Romney says his effective tax rate is 15%
January 17th, 2012
12:00 PM ET
3 years ago

Romney says his effective tax rate is 15%

Florence, South Carolina (CNN) – Mitt Romney said Tuesday he pays roughly a 15% effective tax rate on his income - an acknowledgment that the multi-millionaire pays a smaller percentage of taxes on his income than many middle-income Americans.

"It's probably closer to the 15 percent rate than anything," Romney told reporters when asked about his effective tax rate. "The last ten years my income comes overwhelmingly from investments made in the past rather than ordinary income or rather than earned annual income."

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The information came as his opponents ratcheted up pressure on the GOP front-runner to release his tax returns in a debate Monday night – a disclosure that is not required by law and one Romney has been reluctant to make. Some Americans of far more modest means pay a 15% marginal tax rate on income, while the highest tax bracket tops out at a 35% marginal rate. Because Romney's income comes primarily from investments, it is taxed at a much lower rate.

The candidate, a former chief of private equity firm Bain Capital, went a step further Tuesday and committed to releasing his tax returns in April if he were to become the GOP nominee.

"We'll wait until the tax returns for the most recent year are completed, then release them," he said.

Romney said he had donated the "little bit of income" he earned from his book, "No Apologies," and said occasionally he had been paid fees to speak at events.

The candidate was also elaborated on his views on super PACs, independent political action committees that can raise unlimited funds to advertise on behalf of a candidate. A campaign cannot share strategy with a super PAC.

Romney said he had both encouraged and raised money for his super PAC, and said both former Sen. Rick Santorum and former House Speaker Newt Gingrich had done so as well. He added that although he did not like the existence of super PACs, he would not "disadvantage" his campaign by not taking advantage of the process.

"I wish that law were not as it is. I wish we could just raise money for our campaigns instead of having to create super PACs," Romney said. "I think the whole idea of these PACs becoming larger than the campaigns themselves is a very bad idea."

Gingrich has faulted Romney for failing to publicly denounce attack ads aired by a super PAC supportive of Romney's candidacy, Restore Our Future.

In the press conference, Romney did defend some of the charges made against other candidates by Restore Our Future, including a dig at Gingrich for ethics violations and for his participation with former House Speaker Nancy Pelosi on a climate change awareness initiative, and an ad that charged Santorum supported allowing felons to vote.

"I hear that Rick Santorum is very animated that the super PAC ad says that he is in favor of felons voting, well he is!" Romney said. "What's he missing? That's his position."

The press conference was not without several light moments. After walking to the microphone, Romney first called on his wife, Ann, who had been talking with reporters.

"Where'd the skinny jeans go?" she asked her husband, who did not answer the question.

Romney also weighed in on a campaign commercial aired by Comedy Central comedian and host Stephen Colbert. The ad jokingly calls Romney a "serial killer."

The candidate said he had not seen the ad but admitted of Colbert: "he has a tradition of being able to touch my funny bone."

CNNMoney's Charles Riley contributed to this report.


Filed under: 2012 • Mitt Romney • Taxes
soundoff (194 Responses)
  1. Char

    The guy lives off of investment income. What a life!

    January 17, 2012 03:32 pm at 3:32 pm |
  2. Peter

    I am 54 years old. My first job was delivering the paper when I was 12. I have worked all my life. I didn't have opportunities to go to the best schools. I wasn't able to afford college because my father had died and my mother was too sick to work and I had 4 sibblings to care for. I still work hard at my age and will probably need to work to the day I die. I've watched people I've worked hard for get very rich. It feels like the fruits of my labors are enjoyed more by others than me. I can't afford healthcare and dread the coming days when I will need it. I pay a higher percentage of my meek income in taxes than Romney pays on his fortune. I don't feel that I've been treated fairly. And if I complain, I am branded a lazy person who wants entitlements. But you know what? Yes, I do. I want what I'm entitled to.

    January 17, 2012 03:33 pm at 3:33 pm |
  3. The Real Tom Paine

    If his "income" is being derived from investments and not salary, then the 15% is correct. If Romney had simply said at the outset that he lives off the interst derived from hsi investments, he would have been fine. Romney still comes off as smug and evasive, even when he is providing a truthful answer. Its not the legality of what he is doing, its the manner in which he tells it. He appears tone-deaf, and no amount of explaining can change that.

    January 17, 2012 03:35 pm at 3:35 pm |
  4. MiddleClassBusinessOwner

    @Field1stSGT – How very ignorant of you. And you continue to prove why we consider republican voters uneducated and brainwashed crazies.

    January 17, 2012 03:38 pm at 3:38 pm |
  5. jim

    i'm curious to see the tax rate he paid when he earned hundreds of millions as a gordon gecko, buying corporations, laying people off, selling off the assets, getting the government to eat the pension liabilities. nice gig–and exactly what people are protesting about.
    why not show his tax returns? this isn't like the birthers and obama, which was about legitimacy and/or outright racism.
    mitt's utter cluelessness is astonishing. "only $375K in speaking fees. not much."

    today just defined the entire 2012 race.

    January 17, 2012 03:38 pm at 3:38 pm |
  6. Caibero

    People, don't be ridiculous, this is investment income tax for positions held longer than 1 year, not earned income tax. This encourages long term investments in US companies. Don't compare this to ordinary income that a secretary makes. Don't get me wrong, I believe the Tax code needs to change, it's way too complicated and that is our governments fault. My employer makes over $1M per year, he also has 10 employees that can then support the families they have, don't bite the hand that feeds you, although maybe most of you are gov't employees.

    January 17, 2012 03:39 pm at 3:39 pm |
  7. canucken

    As with most others here he pays a far lower rate than my wife and I and I consider us very middle class. I'm going to guess that he paid zero in tax on the actual investments as well.

    January 17, 2012 03:39 pm at 3:39 pm |
  8. mdmikeh

    There should not be any problem with Romney paying a 15% tax rate and that goes for Warren Buffet. These people are not receiving any salary to be taxed at the higher income tax rates, if they are it is a marginal amount of income. Their income is made primarily by taking their wealth, investing in the free market at significant risk, and then realizing an income off those investments.

    Romney could just put his wealth in an account drawing no interest, and then guess what...he pays zero tax. However, he has chosen to invest money that has already been taxed once as income and is earning dividends as income from those investments for which he pays 15% on long-term investments and 25% on short-term investment.

    For us normal people that don't have millions of dollars, what would be fair for us? Should the money I invest in mutual funds be taxed again at my normal income tax rate when I sell or should it be taxed as capital gains? Without an incentive to invest why do I take the risk?

    January 17, 2012 03:39 pm at 3:39 pm |
  9. Noodle Nose Johnson

    What's hilarious/sickening is watching posters like Truth and nothing but my delusions and Fair is farce try to defend a Multi-millionaire when it's fairly obvious they aren't anywhere near the top 10% of wage earners. They're actually defending wealth inequality as a good thing.

    From Wikipedia – "The 400 highest tax payers in the nation had gross annual household incomes exceeding $87,000,000*. Household incomes for this group have risen more dramatically than for any other. As a result the gap between those who make less than one and half million dollars annually (99.9% of households) and those who make more (0.1%) has been steadily increasing."

    *That's Mitt Romney territory. And he wants a tax cut.

    January 17, 2012 03:40 pm at 3:40 pm |
  10. joe800

    ...this is why I dont understand why a person who doesnt sign their own paycheck, ie: the OWNER, could vote repugnican...why oh why do you think Mitt Romney or any of the republicans have anything in common with you?..you dont...you dont even count in their minds...so why would you entrust them to do whats best for you?...I for one sign my own paycheck and assign myself a vehicle and pay its gasoline and insurance and take the maximum 25% in SEP contributions which I get to take right off the top of my businesses profit, which sometimes means I have no profit...and I'm small potatoes ... imagine what you can do with $26 million!!!...

    January 17, 2012 03:41 pm at 3:41 pm |
  11. SOUTHERN HOTTIE

    Whatever. He still looks like an idiot wearing those mom jeans of his.

    January 17, 2012 03:41 pm at 3:41 pm |
  12. Nick

    I'm sure the left is all agog that his rate is 15% – never mind that the rate of most of the senior people in government is probably the same or less (ask Pelosi – I'll bet the answer will be enlightening). Why do you think most politicians enter office in debt and wind up millionaires? Most of Obama's income is probably from investments as well – but the left won't attack that, will they?

    January 17, 2012 03:43 pm at 3:43 pm |
  13. JM

    Your local town, when it wants to build a new school, etc, needs to issue a bond to come up with the capital. The town can not afford to pay people a high rate of return, so to give people incentive to invest at low rates of 2.5 – 3.5% return, you have a tax break. Tax free bonds make up large portions of people's portfolio who are in the highest tax brackets., Yes it dramatically lowers their effective rate, but it puts a lot of funding into local projects. Take that away and things will get way worse then they are now.

    January 17, 2012 03:43 pm at 3:43 pm |
  14. Bryan

    "Brad

    To all the whiners in the comments: Romney at one point already paid taxes on this income, geniuses, probably at the 35% level. Now he's being double taxed on capital gains, at a lower rate (as it should be). Investments are where money is made, so why don't you elect someone who will slash income taxes and allow you to also take advantage of that extra cash by getting it into investments? Then YOU TOO can be called evil, like anyone else who is smart enough to invest their money."
    Yes, all you average, middle class people, take that extra money and invest it in a business. Don't pay your mortgage or healthcare or put your kids through school or any of the other things that life throws at you. What a stupid comment.

    January 17, 2012 03:43 pm at 3:43 pm |
  15. nrog

    John says: "It should be zero percent. This money was already tax at the higher rate once when it was initially earned. Why does the media insist on keeping the public ignorant?"

    What are you talking about? The original investment was presumably after-tax money, but the earnings (gains) on that investment have never been taxed. Thanks to the coddle-the-wealthy tax policies, gains are taxed at a much lower rate than ordinary income. Both forms of money are income and both should be subject to income tax. The difference is that ordinary income derived from WORK actually requires WORK, whereas income derived from investments requires no work at all – just sit back and collect. If anything, such gains should be taxed at a higher rate than ordinary income, or the same rate, but not a lower rate. I say this knowing that it would cost me money...

    January 17, 2012 03:46 pm at 3:46 pm |
  16. S.positive

    President Obama will win in Nov 2012. Thank God that the reasons are all coming together. The gop that destroyed this country in 2008 will finally be kicked hard in the butt... Stupid

    January 17, 2012 03:47 pm at 3:47 pm |
  17. Anonymous

    So this means most of us have more "skin in the game" percentage-wise than Flipper the Robot does. Buh-bye, Flipper.

    FLUSH!

    January 17, 2012 03:47 pm at 3:47 pm |
  18. Dominican mama 4 Obama

    @FIELD1stSGT
    You people couldn't even receive the welfare you're on if it were not for them. When you get Obama to destroy them then who is going to pay your lazy rears way.
    ------------------------
    I guess you cutting "us" a check on the 1st of the month is out of the question then, field sgt sir?
    bwahahahahahaha!!!!!

    January 17, 2012 03:48 pm at 3:48 pm |
  19. A Texan

    Ranks right up there with Warren Buffett............ I`m sure Mitt`s employees pay a higher tax rate just like Warren`s !!!!!!! Just proves again, the rich benefit most from the tax system..................

    January 17, 2012 03:49 pm at 3:49 pm |
  20. Grant in Nashville

    I didn't realize that 375K/yr was "not that much" money. Could this guy be more out of touch with the average American? I know he only visits us occasionally from his many mansions but really......

    January 17, 2012 03:49 pm at 3:49 pm |
  21. Matt

    By John's dumb argument "his money has already been taxed" then my money (a civil servent wage earner) should bot be taxed because it is tax money. R's and Mitts misleading repeated pattern is to sell the tax cuts and ignore any specific need for program/benefit cuts.

    January 17, 2012 03:50 pm at 3:50 pm |
  22. gino

    Brad: Mitt Romney never paid 35% in taxes in his whole life–even when he put the dog up on top of the car.

    January 17, 2012 03:51 pm at 3:51 pm |
  23. SilverHair

    What about retired military pensions taxed at full 'working class' rate? Insane for a candidate to flout his 'low' rate because of position and privilege.

    January 17, 2012 03:53 pm at 3:53 pm |
  24. gino

    Sorry. I meant brain Bryan (or Bain Bryan) not Brad. In any case, I pay and have always paid taxes at a higher rate than Mitt. That's because he is rich and i am not. That's the vulture capitalist scam and getaway.

    January 17, 2012 03:55 pm at 3:55 pm |
  25. Orchid333

    –––––––
    Nick
    I'm sure the left is all agog that his rate is 15% – never mind that the rate of most of the senior people in government is probably the same or less (ask Pelosi – I'll bet the answer will be enlightening). Why do you think most politicians enter office in debt and wind up millionaires? Most of Obama's income is probably from investments as well – but the left won't attack that, will they?
    –––––––––

    No, we won't attack Obama for it because he's actually trying to help the middle class, not give himself a tax break. Big difference. Romney is a hypocrite – he claims he cares about the middle class and getting jobs to open up in this country, yet he sits on the side of the aisle that refuses to pass a jobs bill that would put thousands of people to work. So many people blame Obama for the slow economic growth, but look at the Republican House that absolutely REFUSES to put the smallest surtax on the rich to pay for a Jobs plan that'll put thousands of people to work. Dumb.

    January 17, 2012 03:57 pm at 3:57 pm |
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