Paul L. Caron

Saturday, January 28, 2012

NY Times: Mitt Romney Paid More Taxes Than He Owed

New York Times, Romney Paid More Than He Owed, by Floyd Norris:

Mitt Romney’s tax returns tell us some things about him. They tell us a lot more about the sad state of the tax laws in this country.

When the candidate released his tax returns this week, the fact most noted was the low 14% effective tax rate paid by one of the wealthiest people in America, one with income of more than $20 million in both 2010 and 2011. Others were surprised to see how easy it was for Mr. Romney to effectively transfer millions of dollars each year to his children, tax-free, thus escaping estate and gift taxes.

But what really stands out is the mind-numbing complexity of tax laws, and about how hard it seems to have been for even the high-priced help Mr. Romney can afford to get things right.

In one case, the trustee for one of the Romney trusts sent two letters to the IRS electing to use an apparently irrelevant section of the tax code, and in the process misstated the facts involved.

That mistake did not affect the taxes owed, but another error was more significant. It appears that the return filed by that trust overstated capital gains realized by nearly $300,000, causing Mr. Romney and his wife to pay about $44,000 more in taxes than they owed.

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Are we sure that the Romney's over paid their "correct income taxes" for 2010 ? Upon reviewing their 2010 income tax return, there was no tax preparation fees listed as a deduction on their Schedule A. One has to wonder why PriceWaterhouseCoopers a) did not charge the Romney's for preparing the Romney's personal income tax return for 2009 prepared in 2010 which would have been a deduction on their 2010 return, b) missed the deduction (oops), c) billed and were paid from a Romney entity the preparation fees for preparing the Romney's personal income tax return or d) the Romney's didn't pay their tax prep fee for their 2009 return until 2011.

If the tax prep fees were paid from a trust which is considered a grantor trust, then of course, such fees would be deductible 2% miscellaneous deductions and included in the line item denoted as from Partnerhsips,S-Corporations, etc. but would be somewhat misconstrued as a deduction stemming from the operation of the grantor trust instead of a personal deduction of the Romney's.

This naturally raises the question, what other personal expenses of the Romney's might possibly be paid and deducted through Romney entities ?

Granted, the deduction for income tax preparation would be to no avail due to Alternative Minimum tax, but that still does not negate the fact that the Romney's possibly didn't pay to have their personal income tax return prepared or it was deducted through a Romney entity etc.

It is possible that PWC would have only charged $100 or at most $150 to prepare such a simple return (probably only 150 to 175 pages for 2009) and that is why the deduction is not listed.

Posted by: Factchecker | Jan 31, 2012 5:29:05 AM

Ammended return in 3...2...1...

Posted by: bill | Jan 29, 2012 1:35:05 PM

Did the NY Times ever feel the need to point out that John Kerry is "one of the wealthiest people in America"?

Posted by: zbarbera | Jan 29, 2012 8:17:27 AM

Am I the only one noticing the MSMs efforts to support Romney and vilify Gingrich?

I's almost as if the Obama administration and its allies WANT to run against Mitt and fear the far more Conservative challengers, regardless of the conventional wisdom of their "electability."

Very puzzling to me.

Posted by: James Bongard | Jan 29, 2012 8:01:36 AM

It's not a fact that is in any way important to me but is Romney really "one of the wealthiest people in America" or is the NYTimes overstating things a bit?

Posted by: Eric | Jan 29, 2012 7:58:30 AM

Odds of this story being the NYT headlines: 0%
Odds of this story being in section A: .01%
Odds of this story being anywhere easy to find: 4%
Odds of this story being hidden between the classifieds and the ads: 95.99%

Posted by: Georg Felis | Jan 29, 2012 7:04:10 AM

There! Romney's a bad manager of his own money! How can we expect him to manage the nation's finances?

Posted by: Roger Zimmerman | Jan 29, 2012 6:06:45 AM

What does it say about the tax code when high priced tax specialists, lawyers and the wealthy can't understand the laws?

Isn't there a general principle that laws that cannot be understood by reasonable people are of questionable legality?

Posted by: WarEagle82 | Jan 28, 2012 10:59:14 AM