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From humble roots to top of income ladder

Warren, Brown release tax returns; Earnings become key in Senate race

David L. Ryan/Globe Staff

Scott Brown, on a tour of Roslindale Village businesses Friday, reached out to Jean Reilly.

Tax returns released Friday by Republican Senator Scott Brown and his likely Democratic challenger, Elizabeth Warren, show both have generated hundreds of thousands of dollars in income in the last several years, despite campaigns that play up their humble roots.

Warren and her husband, fellow Harvard professor Bruce Mann, earned an annual average of more than $845,000 over the past four years, and Brown and his wife, Gail Huff, a television journalist, earned an average of nearly $428,000 over the last six years.

JONATHAN WIGGS/GLOBE STAFF

Elizabeth Warren met Rodney Johnson Thursday at a job training center in Dorchester.

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Brown’s earnings were augmented by $1 million he received for his 2011 memoir, “Against All Odds,’’ $300,000 more than the amount that had been previously disclosed.

Warren’s salary at Harvard and as the interim director of a new federal consumer protection bureau until last year has been supplemented by an average of nearly $142,000 a year she received as a consultant and lecturer.

Throughout the Senate campaign - one of the most closely watched in the country - class has emerged as an important marker of authenticity. For months, Republicans have been calling Warren an “elitist hypocrite.’’ And on Thursday, Democrats swung back, making similar claims about Brown and questioning the everyman image that he has crafted.

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But after making their federal and state tax returns available Friday, both candidates brushed aside questions from reporters about their own wealth, insisting that their backgrounds and good fortune inform their politics.

“People have read my book. They understand where I come from and where I’m going and where I’ve been,’’ said Brown. “And I’m going to continue to obviously do the things that are important and fight for jobs, work in a bipartisan matter, do the things that I feel matter very greatly for this state and solve problems.’’

“I am the daughter of a maintenance man who has lived the American dream,’’ said Warren, a specialist on bankruptcy law. “And the lesson I take from that is that great opportunities were given to me. I am in this race right now because I worry those opportunities are being taken away . . .This [campaign] is just a continuation of the fight I’ve always been involved in.’’

Their tax filings make clear that both Brown and Warren are wealthier than the average Massachusetts residents whose votes they are courting. As of the 2010 Census, the median Massachusetts household income was $64,509. But their status is fairly modest compared with members of the US Senate, many of whom are extremely wealthy.

As calculated by the campaigns, Warren and Mann paid a federal effective tax rate ranging from a low of just under 26 percent in 2011 to a high of almost 29 percent in 2009, while Brown and Huff paid federal effective tax rates ranging from a low of 21 percent in 2006 to a high of more than 28 percent in 2010. Last year, their rate was more than 24 percent, the Brown campaign said.

Both couples filed joint returns with their spouses, with Brown and Huff claiming their youngest daughter, Arianna, as a dependent. Warren and Mann prepared their own returns, while the senator and his wife used an accountant.

After more than a week of sparring with each other, Brown agreed to release information from the last six tax years, while Warren disclosed only the last four. The campaigns tussled over which was being the more transparent, with Brown’s campaign manager Jim Barnett insisting Warren is “clearly hiding something’’ by releasing more limited information.

The Warren campaign said she was only willing to release four years because that covered the period she was in Washington advising Congress and President Obama about the creation of the Consumer Financial Protection Bureau.

Neither side would let reporters photocopy or remove copies of the returns, which were made available for inspection at their respective campaign headquarters on Friday. Warren’s campaign released the summary sheets of her returns online, but had removed them by Friday night.

Tax professionals surveyed said they saw nothing extraordinary in either set of returns, based on a review of the small amount of information that was publicly available.

Timothy R. Weeks, a tax attorney who assessed the information that both campaigns released online, said that both Brown and Warren paid high effective federal tax rates “because the great majority of their earnings are wages, and not preferential tax items such as qualified dividends and capital gains. Aside from the amounts, they both report income the way most other typical taxpayers do,’’ Weeks said.

Brown’s largest earnings in the six years he made public came in 2010, when he and his wife earned $839,520, due in part to the advance for his book. The couple’s lowest-earning year was 2007, when they reported $275,921 of income. Of the four years Elizabeth Warren and her husband made public, they earned nearly $1 million in both 2009 and 2010.

During the most recent filing year, she was in the top 1 percent of earners while Brown was in the top 2 percent. Brown joined Warren in the uppermost echelon in 2010.

Brown and Warren also have significant holdings in stocks and mutual funds, which they have previously recorded in federal financial disclosure forms. But in the tax years covered in the returns released Friday, they did not earn significant profits from the stocks.

In fact, Warren and Mann took a significant hit when the stock market plummeted, selling investments at losses of $217,217 in 2008 and $91,270 in 2009. Warren’s husband did collect small royalties - less than $1,000 per year - from an interest in gas wells in Oklahoma, where Warren was raised.

In addition to the proceeds from Brown’s book, he and his wife derived income from a variety of sources. Brown made about $16,000 a year as a lieutenant colonel in the Massachusetts National Guard, in addition to an average salary of $92,000 as a lawmaker, ranging from a low of $54,982 in 2006 in the Massachusetts Senate to $142,821 last year as a US senator.

His wife, formerly a reporter at WCVB-TV and now a part-time reporter for a station in Washington, D.C., earned an average of about $120,000 a year over the last six years. Brown’s law practice, which he has halted since his election in 2010, netted him an average of more than $34,000 a year after deductions.

In 2006, Brown and Huff sold a $175,000 condominium unit that his campaign said was used for his law practice in Wrentham. He paid taxes on a $105,507 capital gain. And he reported a gain of $786 from the 2011 sale of stock he owned in Tesla Motors, maker of electric-powered cars.

Brown also claimed deductions totalling $118,656 for expenses related to his book over a two-year period, such as travel, meals, supplies, professional services and $1,401 for “TV makeup and grooming.’’

Warren and Mann’s earnings fluctuated over the past four years from a high of $955,000 in 2010 to a low of $616,000 in 2011. Thoughout that time, Mann earned about $240,000 a year from Harvard, where he works as a professor of legal history. Warren earned closer to $350,000 from Harvard in 2008 and 2009, but the salary went down to $82,673 by 2011, when she had a limited teaching schedule. She also listed earnings from consulting, writing and lecturing every year, including $131,921 in 2008, $147,468 in 2009, $218,615 in 2010, and $61,244 in 2011.

Some of that money was listed as legal work for outside clients, including Travelers Insurance. Warren also collected salaries from two consecutive government jobs, serving on a congressional oversight panel that reviewed the bank bailout program and then as a special adviser to President Obama establishing the federal consumer protection agency she helped form in the bank bailout’s aftermath.

In 2010, Warren collected salaries from three employers - $281,889 from Harvard, $64,000 for the last of her work on the congressional oversight panel, and $33,943 as she began her work for Obama.

Brown and Huff also reported rental income from a pair of investment condominiums on Commonwealth Avenue in Boston’s Brighton section. But after taxes, other expenses, and depreciation, the properties operated at a loss each year. Brown and Huff own a third unit in the building with their older daughter, Ayla, but have not claimed any tax advantages from that unit in recent years.

They also reported paying property taxes on their principal residence in Wrentham, a vacation home in Rye, N.H., and a condominium in Washington. Warren and Mann reported paying property taxes only on their home in Cambridge.

Brown and Huff gave an average of more than $9,000 a year to a variety of charities, ranging from a low of $3,959 in 2007 to a high of $16,487 last year. Contributions included those to their church, homeless shelters, disease research programs, and the YMCA. In 2006 their charitable donations included a horse, described as in “good’’ condition and worth $6,000, to a horse rescue program in West Virginia. That year they also donated a nine-year-old Saab, valued at $500, to an elderly services program in New Bedford, their return shows.

Warren and Mann reported charitable donations averaging $24,000 a year, with a high of $27,816 in 2010 and a low of $17,209 last year. They made significant annual contributions to the American Society for Legal History (Mann is a legal historian), the Boston Ballet, and a variety of environmental advocacy groups.

Brian Mooney can be reached at mooney@globe.com. Noah Bierman can be reached at nbierman@globe.com. Follow him on Twitter @noahbierman.
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