 million). After all, no savvy CEO of Bain Capital would be living paycheck to paycheck — no, this man knows exactly how much money goes into his account and when. But why would his 2011 income be so drastically different from his 2010 income, unless some deliberate manipulation was going on in order to appeal to the public eye?
- His 2011 taxes were $1.94 million, and if those taxes were on the income that he said in January was his 2011 income, his actual tax rate was closer to 8.54%.
- Romney’s 2011 return wasn’t completed and signed off until September 17th, 2012 — that’s five days ago. That means that he has had this whole time of political backlashing to consider how to tailor the returns in a way to amortize this and depreciate that so his tax rate looks good and reasonable to the American people. I’m not saying that this is wrong, necessarily, but it is conduct unbecoming of an honest political candidate.
- UPDATE 9/23: Reader “Josh” pointed out that the $887,000 was a 1/4 payment voucher for estimated 2012 taxes. If you multiply it by 4, you’ll get Romney’s estimated 2012 tax contributions: $3.55 million (for a total income estimated in 2012 of over $20 million — indicating that the only year that was disproportionately off was 2011).
Second, he is so far removed from his own finances and reality and he can overestimate $9,000,000 and its not a big deal. This is problematic on many fronts.
- Romney has run his entire campaign on his successes as a businessperson. Would a successful businessperson really overstate $9,000,000 on his own tax returns?
- If he did overstate $9 million, what does this say about his attention to detail when it comes to numbers if he’s this nonchalant about overstating 40% of his personal income? Is that the kind of person we want in charge of national budget decisions?
- If he had originally planned on not releasing his returns and only later buckled under pressure (which is exactly what happened), how did the modified tax returns (again, finished on 9/17) differ so drastically from his estimated taxes?
Romney could have deliberately changed his 2011 income to appeal to people who think he’s a rich out-of-touch person who is unfit to lead this country because of how much money he makes. He could have cut his income in half to make it look like even rich people like him have tough times and he knows what it feels like to struggle. Or, he could have been so removed from his own finances that this idea of a number-crunching businessman has been a façade this whole time.
Either way, one this is for sure: there’s a $9 million question that’s going to haunt him until election day.