Tax returns show Romney paid $6.2m on earnings of $45m over the past two years, putting him in the top 1% of US earners
Mitt Romney is facing a series of questions about his tax affairs after publication of his returns revealed that he paid a much lower rate on his multimillion-dollar income than the average American.
Romney's political opponents challenged him over holdings in a Swiss bank and other overseas accounts, questioning whether he had created tax shelters, something the Romney campaign immediately denied. He was also facing questions over investments in Fannie Mae and Freddie Mac. Romney had earlier criticised rival Newt Gingrich's involvement with the mortgage giants.
Fannie Mae and Freddie Mac are accused of contributing to the housing market collapse – an emotive issue in Florida, a state which has been blighted by lost homes and where the next Republican primary takes place on 31 January.
The tax returns, which Romney had steadfastly refused to release until now, show he earned $45m (£29m) over the past two years, and paid just $6.2m in taxes, a rate of about 15%. Most of the income was derived from investments from his $200m-plus fortune.
The documents show that Romney's income places him in the top 1% of earners in the US, which is only likely to add to the political embarrassment around the release of the returns because of its resonance in the age of the Occupy movement and their 'We are the 99%' slogan.
Among many criticisms to have emerged overnight, Ty Matsdorf, of American Bridge 21st Century, a Democratic political action committee, said; "[Romney] is relentlessly attacking Newt Gingrich over his ties to Freddie Mac, despite the fact that he personally invested up to a half a million dollars in both Fannie Mae and Freddie Mac."
The Romney campaign put out the tax returns in the middle of the night, perhaps hoping that it will be an issue on Tuesday morning and afternoon but then lost in the evening as the media switches focus to the President Obama's state of the union speech.
The Romney campaign fielded a former commissioner of the Internal Revenue Service, Fred Goldberg, to try to blunt criticism. Goldberg, in a statement issued by the Romney campaign, reviewed the tax returns and concluded: "There is no indication or suggestion of any tax motivated or aggressive tax planning activities. In my judgment, they have fully satisfied their responsibilities as taxpayers."
Romney's rivals for the Republican nomination will tread carefully in attempting to exploit his vast income and low taxes, in part because they have it as an article of faith that government spending – and therefore taxes – is far too high. But if Romney is to become the Republican presidential nominee against Barack Obama, the Democrats can be expected to portray his extreme wealth and relatively low taxes as a prime example of how the rich do not pay their fair share while shifting the burden to the less privileged.
It will also undermine Romney's attempts to make out he is an just an ordinary American who "lived in the real streets of America" and "didn't inherit money from my parents", as critics portray him as a corporate raider whose firm, Bain Capital, made large profits by throwing people out of work.
In Tuesday's Republican debate, shortly before his returns were made public, Romney offered up a defence.
"I pay all the taxes that are legally required and not a dollar more," he said. "I don't think you want someone as the candidate for president who pays more taxes than he owes."
But he recognised that it could be a political problem.
"You'll see how complicated taxes can be. And will there be discussion? Sure. Will it be an article? Yeah. But is it entirely legal and fair? Absolutely. I'm proud of the fact that I pay a lot of taxes," he said.
The returns show Romney paid a smaller proportion of his income in tax than most Americans because his income is from investments from his $200m-plus fortune, which attract a lower rate than earned income.
In 2010, Romney earned more than $21m and paid $3m in tax, a rate of less than 14%. He expects to pay $3.2m in taxes on his 2011 income, a rate of 15.4%.
He and his wife, Ann, donated $4.1m to the Mormon church and about $3m to other charitable causes. The money given to a church that many on the Republican right do not regard as Christian may not sit well with some voters.
Romney is still refusing to release tax returns for earlier years, leading some critics to speculate that he paid even less tax back then, before he knew he was going to run again for president.
Newt Gingrich revealed at the weekend that he paid nearly $1m in income tax, a rate of about 31%.
The Obamas had a joint income of $1.7m in 2010, much of it from sales of the president's two popular books. They paid 26% in tax.
One line of attack likely to be pursued is why Romney has not disclosed his tax returns going back 12 years, as his father, George Romney, had done when embarked on a presidential nomination run in 1968. Romney said in the debate that he differed from his father on this point and would not be releasing them.
His tax details show he had an account in Switzerland that was closed in 2010 and accounts in Bermuda and the Cayman Islands. Another listing, called a 'Federated Government Obligation Fund', and worth between $250,000 and $500,000, included investments in Fannie Mae and Freddie Mac.
On Tuesday, the Romney campaign kept up attacks on Gingrich over his work for Fannie Mae and Freddie Mac. "We just learned that his contract with Freddie Mac was provided by the lobbyists at Freddie Mac. I don't think we can possibly retake the White House if the person who's leading our party is the person who was working for the chief lobbyist of Freddie Mac," Romney said.
"Freddie Mac was paying Speaker Gingrich $1.6m at the same time Freddie Mac was costing the people of Florida millions upon millions of dollars."