Throughout the month of January, one of the biggest questions in the race for the GOP presidential nomination was if, and when, Mitt Romney would release his tax returns. Starting at a January 16 GOP debate, and culminating in a disastrous (for Romney) debate 3 days later, Romney was assailed on all sides for hiding his wealth by refusing to release his tax returns. (Romney’s initial position, which may well have cost him the South Carolina primary, was that he would probably release them in April). In the end, he eventually was forced to succumb and released a tax return for 2010 and an estimated return for 2011; returns that showed incomes in excess of $20 million a year and effective tax rates of around 14%.
While the media has given a substantial amount of attention to this issue in the past week, little analysis has been carried out comparing Romney’s tax rates and total income with that of past presidential contenders. To fill this gap—and in so doing, hopefully put Romney’s wealth in context with that of past candidates—we scoured the internet for tax returns of contenders starting from the 1988 presidential election.
First some notes on methodology: (1) where possible, we relied on tax returns from two years before each election—the exceptions being Dukakis (1987), Bush (1987), and Kerry (2003); (2) for Kerry (2003) and McCain (2006), both of whom filed separately from their wives, we combined total income and total taxes with that of their wives as if they had filed combined tax returns; and (3) we excluded sitting presidents.
The first chart, below, compares tax rates (total tax divided by total income) for the 11 candidates in our sample (Democrats are in blue, Republicans in red). Perhaps contrary to what many would guess, Romney doesn’t set the mark for the lowest effective tax rate: in 2003, John Kerry and his wife paid even less, with a tax rate of just 13.15% compared to Romney’s 13.89%. That said, Romney’s tax rate is around half that of other recent contenders, including Gingrich (31.45% in 2010), Obama (27.99% in 2006), and McCain (28.69% in 2006). (These results are also consistent when looking at other tax returns not included in this sample).
So clearly, Romney has some rivals when it comes to the competition for the lowest tax rate. But how about when it comes to his vast income? The next chart compares the incomes of the 11 candidates, adjusted for inflation to represent 2011 dollars. Once again, Romney ends up in second place, with his $22.3 million income in 2010 falling just short of George W. Bush’s income from 1998 (adjusted for inflation) of $25.5 million. However, both of these candidates’ incomes far exceeded all other candidates: for example, Romney’s income in 2010 is approximately 20 times that of Obama (2006), 3 times that of McCain (2006), and a whopping 104 times that of Dukakis (1997).
NOTE: We used the BLS inflation calculator to adjust incomes to 2011 dollars.
In short, by any measure, Romney is one of the richest candidates ever to run for office. And while a lack of data prevented us from looking at the net worth of candidates, we would certainly expect similar results on this measure as well. (Romney himself estimates his net worth to be in the range of $150 million to $200 million). In an election that will certainly bring attention to the growing income inequality in the U.S., Romney’s wealth—and what it means for his ability to represent the average American—is an issue we’re sure to hear more of.
Sources: “An Embarrassment of Riches in Campaign ’88: Bush, Dukakis and their running mates are men of wealth,” Newsday, August 21, 1988; “CAMPAIGN ’96 : Tax Returns Show That Doles Are Millionaires,” Los Angeles Times, January 20, 1996; “John Kerry’s Bright Financial Picture,” National Review, April 14, 2004; “1998 Taxes: Clintons’ Tax-Exempt Income Declines,” The Bond Buyer, April 15, 1999; Tax History Project, accessed January 28, 2012.