The returns also offered a window into the finances of the rich, complete with a Swiss bank account, investments in the Cayman Islands, and Social Security taxes for domestic help - all well within the law, Romney’s spokesman said yesterday. Romney declined to field questions from reporters about his returns.
Nearly all Romney’s income came from interest, dividends, capital gains, and other investment income, which is taxed at lower rates than wages and salaries for top earners. As a result, he paid about 15 percent of his income in taxes, a lower rate than some middle-class workers pay.
Many hedge fund and private equity managers - Romney’s former occupation - structure their compensation as investment income, so it is taxed at a 15 percent rate, rather than ordinary income rates of up to 35 percent on salaries. Romney disclosed yesterday that over the past two years he earned $13 million from Bain Capital, the Boston private equity firm he cofounded, and similar partnerships.
Democrats said they would redouble efforts to ensure that such income is taxed the same rate as regular wages and salaries.
“The fact that one of the leading Republican presidential candidates benefited to such a significant extent from this egregious loophole only further illustrates the need to address this issue once and for all,’’ said US Representative Sander Levin, a Michigan Democrat who has pledged to reintroduce legislation to change the tax treatment.
But Eric Fehrnstrom, a senior adviser to Romney, said Romney has met all his tax obligations. “He made a lot of money, he paid a lot of money to taxes, made a lot of charitable contributions, and paid 100 percent of the tax that was owed to the US government,’’ Fehrnstrom said.
Romney released his 2010 tax returns and preliminary 2011 returns under pressure from his rivals for the Republican presidential nomination. In recent weeks, Romney’s earnings and record at Bain Capital have been attacked furiously by his opponents, undermining what had seemed a clear path to the nomination.
