Why Mitt’s Tax Summary Doesn’t Cut the Mustard

The Obama campaign views Mitt’s 2011 tax return, and the summary of returns from 1990-2009–released late this afternoon–quite skeptically. That’s no surprise, of course.  But, by providing only a summary for the bulk of years included, with a total average about what tax rate he paid over those 20 years–the Romney camp claims 20.20%–we can’t  determine how the number was arrived at. As Greg Sargent points on the Plum Line,

“The way [the Romney Camp did it] obscures the fact that [his] income may have fluctuated quite markedly from year to year. If Romney paid his lowest rates in a number of the higher income years, the overall 20 percent figure would overstate the rate he actually paid over the whole period. [Roberton] Williams, [a senior fellow at the nonpartisan Tax Policy Center], provided the following purely hypothetical example:

‘Let’s say you have 10 years in which you paid 13 percent in taxes, and 10 years in which you paid 27 percent. . . . If you average those rates, you’ll get an overall rate of 20 percent. But if the 13 percent years were high income years, and the 27 percent years were low income years, then his total taxes paid as a share of total income over the 20 years would be less, perhaps significantly less, than 20 percent.’ 

Yet in that scenario, the Romney campaign would be claiming, by its chosen metric, to have paid 20 percent. How realistic is it that Romney could have had far higher income some years than others?

‘You can be a person like Romney and have a highly fluctuating income year to year,’ Williams said. ‘Some years Romney’s income could be much lower than in other years. When you average just the rates, you can distort the rate you’ve paid relative to your income over the whole period.’

Williams concluded: ‘The only way we can know for sure what rate he actually paid is to see what his tax payment and his income was for each of the 20 years.’”

With that truth for context, I suggest the Obama campaign’s statement packs a potent punch, one that DEMs and the media ought to ask on the Romney tax issue (italics added are mine):

“Today’s release of Mitt Romney’s 2011 tax returns confirms what we already knew – that people like Mitt Romney pay a lower tax rate than many middle class families because of a set of complex loopholes and tax shelters only available to those at the top. Yet, Mitt Romney still wants to give multi-millionaires an additional $250,000 tax cut at the expense of middle class taxpayers who will see their taxes go up. While the tax return for the one year released today continues to mask Romney’s true wealth and income from Bain Capital, leaving the American people in the dark about critical details about his finances, it does confirm that he continues to profit from millions of dollars invested overseas. These types of investments, the use of tax loopholes, and the resort to foreign blocker corporations enabling him to reduce his U.S. tax obligations, all raise basic and still unanswered question – why does Mitt Romney not just release the full returns, instead of the bare summary he has provided of the last 20 years, so voters can make their own judgments about Mitt Romney’s finances? As Mitt Romney’s father said, candidates should release several years of returns, because one year could be a fluke. President Obama, Vice President Biden and nearly every other candidate in recent memory has met that test, but Mitt Romney continues to fail it.”

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