Newt Gingrich Releases Tax Returns, Pays 31% Rate Compared to Mitt Romney's 15%

Republican presidential candidate Newt Gingrich released his 2010 tax return Thursday night. In doing so, he forced Mitt Romney’s hand in releasing his tax returns and was able to expose a chink in his chief rival’s armor: the rate at which their incomes are taxed. Gingrich, not surprisingly, used this to his advantage.

Gingrich’s joint return filed with wife Callista listed a gross income of about $3.2 million. His portion of the income was $2.5 million earned through a combination of family owned businesses, a rental property, and investment income. He also paid almost $20,000 in alimony and made about $81,000 in charitable donations. His total tax bill came to $994,708, which works out to an average tax rate of 31.5%. Romney has previously acknowledged that he “probably” paid 15% on his taxes.

How is this possible? A very simple answer: Capital gains are taxed at a different rate than regular income. The majority of the income Mitt Romney earns is from investments and his retirement deal with Bain Capital, the private equity firm he founded in the 1980s.

According to The New York Times, Romney negotiated “a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year.” Even though he left the firm in 1999, he still earns this income. It is taxed at a rate of 15% because it is classified as “carried interest,” which the IRS classifies as capital gains and thus taxes at a rate of no more than 15%.

Romney pays taxes at a rate similar to a middle class family while pulling in millions of dollars a year. In the middle of what is the worst economic downturn since the Great Depression, that is tough to dance around on a nationally televised debate. His response to taunting by Gingrich was, “I pay full taxes. I'm honest in my dealings with people. I'm not gonna apologize for being successful. I didn't inherit money from my parents. What I have, I earned.”

Though it will outrage many people, Romney pays a fair amount of taxes under federal guidelines. Where this plays to Gingrich’s advantage is that while he is also wealthy, he pays his fair share. Not only does he pay a fair share, he can also say he actually earned his money as opposed to having it funneled to him while he pursued his political career. What his companies do though, is unclear according to the Wall Street Journal. His occupation was listed as “consultant.”

When Rick Santorum blasted Gingrich by saying “Grandiosity has never been a problem with Newt Gingrich,” Gingrich fired back saying, “This is a grandiose country of big people doing big things.”

Gingrich runs on a platform of creating jobs, balancing the budget, and cutting taxes. Romney comes from a background of “vulture capitalism” according to former presidential candidate Rick Perry, despite there being a track record of venture capital firms having a positive impact on the economy. Gingrich's portraying Romney as making millions off the backs of layoffs will only add to his growing lead in South Carolina and beyond.

Photo Credit: Wikimedia Commons

How likely are you to make Mic your go-to news source?

Ryan Gorman

Ryan's work has been featured in the NY Daily News, Gothamist and the Wall Street Letter. His work has been cited by both the Colbert Report and Time Magazine's website. Ryan worked on Wall Street for five years before returning to school to finish a degree in journalism at St. John's University.

MORE FROM

Grizzly bear protections in Yellowstone National park are ending

A final ruling by US government officials will strike the Yellowstone grizzly bear from the list of threatened species after its population increased to 700.

Another day, another off-camera White House press briefing

The move to scale back on-camera press briefings comes amid Trump's increasing unwillingness to interact with the press.

Minneapolis might get a $15 minimum wage, but restaurant workers aren't celebrating

Discord has been brewing in Minneapolis over whether tipped work will be counted toward a $15 minimum wage.

These abysmal new poll numbers for House health care bill don't bode well for Senate version

Only 34% of Republicans approve of the new proposed law.

'Pizzagate' shooter gets 4-year prison sentence, lawyers urged judge to deter vigilantism

Welch stormed a Washington, D.C., pizza place and shot off a firearm because of the internet.

American Health Care Act by the numbers: What to know about Senate Republicans' secret health plan

After drafting the ACA repeal and replace plan behind closed doors, the AHCA is out — and Senate Republican leaders are hoping to vote on it in a week.

Grizzly bear protections in Yellowstone National park are ending

A final ruling by US government officials will strike the Yellowstone grizzly bear from the list of threatened species after its population increased to 700.

Another day, another off-camera White House press briefing

The move to scale back on-camera press briefings comes amid Trump's increasing unwillingness to interact with the press.

Minneapolis might get a $15 minimum wage, but restaurant workers aren't celebrating

Discord has been brewing in Minneapolis over whether tipped work will be counted toward a $15 minimum wage.

These abysmal new poll numbers for House health care bill don't bode well for Senate version

Only 34% of Republicans approve of the new proposed law.

'Pizzagate' shooter gets 4-year prison sentence, lawyers urged judge to deter vigilantism

Welch stormed a Washington, D.C., pizza place and shot off a firearm because of the internet.

American Health Care Act by the numbers: What to know about Senate Republicans' secret health plan

After drafting the ACA repeal and replace plan behind closed doors, the AHCA is out — and Senate Republican leaders are hoping to vote on it in a week.