After weeks of stalling, Mitt Romney did an about-face on Tuesday and said he will release his tax returns in April and that they will show he pays close to 15 percent of his income in taxes.
Romney, a multimillionaire, has been under pressure from his rivals for the Republican presidential nomination and others to release the information. He'd previously said he wouldn't release it. He suggested Tuesday that he would make public only one year's worth of information, for 2011.
Speaking to reporters after a campaign stop in South Carolina, Romney said most of his income comes from investments, not regular wages and salary. The tax rate on investment income is 15 percent, much lower than the 35 percent rate applied to wages for those in the highest tax bracket.
"What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything,"Romney said. "Because my last 10 years, I've ... my income comes overwhelmingly from investments made in the past, rather than ordinary income or rather than earned annual. I got a little bit of income from my book, but I gave that all away. And then I get speaker's fees from time to time, but not very much."
Romney has resisted calls to release his tax returns, insisting that he and his wife, Ann, have complied with federal law that requires them to disclose information about their financial holdings.
But in a debate Monday night, Texas Gov. Rick Perry insisted that Romney release his returns, saying that the party needs to fully scrutinize its nominee now instead of later. Former House Speaker Newt Gingrich said he will release his tax information this week.
"I know that if I'm the nominee, people will want to see the most recent year, and see what happened in the most recent year," Romney said, suggesting he'd release the couple's 2011 tax information. "We'll wait until the tax returns for the most recent year are completed, then release them."
Romney's wealth — he is worth between $190 and $250 million — puts him among the wealthiest Americans. But if most of his income is from investments, it could help him to significantly lower his federal tax bill compared to people who make money in other ways.
The top federal tax rate for investment income — qualified dividends and long-term capital gains — is15 percent. By comparison, the top tax rate for wages is 35 percent, on taxable income above $388,350. Wages are also subject to Social Security and Medicare payroll taxes.
At 15 percent, Romney's federal income tax rate would still be higher than the tax rate paid by most Americans.
On average, households making between $50,000 and $75,000 will pay a federal income tax rate of 5.7percent this year, according to projections by the Tax Policy Center a Washington think tank.
However, when payroll and other taxes are included, that same household would pay an average federal taxrate of 16.6 percent.
Overall, the average American household will pay 9.3 percent in federal income taxes — and 19.7 percent in all federal taxes.