Mitt Romney responded to months of political pressure Friday by making public his most recent tax return and limited information from previous years, asserting that he had paid a double-digit federal income tax rate for more than two decades.
Romney's return for 2011 showed that he paid an effective federal income tax rate of 14 percent last year, or a little more than $1.9 million on adjusted gross income of about $13.7 million. A letter from his accountants said his tax rate from 1990 through 2009 had never fallen below 13.66 percent but did not disclose the amount of tax paid. Romney's 2010 return, which he made public in January, showed that he paid a rate of 13.9 percent.
Romney's tax return for last year showed just how sensitive a political matter his wealth and tax rate have become. In a bit of reverse financial engineering, he and his wife, Ann, gave up $1.75 million worth of charitable deductions, boosting his tax payments significantly. Had he claimed all the deductions he was entitled to in 2011, his effective rate could have dipped to near 10 percent, contradicting his past assurances that he had never paid below 13 percent.
But forgoing the full deductions available to him put him at odds with his own past assertions that he had never paid more taxes than he owed. Romney has previously said that paying more taxes than required should disqualify him from becoming president.
"I don't pay more than are legally due, and
Romney had previously pledged to disclose his 2011 return before Election Day, and his campaign said it was filed Friday with the Internal Revenue Service. His aides appear to have judged that any political harm from releasing the new documents -- made public Friday afternoon -- would best be timed for the end of a week that had already been among the most difficult of his campaign.
While the release of some figures for the previous two decades went beyond what Romney had previously signaled he would be willing to disclose, it remains impossible to get a complete picture of his tax liabilities from those years without his returns for that period. Democrats quickly pounced on Romney's decision to release only average figures for his 1990-2009 returns, leaving many details of his finances and tax planning unclear.
In a statement, Stephanie Cutter, the deputy campaign manager for President Barack Obama, said Romney "continues to fail" the test of full disclosure by releasing only a summary of his earlier returns. Harry Reid, the Senate majority leader, who had repeatedly alleged that Romney paid no taxes for a decade, did not repeat his claim Friday -- but did not back down, either.
"When will the American people see the returns he filed before he was running for president?" Reid said in a statement. "Gov. Romney is showing us what he does when the public is looking. The true test of his character would be to show what he did when everyone was not looking at his taxes."
The Romney campaign took questions about the new documents only on email, and a memo from his lawyer, R. Bradford Malt, left unanswered questions that have swirled about Romney's overseas income, foreign tax credits and use of sophisticated corporate structures abroad to minimize his tax burdens.
A campaign spokeswoman did not respond to questions about which years Romney or the family trusts had filed separate forms with the IRS disclosing their foreign income. Disclosing those forms would reveal whether Romney had over the years declared all of his foreign income to the IRS in a timely manner.
The summary of his returns for the years before 2010 said the Romneys had owed both federal and state taxes in each year between 1990 and 2009 and had paid an average effective federal income tax rate of 20 percent of their adjusted gross income.
But accounting experts cautioned that without seeing the actual returns it was impossible to gauge Romney's actual tax burden. The campaign declined to divulge the minimum dollar amount of Romney's federal income tax obligations during those two decades.
Citizens for Tax Justice, a liberal-leaning research group, said Friday that by including in the average the years 1992 through 1997, Romney's accountants skewed his average rate upward because investment income -- the overwhelming source of Romney's wealth -- was taxed at nearly double the current rate of 15 percent. In addition, the family appeared to defer other tax deductions into future years, a move that would give Romney further options -- all of them legal -- to adjust his effective federal tax rate going forward.
In an amended return also released Friday, Rep. Paul Ryan, Romney's running mate, disclosed that he and his wife had initially failed to report $61,122 in income from 2011. He said the failure was inadvertent. The change raised their total income to $323,416 and increased their taxes by $19,917 to $64,674, or 20 percent of adjusted gross income.
They owed a penalty of $59 for the original underpayment. The Ryans explained that they had overlooked their income from the Prudence Little Living Trust. Little, who died in 2010, was Janna Ryan's mother.
Some elements of Romney's finances became more opaque in 2011. Taxable wages for household employees, which reached $20,603 for four people in 2010, were not included on the 2011 return. Instead, the family made those payments through a payroll company that filed its own return.
Malt, who manages the family's trusts, also disposed of politically sensitive investments while Romney campaigned for president, particularly in China. The 2011 tax returns his campaign released Friday showed that Romney's family trusts had invested in shares of a Chinese-owned state oil company and dumped those investments this summer, as Romney's anti-China rhetoric heated up on the campaign trail.
Romney's trusts also hedged against the dollar: Malt invested in a derivative that would profit if the dollar fell against a group of foreign currencies. He also put some of the family's money in derivative securities linked to the Japanese stock market and to an index that includes stocks in every major country except the United States.
In 2009 and 2010, the W. Mitt Romney blind trust invested $77,262 in shares of CNOOC Ltd., the Chinese state-owned oil company, and Industrial and Commercial Bank of China. On Aug. 10, 2011, as Romney was emerging as a harsh critic of China, the shares were sold, producing a profit of $8,138, as the trust made money on the oil company and lost money on the bank.
Romney's campaign has repeatedly criticized Obama for failing to take a tough line against Chinese trade practices. After Obama this week announced new trade actions against China, Romney took credit for forcing his hand.
Romney's 2011 income puts him among Americans who will likely pay far higher Medicare taxes next year, thanks to Obama's health care law, which Romney has vowed to repeal.
Bloomberg News contributed to this story.