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Romney: My Secret Tithing Makes My Real Tax Rate 50 Percent

August 25, 2012

By every indication, Mitt and Ann Romney are completely committed and deeply dedicated to each other. Nevertheless, they really need to get their lines straight, especially on the subject of their mysterious tax returns. Last month, Mrs. Romney protested that "We give 10% of our income to our church every year. Do you think that is the kind of person that is trying to hide things or do things?" But in a new interview in Parade magazine, Mitt insisted that his tithing shouldn't be public.

As it turns out, Mitt Romney might want to check the video of his own past statements on the topic. After all, the same man who said that his charitable contributions to his LDS church shouldn't be politicized has also repeatedly claimed they make his paltry tax rate "really closer to 45 or 50 percent."
Mitt's on-again, off-again reticence regarding his church donations resurfaced in a pre-Republican convention fluff piece published by Parade. As the Salt Lake Tribune reported:

Mitt Romney says in a new interview that one of the reasons he's distressed about disclosing his tax returns is that everyone sees how much money he and his wife, Ann, have donated to the LDS Church, and that's a number he wants to keep private.
"Our church doesn't publish how much people have given," Romney tells Parade magazine in an edition due out Sunday. "This is done entirely privately. One of the downsides of releasing one's financial information is that this is now all public, but we had never intended our contributions to be known. It's a very personal thing between ourselves and our commitment to our God and to our church."

Make that a personal thing between the Romneys, their God, their church and the millions of Americans who think the Bain Capital tycoon doesn't pay nearly enough in taxes to Uncle Sam.
In January, Mitt Romney reluctantly admitted that he paid under 15 percent in federal taxes, a share smaller than many middle class families. Given the horrible appearances for a man who claims to be part of "the 80 to 90 percent of us" who are middle class, Team Romney set out to polish Mitt's tax turd. As Romney spun it to Jorge Ramos of Univision on January 25:

Well, actually, I released two years of taxes and I think the average is almost 15 percent. And then also, on top of that, I gave another more 15 percent to charity. When you add it together with all of the taxes and the charity, particularly in the last year, I think it reaches almost 40 percent that I gave back to the community. One of the reasons why we have a lower tax rate on capital gains is because capital gains are also being taxed at the corporate level. So as businesses earn profits, that's taxed at 35 percent, then as they distribute those profits as dividends, that's taxed at 15 percent more. So, all total, the tax rate is really closer to 45 or 50 percent.

Romney restated the point during a GOP debate in Florida. He did the math for Wolf Blitzer and Newt Gingrich:

"My taxes plus my charitable contributions this year, 2011, will be about 40 percent."

To drive the point home, the Romney campaign web site proclaims that "a number of key points should be kept in mind." Among them:

Second, the Romneys take to heart "to whom much is given, of him shall much be required." Accordingly, they have been extraordinarily generous in their charitable giving, donating over $7 million from 2010-2011, averaging over 16% of their income.

Put off by the "small-minded" 63 percent of Americans who believe he should release more of his tax returns, just last week Romney announced that he never paid less than 13 percent in taxes (which ones he didn't say) over each of the last 10 years. Once again, Mitt insisted that get credit for the dollars donated to the LDS:

"Every year, I've paid at least 13 percent, and if you add, in addition, the amount that goes to charity, why the number gets well above 20 percent."

Not to the U.S. Treasury it doesn't.
Now, millions of Americans give to their houses of worship each year. Religious donations represent far and away the largest share of Americans' charitable giving. (It also explains why red-staters give a larger share of their income to charity. But if faith-based donations are excepted, blue-state Americans are the bigger donors.) But Mitt's squeamishness about his sizable donations isn't so much about who is receiving them, but what they contain.
For the former bishop and Boston "stake president," most of his charitable giving is in the 10 percent tithe required by his church. As the AP explained:

Romney reports he will give a total of $4.13 million to The Church of Jesus Christ of Latter-day Saints over two years as part of his overall charitable donations. The former Massachusetts governor reported income of about $43 million for the two years. Separately, over the past decade, Romney and his wife, Ann, have given more than $4.7 million to the denomination through the Tyler Charitable Foundation, a multimillion-dollar trust the couple leads.

But as ABC News documented earlier this year, "the private equity giant once run by the GOP presidential frontrunner carved his church a slice of several of its most lucrative business deals, securities records show, providing it with millions of dollars worth of stock in some of Bain Capital's most well-known holdings." In its article "In Bain deals, Romney gave stock to Mormon church," Reuters explained the massive savings Mitt likely reaped on his tax bill as a result:

Tax analysts said the donation method used by Romney and Bain generally worked like this:
Romney was eligible to invest in the stock of companies that were being restructured by Bain. Romney and other Bain investors usually were able to purchase the stock at very low prices.
Through the years, such stock may appreciate in value, sometimes considerably.
The analysts said that if Romney and others at Bain got a stock cheap and eventually donated it to a church or charity without cashing in the stock, then they could get two tax benefits.
First, they would not have to pay capital gains tax on the appreciated value of the stock, which they would have to do if they sold the stock and either pocketed or donated the proceeds.
Second, they might be able to deduct all, or at least part of, the value of the donated stock from their taxable income.
Such a move can save wealthy donors millions of dollars, the analysts said.

Now, Mitt Romney is hardly alone among the wealthy in relying on this device. But he is alone in both running for President in 2012 and claiming he deserves public credit for "giving back to the community" in ways that he refuses to discuss. (Regardless, that is no substitute for paying your fair share to the government of all the people in the United States, especially when your campaign slogan is "Believe in America.") He can't have it both ways. Besides, his wife Ann already said that "you should really look at where Mitt has led his life and where he's been financially" and boasted that "you have to understand is that Mitt is honest, his integrity is, is just golden."
As Mitt Romney prepares to accept his party's nomination for President at the Republican National Convention this week in Tampa, on one point regarding his LDS giving he and his wife are on the same page. Asked by Parade "How has tithing [the Mormon practice of giving 10 percent of one's income to the church] shaped your view of how we treat each other?" Mrs. Romney responded:

"I love tithing. When Mitt and I give that check, I actually cry."

"So do I," Mitt answered, "but for a different reason."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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