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Under pressure from rivals to release his tax returns, Mitt Romney said on Tuesday that he paid a tax rate approaching 15% on his millions of dollars in annual income.
His tax rate was “probably closer to the 15 percent rate than anything,” Mr. Romney said at a campaign stop in South Carolina, noting that most of his income has come from investments and not from salary. He also characterized as “not very much” the $374,327 he earned in speaking fees last year, though that sum would itself catapult most American families into the top 1% of the country’s earners.
His remarks drew criticism from the Obama administration and Republican rivals and will cement Mr. Romney’s place as an emblem of the national debate over taxation and income inequality.
In acknowledging that most of his income comes from investments, Mr. Romney underscored a fact likely to figure prominently in attacks from Democrats in the coming months: He is among the small percentage of wealthy Americans who have benefited enormously from shifts in federal tax policy that have pushed federal tax rates on investment income well below the top 35% rate for wages and salaries.
Mr. Romney probably pays a lower overall rate than many other wealthy Americans, who typically take home more income from salaries and wages than does Mr. Romney.
Like other people who amass wealth at hedge funds or private equity firms, Mr. Romney earned much of his money at Bain in the form of “carried interest,” a share of the profits earned by investors in Bain funds, which federal rules treat as capital gains taxed at a 15% rate.
The Romneys also derive significant income from other investments and mutual funds.
During 2010 and the first nine months of 2011, the Romney family had at least $9.6 million in income, according to a financial disclosure filed in August.
Mr. Romney’s fortune of between $190 million and $250 million makes him one of the wealthiest men to run for President.
As a candidate, Mr. Romney has also advocated tax policies that would benefit people who, like him, derive most of their income from investments. Assuming Congress does not act to extend the Bush-era tax cuts, the rate for capital gains income is set to return to 20% for the 2013 tax year, while the rate for dividend income will jump to 39.6%. In his economic plan, Mr. Romney calls for making permanent the Bush-era tax cuts on capital gains and dividend income, keeping them both at 15%.
Via The New York Times.