Depending on how you measure it, Mitt Romney’s tax rate may be even lower than it looked at first.
Mitt Romney paid just 10.7 percent of his total gross income in federal income taxes in 2010 -- less than the 13.9 percent tax rate reported last week, according to a Boston tax lawyer who analyzed Romney’s returns.
Romney, who was widely expected to win the Florida primary today in his bid for the Republican presidential nomination, paid about $3 million in taxes on $28 million of total income in 2010, said Morris Robinson, a Boston tax attorney and certified public accountant.
The Romney campaign told reporters last week that Romney paid 13.9 percent of his adjusted gross income in 2010 and 17.6 percent of his total taxable income in 2010. Adjusted gross income is total income minus specific reductions, such as contributions to retirement plans. Taxable income is generally adjusted gross income minus personal exemptions and itemized deductions.
But Kenneth P. Brier, a tax attorney from Brier & Geurden in Needham, said all three figures are reasonable ways to report Romney’s tax rate.
“There isn’t one tax rate,” Brier said. “This is one of several ways to measure it.”
Robinson made several adjustments to come up with the lower tax rate. For instance, Romney reported earning $21.7 million in adjusted gross income. But Robinson estimated his total income swelled to $28 million once you add in $1.5 million in gains on stock Romney donated to his charitable foundation (and therefore weren’t taxed) and exclude $4.8 million in investment losses from past years that were carried over to 2010.
Regardless, the main reason Romney paid a relatively low tax rate is because the vast majority of his income came from investments, which are generally taxed at 15 percent, rather than as ordinary income, which is taxed as high as 35 percent.
Both Brier and Robinson agreed that all the deductions Romney used were perfectly legal. “My overall impression is the guy is a square shooter,” Robinson said.
Todd Wallack can be reached at email@example.com. Follow him on Twitter @twallack.