We now know that over the past two years, Mitt Romney has earned $42.6 million, mostly from investment income, paid $6.2 million in taxes and donated about $7 million to charity. By all accounts, he paid what he owed under the law. Though I have not had a chance to digest the more than 500 pages of documents the campaign has provided (which you can view here), my initial take is puzzlement that Romney didn't simply do this long ago to get the issue out of the way, because he has absolutely nothing to apologize for.
Liberals have seized on the fact that his effective tax rate was 13.9 percent in 2010 and estimated at 15.4 percent for 2011. The reason is that he earned most of his money from investments held in blind trusts, which is taxed at a lower rate of 15 percent. However, the capital gains tax rate takes into account the fact that income earned by investments is already subjected to a 35 percent corporate tax rate. If companies didn't have to pay that tax, then profits would be larger and investors would make more money that would be subject to taxation.
During a conference call with reporters, Romney's trustee who handles his investments, Brad Malt of Ropes and Gray, responded to media reports about a number of other aspects of his returns. Yes, Romney has some investments in the Cayman Islands, a noted tax haven, but he doesn't have offshore accounts there. The analogy Malt gave is that a person may invest in a foreign stock, such as Toyota, but that isn't the same as having a Japanese account. Also, given that his investments have been in blind trust since he was a governor, he doesn't have direct control over them.
Romney did have a Swiss Bank account, which Malt said he opened in 2003 for "diversification," but it was closed in 2010. During the time Romney held the account, he paid taxes on all interest as if it were a U.S. bank account.
Typically, liberal rhetoric on taxes makes it seem as if the wealthy are getting a free ride on the backs of middle and lower-income Americans who are doing all the work and are really paying the taxes. But to put things on perspective, here's what $3.2 million in federal taxes -- Romney's estimated 2011 burden -- pays for:
-- The monthly food stamp allowance for about 23,909 people.
-- The cost of educating 302 elementary and high school students.
-- The base salary (before bonuses and allowances) of 178 privates in the U.S. Army.
-- The federal contribution to the benefits of 636 Medicaid enrollees.*
In addition to his taxes, Romney has given around 16.4 percent of his income over the past two years to charity through his family charity, the Tyler Foundation. In addition to donations to the Mormon church, here's where else Romney and his wife Ann donated money: the Boys and Girls Club of Boston, the Center for the Treatment of Pediatric MS, the Dana Farber Cancer Institute, Homes for Our Troops, and the Inner-City Scholarship Fund, among others.
I may have my differences with Romney based on his governing record in Massachusetts, but I think his opponents would be barking up the wrong tree if they tried to attack him for his tax returns.
* To derive the Medicaid numbers, I looked at the Centers for Medicare and Medicaid services national health expenditure data, dividing $269 billion in total federal contributions by the 53.6 million beneficiaries. That puts the federal contribution per beneficiary at around $5,028.