Romney Cut Deductions on 2011 Taxes to Maintain Campaign Pledge.
Romney’s accountants had to slice out legitimate deductions to meet a campaign pledge. Daniel Gross explains.
Now we know why it took so long for Mitt Romney’s accountants to prepare his 2011 taxes. As his financial trustee, R. Bradford Malt, explained to me in an interview last week, they had to wait until all the partnerships Romney owns—and all the partnerships that those partnerships own in turn—filed their financial data before getting to work. Then they had to tally all Romney’s deductions. And then, it turns out, they had to reverse-engineer the tax return so that it conformed with Romney’s political rhetoric.
That’s low. But critics suspected that in prior years he had paid even less. Sen. Harry Reid said that someone had told him that there were years in which Romney paid no taxes at all. And that, Reid and others charged, was one of the reasons Romney was reluctant to release tax returns before 2010. Romney rubbished these charges, and in August stated emphatically that he had never paid an effective tax rate of less than 13 percent of his income.
That must have caused some heartburn among the team of auditors doing Romney’s 2011 return. Here’s why. Before releasing the whole shebang, the Romney campaign Friday afternoon released some talking points about Romney’s 2011 return.
They included the following: in 2011, the Romneys had $13,696,951 in income, mostly from investments. They paid $1,935,708 in taxes, giving them an effective tax rate of 14.1 percent. The Romneys donated $4,020,772 to charity—nearly 30 percent of their total income, which is very impressive indeed. Next, however, trustee Malt notes that “the Romneys claimed a deduction for $2.25 million of those charitable contributions.” In other words, they didn’t take a deduction for nearly $1.8 million in charitable donations— donations for which they would have been perfectly entitled to take deductions. If the Romneys’ income were taxed at the 15 percent rate levied on investment income, that means the Romneys needlessly paid an extra $270,000 in taxes. If their income was taxed at the top marginal income tax rate of 35 percent, that means they needlessly paid an extra $630,000 in taxes.