Mitt Romney's tax returns are out, and so we've learned the truth: Mitt Romney is a rich person. Hadn't you always suspected? And because the first thing you want to be reading this Tuesday in January is a description of tax forms, here's your guide to Romney, his taxes, and the political effects thereof.
Why this became an issue
When Mitt Romney was ahead of Newt Gingrich, Rick Santorum, Ron Paul, and whatever other losers have come and gone by 20 percentage points in New Hampshire, South Carolina, and national primary polls, nuanced attacks were not going to be effective enough to slow his momentum. So everyone pulled out a popular stock item from the list of traditional desperate political attacks: Show us your tax returns, Rich Man.
How Mitt Romney made it worse
Romney had deflected hits like this before but oddly, after running for president for six years, he had no clear response to this very obvious thing that was going to come up at some point. He explained that he was following the law and didn't have to release anything but maybe would in a few months anyway. In one South Carolina debate, when the moderator pointed out that his father, George Romney, voluntarily released 12 years' worth of tax returns in his 1968 candidacy (he lost) and asked whether Mitt would do the same, his response was "Maybe." Innocent darling Newt Gingrich noted that he paid a 31% tax rate last year, like an honest man would.
He was hoping to escape the issue by walking through South Carolina and Florida, effectively clinching the nomination, and then releasing a year or two's worth of returns once he had the party (relatively) united around his candidacy and prepared to thwart off such "Class Warfare" demagoguery from the Democrats. But now the Republican primary race is back to a dead heat and won't end anytime soon, so he has to get it over with. Tough life, huh?
What's in his tax returns
He made $20.9 million last year and $21.7 in 2010 — off years, sure, but just enough to put a steak on the dinner table every now and then. Most of this came from investment income like dividends, capital gains, and carried interest, which is taxed at 15%. He made great use of charitable deductions, too, giving away $7 million in the last two years, $4.1 million of which went to the Mormon church as a tithe. After that, what he wound up paying was an effective 15.4 percent ($3.2 million) of his 2011 gross income and a 13.9 percent ($3 million) of his 2010 gross income.
They're about as predicted. The most embarrassing nugget, though, is probably that he had a fancy-sounding Swiss bank account that was closed in 2010 because advisers thought it could be "politically damaging." Well, now it's going to be politically damaging because you said that, suckers.
How this will affect the presidential race
Romney's disclosure should quiet Republicans, who can't really attack the contents of his tax returns without directly attacking their own ideology. Mitt Romney takes advantage of lower investment income tax rates — put in place partially by Newt Gingrich's 1990s capital gains tax cut rate, a link that pundits have trouble putting together — in order to "put his money to work," allowing his wealth to trickle down to the commoners in the form of billions of great steady jobs. He is the precise economic actor that Republicans have in mind when they're designing their supply-side economic policies. He gets out of bed each day knowing he'll have to carry the cross of the Wealthy Capitalist, and he manages to do it.
Democrats, meanwhile, will make jokes about how rich Mitt Romney is for many months. It will either prove extremely tiresome or win President Obama reelection, or both. The key will be to point out that Romney's wealth came from an especially exploitative niche of finance capitalism, and not because he invented some really fantastic machine in his basement (unless you're counting Tagg Romney.)
[Image via AP]