DENVER – When Mitt Romney hastily called a press conference in South Carolina, he planned to talk about Medicare, even bringing out a white board on which he attempted to simplify the contrast between his plan and President Obama’s.
But that topic was eclipsed by what Romney said about his tax returns in a response to a reporter’s question on the subject at what was the GOP presidential candidate’s third media availability of the week.
Romney, who’s refused to release more than two years of incomplete tax returns, told reporters that he’s examined his tax returns going back a decade.
“Every year, I’ve paid at least 13 percent,” he said, in reference, it seemed, to his effective federal income tax rate.
The comments, perhaps meant to put the nagging issue to rest, served as catnip for the Obama campaign, eager to return the issue to the fore.
“Given Mitt Romney’s secrecy about his returns, coupled with the revelations in just the one return we have seen to date and the inconsistencies between this one return and his other financial disclosures, he has forfeited the right to have us take him just at his word,” said Lis Smith, a spokeswoman for the Obama campaign.
It’s the first time Romney has addressed the issue since a still unsubstantiated attack from Senate Majority Leader Harry Reid, D-Nev., that Romney paid no taxes in some years, presumably by using offshore tax shelters and other legal accounting measures.
“I just have to say, given the challenges that America faces – 23 million people out of work, Iran about to become nuclear, one out of six Americans in poverty – the fascination with taxes I’ve paid I find to be very small-minded compared to the broad issues that we face,” Romney said.
But a CU law professor who specializes in tax law wrote Thursday that, in his view — and words — Romney’s claim is “BS.”
“What Romney’s saying is technically true, but it’s misleading,” Victor Fleischer told FOX31 Denver. “The reason it’s misleading is because it’s 13 percent of what?
“Of his taxable income, that may be true. But you can have a lot of economic income that isn’t taxable and Romney has shown himself to be quite sophisticated in keeping his taxable income low even as his economic income remains high.
“He’s got interests in a lot of different investment stocks, and he can basically choose when he wants to recognize income from those funds. So he can use capital losses to offset capital gains and keep his taxable income low.”
According to Fleischer’s blog, Romney’s claim of paying at least a 13 percent tax rate could be literally true only because the U.S. method of tax accounting doesn’t calculate economic gains until those gains are realized through a sale or some other disposition
“When you have a wide portfolio of investments, you can have a good year, but still not have a lot of taxable income, as long as you sell some losers as well as some winners,” Fleischer explained to FOX31 Denver. “That appears to be what Romney did in 2009, paid tax on whatever income he had, but it doesn’t mean he paid a lot.”
The capital loss carry-forward on Romney’s 2010 return, which the candidate has made public, suggests, at least to Fleischer, that he took enough losses to keep his overall taxes low, despite making millions of dollars.
That, the tax expert believes, is why Romney has refused to release more of his tax returns — because the millionaire’s relatively small percentage of taxes paid would alienate most voters.
“Romney holds himself out to be a good presidential candidate because of his business experience,” Fleischer told FOX31 Denver. “But his business experience and personal financial dealings show someone who favors the rich. He’s someone who has taken full advantage of a tax system and loopholes that favor the wealthy; and he shows no desire to fix the loopholes that he personally has taken advantage of.”