Did Mitt Romney pay any federal taxes at all in 2009?
Posted by Ezra Klein on July 17, 2012 at 2:50 pm
On the issue of Mitt Romney’s tax returns, my colleague George Will put it simply: “The cost of not releasing the returns are clear. Therefore, he must have calculated that there are higher costs in releasing them.”
The question is what could be in them that would be so damaging to the Romney campaign. Right now, the most popular theory is that Romney simply didn’t pay any federal taxes at all in 2009. As Joshua Green wrote, ” It’s possible that he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009.”
My guess is the person who spends the most time wondering why Mitt Romney didn't clean up his taxes in 2008 is...Mitt Romney. (AP Photo/Evan Vucci)
But the tax experts I’ve spoken to are skeptical. “Romney had a $4.8 million capital loss carryover coming into 2010,” says Edward Kleinbard, a professor of tax law at the University of Southern California. “So that means no capital gain income in 2009. If you look on the first page [of his 2010 tax return], though, he had lots of ordinary income (interest mostly), and dividends, which are taxed at the same rate as capital gains but which cannot be sheltered from tax by capital losses. So presumably he had some positive income tax in 2009.”
Roberton Williams, a senior fellow at the Tax Policy Center, agrees. “It’s unlikely that his taxable income was zero or even close enough to zero that his credits would zero out his tax liability completely,” he says.
But Daniel Shaviro, a tax professor at New York University, isn’t so sure. “I think there’s an excellent chance that [Romney] didn’t pay any taxes in 2008 or 2009,” he says. But to get from a small federal tax liability to no federal tax liability, Romney would have needed to engage in incredibly aggressive tax planning. Shaviro mentions picking loser investments to get some benefits from “loss harvesting,” unusual tax shelters, and a bevy of other stuff that, frankly, I don’t totally understand.
The overriding question, though, is why would Romney do any of this. As Shaviro says, “If you were running for president and in his position, wouldn’t you think of telling your transaction people not to take you down too low in 2008 and 2009?”
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