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. Mark from Louisiana

    I thought he wasn't going to release his income tax return until obama released his college records?

    January 17, 2012 03:57 pm at 3:57 pm |
  2. Gina

    Last year made $69000 and paid $29000 for taxes! ;-(

    January 17, 2012 03:58 pm at 3:58 pm |
  3. Dominican mama 4 Obama

    Butter My Butt And Call Me a Biscuit
    "Romney for the Millionaires"
    "Obama for the Millions"
    ------------------------
    I LOVE IT!!! Mind if I use it?!
    Your moniker is to DIE for, by the way!

    January 17, 2012 03:58 pm at 3:58 pm |
  4. Truth and Nothing But the Truth

    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...
    =======================================================================================
    You ignore, disregard or are just plain ignorant of the biggest aspect of capital investment: YOU RISK LOSING EVERYTHING. Just ask the stock and bond holders of the old GM that Obama screwed over royally by disregarding bankruptcy laws and handing the company to the unions.

    Most people in here spewing about this know little or nothing about it. It is all pent up rage generated by the lies and class warfare hat espeech of Obama and the Democrats. This country will be a third world nation without attracting and keeping capital investments in this country. Of course, that is the "level playing field" the Democrats long for. The level playing fild of poverty.

    January 17, 2012 03:58 pm at 3:58 pm |
  5. JM

    nrog – My town is currently issuing a bond to pay for a new high school. It's paying 2.75%. Why on earth would I ever invest my money into that bond if I have to pay 45%+ on that return? I'd be better off investing it in the highest rate of return investment I could find. Probably some place in China or Eastern Europe at the moment. Only reason the bond will be funded and the school built is because gains on it will be tax free.

    January 17, 2012 03:58 pm at 3:58 pm |
  6. Dadster

    Hopefully, now everyone realizes that the real reason to eliminate the last remaining 15% capital gains tax is so that they can make themselves wealthier. What other reason could there be? When President Bush cut the capital gains tax from 28% to 15%, it was supposed to spur investment and thereby create jobs. Instead, but only the recipients of the tax cut got richer. Job creation was a bust. The Republican presidential candidates, who ALL want to totally eliminate the capital gains tax, only purpose is to establish an all out money grab for themselves and their wealthy backers.

    January 17, 2012 03:59 pm at 3:59 pm |
  7. Mike

    It always puzzle me why "unearned income" (the term used in tax forms referring to interest and dividends) would be taxed at a much lower rate than "earned income" (income attached to actual labor and creation of value/wealth). It should be the other way around.

    January 17, 2012 04:00 pm at 4:00 pm |
  8. Ramrod

    The average guy pays 6.4% SoSec (FICA) flat tax plus 15 to 28% Income tax. Nice going rich Senators.
    I have to count my CD interest as income, taxed at "working" rate. Can you explain?

    January 17, 2012 04:01 pm at 4:01 pm |
  9. Rudy NYC

    Suppose that I were part owner of a company, which paid me an "income" every year. Suppose again that I actually work full time for that company. Is that income capital gains or is it earned income? All of the money that was invested did not belong to Mitt Romney. I do not see how he can legally call his commissions capital gains. I don't care what type of business you are running.

    January 17, 2012 04:01 pm at 4:01 pm |
  10. Jerry

    I don't understand why income from investments is only at 15% while income from savings is taxed at a possibly higher rate. Why not make all income, from work, savings, investments, etc. taxable equally?

    January 17, 2012 04:02 pm at 4:02 pm |
  11. AL in West Palm Beach

    Hey Romney,
    1. I have college loans... YOU DON'T.
    2. I have to actually WORK to get paid... YOU DON'T.
    3. I have to worry about paying my bills... YOU DON"T.
    4. I don't mind paying my fair share in taxes...

    TELL ME AGAIN WHY SHOULD YOU PAY LESS THAN ME?

    January 17, 2012 04:02 pm at 4:02 pm |
  12. John

    He ONLY pays 15%. I don't make very much and I pay more than 15%. And he claims that he wants to help us. Yeah Right!

    January 17, 2012 04:03 pm at 4:03 pm |
  13. Mike

    Whoa, did Romney just admit to campaign fraud? "Romney said he had both encouraged and raised money for his super PAC" By law he is not supposed to "coordinate" in any way with the SuperPACs.

    January 17, 2012 04:04 pm at 4:04 pm |
  14. Chris

    Ah, yes. The good ole' 15% myth. My wife (when she was my Fiancee') paid about 6,500 per year in taxes. Her returns were about 5,000 so, she "paid" about 1,500 per year in true taxes. I paid 42,500 in taxes last year. My "refund" was about 7,000. So, although my "tax rate" was "lower" than hers, to say that I pay "less" of a tax rate is a flat out lie. THAT'S the problem. People don't do any research. My wife's tax rate was only around 5% after her refund. Get a clue, people.

    January 17, 2012 04:04 pm at 4:04 pm |
  15. Andy

    It is a shame that CNN reports in this fashion and that so many people who don't invest don't understand that Mitt and others with investments like him are paying more in taxes than any of you. First, you are taxed on what you earn. Post tax, you invest. You are then taxed on the dividends or "capital gains". So many are ignorant of this FACT because they would rather HATE. Obama is spreading this hatred. If your solution is to raise capital gains rates then THINK. Who are you affecting. You destroy investment, you destroy business, you destroy your pensions, your own retirement. I pay the highest tax rate. I invest, and pay an additional 15% on top of that rate on whatever I am fortunate enough to get a dividend on. PLEASE, educate yourselves before falling into the trap of just looking at the one NUMBER.

    January 17, 2012 04:04 pm at 4:04 pm |
  16. Jslam

    So If I were to cut Mitt Romney's lawn for 100 dollars, shouldn't I receive a 15 dollar refund or a negative 15% tax rate from the federal government? After all, that money has already been taxed through both Bain Capital and Mitt Romney's personal income tax return.

    It goes to show that the double taxation argument is flawed since even regular earned income has already been taxed as it changed hands. If there is any problem the USA does NOT have, it is generating enough profits from corporate earnings.

    January 17, 2012 04:05 pm at 4:05 pm |
  17. Rudy NYC

    Truth somebody wrote:

    You ignore, disregard or are just plain ignorant of the biggest aspect of capital investment: YOU RISK LOSING EVERYTHING.
    -----------–
    You ignore the fact that the money being invested did not belong solely to Mitt Romney. Bain employees collected commissions from investing client's money. The clients recieved capital gains based upon the size of their investments. Meanwhile, people like Romney who worked at Bain recieved commisions.

    Mitt Romney earned a commission from Bain, but declared it as capital gains.

    January 17, 2012 04:06 pm at 4:06 pm |
  18. phearis

    Wish I was only paying 15%. I bet he paid 0% on his investments though. Must be nice to be rich.

    January 17, 2012 04:06 pm at 4:06 pm |
  19. gg

    how is this tax assignment work for ya?

    January 17, 2012 04:06 pm at 4:06 pm |
  20. JM

    If you want to lower your tax rate, save money and invest it. You don't have to go out and buy the Ipad 3 in April, the Ipad 2 will still be perfectly good.

    Or you could plant a money tree in your back yard like all the rich people do.

    January 17, 2012 04:07 pm at 4:07 pm |
  21. Seattle Sue

    Could this be the type of crap Occupy Wall Street is upset about?

    January 17, 2012 04:07 pm at 4:07 pm |
  22. Capital Gains Facts

    You ignore, disregard or are just plain ignorant of the biggest aspect of capital investment: YOU RISK LOSING EVERYTHING. Just ask the stock and bond holders of the old GM that Obama screwed over royally by disregarding bankruptcy laws and handing the company to the unions.
    =======================================================================================
    You actually don't risk losing everything. Many investments carry little or no risk, such as bonds or certain types of funds. A well-diversified portfolio should never be subject to much in the way of risk. Also, you conveniently leave out that you can declare a capital loss on investment as a tax deduction – meaning that even if you do lose money on your investment, you can get some of it back, courtesy of the US government.

    January 17, 2012 04:07 pm at 4:07 pm |
  23. ds

    So I have to give up 25% of my income because I work for a living. I think there are too many loopholes, they should be able to reduce the percentage that much and capital gains/investment isn't any more helpful to our economy than us working for those companies generating that revenue for the investors.

    January 17, 2012 04:09 pm at 4:09 pm |
  24. mk1

    Never forget that an unspoken position of all Republicans is to do away with the Capital Gains tax altogether. Guess what rate that would give Romney and people like him? ZERO. Talk about redistribution of wealth, this would compound the massive redistribution that has already taken place over the last three decades. Now these are the people who we really want as our leaders? I sure don't think so.

    January 17, 2012 04:10 pm at 4:10 pm |
  25. Darron R. Brown, M.D.

    I don't mean to sound glib, but as I doctor I work hard and make decent money. I also pay about 40% of my income each year in taxes. How do people making tens of millions of dollars annually pay so much less in taxes that I do?

    January 17, 2012 04:10 pm at 4:10 pm |
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