Romney paid even less tax than thought

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Mitt Romney and Newt GingrichGetty Images

No wonder Mitt Romney (pictured left) was reluctant to release his tax returns. The Republican presidential frontrunner paid even less tax on his multi-million dollar income than previously thought - at a rate far below that of the average American.

The former Massachusetts governor's tax returns, released last night, revealed that he and his wife Ann paid $3 million (£1.9 million) tax on income of $21.7 million (£14 million) in 2010. That's a rate of just 13.9% - even though he is in the top 1% of earners in the US.

Romney initially insisted that he would not release the returns until April, but after coming under huge pressure finally agreed to release them in debates before the South Carolina primary - which he lost to Newt Gingrich, a former Speaker of the House (pictured right).

Rather bizarrely, Romney insisted during a televised debate in Tampa, Florida, last night: "I'm proud of the fact that I pay a lot of taxes."

For last year, Romney, who who led the private equity firm Bain Capital in the 1980s and has amassed a fortune of $250 million, expects to pay $3.2 million tax on income of $20.9 million (£13.45 million) - a rate of 15.4%.

To put this into perspective, his tax rate was almost half that of Barack Obama's, even though the president's income is much lower. He and his wife Michelle paid 26% tax on $1.8 million in 2010.

Meanwhile Gingrich, Romney's main rival for the Republican presidential nomination, paid 31.6% on $3.16 million earned with his wife, Callista.

Romney enjoyed a lower tax rate than most Americans because his income came largely from investments and capital gains, which are taxed at a flat rate of 15% under controversial reforms introduced by George W. Bush. By contrast, regular earned income above $379,150 is subject to federal income tax of 35%.

It also emerged that Romney gave $7 million in charitable donations over the past two years, a large chunk of which went to the Mormon church. This did not go down well with evangelical Christians in South Carolina.

The Romneys' foreign holdings include assets in the Cayman Islands, a well-known tax haven, and have held a bank account in Switzerland in the past (they closed it in 2010 after being advised that it could be politically embarrassing).

Romney insisted during the last TV debate: "I pay all the taxes that are legally required and not a dollar more. I don't think you want someone as the candidate for president who pays more taxes than he owes."

What do you think - should politicians always pay full tax, or should they be able to take advantages of loopholes, like other (mainly wealthy) people?

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