Mitt Romney paid $1.9 million in federal taxes in 2011 on income of $13.7 million, an effective rate of 14.1% that reflects the Republican presidential candidate's dividends, capital gains and other returns that are assessed at some of the lowest tax rates.
Romney's tax return, which he released Friday, showed that he boosted his effective tax rate by not declaring all of the $4 million in charitable contributions that he made during 2011, instead only reporting $2.3 million. By doing so he stayed consistent with an earlier public statement that his tax rate for the year would not drop below 13%.
The return does little to fundamentally change the perception of Romney's finances. It is also unlikely to end Democratic attacks on his sources of income, which include foreign investments and other vehicles that are not available to most taxpayers.
He did, however, take a step toward rebutting allegations by Senate Majority Leader Harry Reid (D-Nev.) that Romney had paid no federal taxes in some past years. The Romney campaign released a statement by PricewaterhouseCoopers LLP, the accounting firm that has prepared his tax returns since 1990, saying that Romney had never had an effective tax rate of less than 13.66% during that period and had an average tax rate during the period of 20.2%.
Romney made efforts during 2011 to remove some of the investments and modify the tax strategies that had triggered the most strident political attacks on his candidacy, said Philip J. Holthouse, managing partner in Holthouse Carlin & Van Tright, a Los Angeles accounting and financial advisory firm, who reviewed the tax return at the request of the Los Angeles Times.
"A number of offshore investments have been sold and the Swiss bank account has been closed," Holthouse said. "He has done some things to stop some of the questions and scrutiny of those areas."
But Romney continued to derive significant income from international investments. In some of his tax return schedules, he reports gross earnings of about $3.5 million, which were offset by expenses and taxes that he paid to foreign nations.
Many of his foreign investments appear to be highly successful hedge funds and other financial instruments that he helped set up or invested in while at Bain Capital, the Boston-based private equity firm that he founded in 1984 and led until he stepped down in 1999.
The tax return shows that Romney's income came in far lower than he had expected in January, when he filed an estimated tax return that projected he would earn $20.9 million. The $7.2 million drop in his expected income was explained by the Romney campaign as a result of variations in his investment returns that he could not have foreseen in January.
The return shows that Romney's income dropped sharply from 2010. Income in almost every category was down, including capital gains, taxable interest and rentals, royalties and partnerships.
The Romney campaign suggested, after the voluminous materials were made public, that it was time to move on.
"Mitt Romney has now released more than 1,200 pages of tax returns, giving voters an incredibly detailed look at his finances," Arizona Sen. John McCain, the 2008 GOP nominee, said in a statement issued by the Romney camp. "Now that the most recent tax return has been released, it's time to get back to discussing the issues that voters care about."
Not surprisingly, Democrats disagreed.
President Obama's campaign issued a statement demanding answers to more than a dozen follow-up questions involving Romney's overseas investments, the amount of foreign taxes he paid and his ties to Bain Capital — where he made his personal fortune and, depending on the telling, did or did not preside over massive layoffs at the companies he helped retool.
Even as reporters and tax experts pored over the thick cache of documents, many were quick to note the smaller charitable deduction. While it kept him in line with his statement that he had paid at least 13% in federal income taxes in each of the last 10 years, it also contradicted something else he has said: "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."
Michele Davis, a spokeswoman for Romney, sought to reconcile the two statements.
"He has been clear that no American need pay more than he or she owes under the law," Davis said. "At the same time, he was in the unique position of having made a commitment to the public that his tax rate would be above 13%. He directed his preparers to ensure that he is consistent with that statement."
Romney's tax returns first became an issue during the bitterly fought Republican primary season, when rivals assailed the former Massachusetts governor for refusing to release more than his 2010 tax return, which he issued in January. Opponents noted that Romney's father, George, had made public a dozen years of returns when he ran for president in 1968.
After weeks of criticism, Romney pledged to release his 2011 return by election day. But that failed to mollify Democrats, who quickly took up the attack once the GOP race ended, making Romney's private tax records the centerpiece of a campaign questioning his business ethics and personal probity.
By releasing the information he did, Romney can tell voters he "paid his fair share," said political analyst Julian Zelizer, and say Democrats pressing for more information are simply engaged "in a fishing expedition."
"That's the most obvious upside," Zelizer said. But, he added, there are enough unanswered questions surrounding Romney's tax history that the matter will not go away anytime soon. "If Democrats want to make an issue of it and continue with it, which I think they will, they can," said Zelizer, a political history professor at Princeton.
The politically important question is whether anyone besides Democrats and Romney's critics care, and that awaits a fresh round of polling and voter interviews.