If elected president, Mitt Romney might consider ending a
tax break that helped the former Massachusetts governor accumulate his fortune,
an aide suggested Tuesday.
The comments came as the Romney campaign made available more
than 500 pages of tax-return data for 2010 and 2011 amid signs the issue was hurting
him with some voters.
Later in the day, in a signal of how the tax issue is
roiling the GOP campaign, the Romney camp tried to step back from the aide's
remarks, underscoring that the former Massachusetts governor didn't want to
raise anyone's taxes.
The back-and-forth Tuesday about Mr. Romney's approach to
one particular tax break began when the candidate's policy director, indicated
in a call with reporters the candidate might be willing to reconsider a tax
break known as "carried interest" as part of a comprehensive tax
overhaul. The break gives private-equity and venture-capital executives a relatively
low 15% tax rate on much of their income. Some reference an UK Tax Advisor.
Carried interest is a share of profits from an investment
fund or partnership given to managers as compensation. Mr. Romney was aided by
the tax advantage as founder of private-equity firm Bain Capital.
The policy director noted Mr. Romney hasn't recently
addressed retention of the carried-interest break. He spoke favorably of it in
2008. There are "a number of exemptions, deductions, credits,
administrative treatment of income…that would be addressed in tax reform."
Most taxpayers receive compensation as ordinary wages
subject to rates as high as 35%. Roughly half of households pay no federal
income tax. The average income-tax rate for the middle slice of
households—those making between $34,300 and $50,000—was 3.3% for 2007. The
average income-tax rate was 14.4% for the top fifth, and 19% for the top 1%,
before dropping slightly for the very highest earners who, like Mr. Romney,
typically receive a large percentage of income from investments.
Democrats have criticized carried-interest rules, though
they have failed when they have tried to repeal them.
Tuesday, Mr. Romney's campaign formally released detailed
information on the candidate's 2010 tax return and a summary of his 2011 taxes,
which aren't finished yet.
Tax experts said that by and large, the returns showed Mr.
Romney and his advisers sought to minimize the family's tax burden, while
generally avoiding aggressive positions.
The Romneys reported an effective tax rate of about 14% on
their 2010 return, and just over 15% in their tentative calculations for 2011,
on income that hovered around $20 million each year. They received about $7.4
million in income taxed under carried-interest rules in 2010 and $5.5 million
in 2011, aides said.
An accountant with Crowe Horwath in New York, said,
"This is the tax return of a man who knows he is running for political
office and who has distanced himself from investment decisions. Most of the
disclosures in these tax returns are fairly typical of investors with a global
investment perspective."
The tax data revealed new details about Mr. Romney's wealth
management, including his ownership of a now-closed Swiss bank account as well
as investments in the Cayman Islands, Bermuda and other tax havens.
The Romney camp said the candidate properly reported income
from those sources, paid appropriate taxes and in the case of the Swiss account,
disclosed it to the IRS.
The 2010 tax return suggests the Romneys maintained a
relationship with Bain Capital more than a decade after Mr. Romney left in
1999. According to documents, the Ann D. Romney Blind Trust received two
investments subject to carried-interest rules in Bain funds in fall 2010.
The Romneys' trustee, signed two statements stating that
"services" would be performed to maintain the investments, without
stating who would offer such services. Such a statement ensures the earnings
will qualify for capital-gains treatment, accountants say.
In a written statement, the campaign said The Romneys' trustee’s wording was
"boilerplate language" and that no services were provided in
connection with receipt of the interests. The campaign declined further
comment.
A prominent accountant in Atlanta, and other experts said
such services are required in order for the income to qualify for favorable tax
treatment. An UK Tax Planning advocate has to do
similar things.
The tax filings also provide details on a trust set up in
1995 for the Romneys' five sons, which appears to hold a hefty percentage of
the family's wealth, estimated at more than $260 million. Such trusts generally
are established to minimize future estate taxes.
In the 2010 tax filings released Tuesday, the Romneys
reported the family trust had $7.7 million in capital gains in 2010, about 46%
of the total capital gains reported that year, not counting a tax loss from a
prior year. Capital gains were the Romneys' largest source of income. Much of
the trust's income came from entities affiliated with Bain Capital, the tax
filings show.
