NEW YORK (CNNMoney) — Republican presidential candidate Mitt Romney made $42.7 million over the past two years and paid $6.2 million in taxes, according to documents released Tuesday by his campaign.
Romney and his wife, Ann, filed a joint 1040 reporting $21.7 million in 2010 income and $3 million in federal taxes. They also said their 2011 income was $21 million and tax bill was $3.2 million.
Over the two years, Romney’s effective tax rate — the percentage of his income that he owed in federal income taxes — was just under 14%.
Nevertheless, and contrary to popular perception, Romney’s effective federal income tax rate is still above that of many Americans — 80% of whom have an effective rate below 15%. That tax rate is higher when other federal taxes — such as the payroll tax — are included.
The reason Romney’s rate is so low — despite having one of the highest incomes in the country — is because his income was derived almost entirely from capital gains and dividends from his extensive portfolio of investments. And that form of investment income is typically taxed at just 15%, well below the 35% top tax rate for high earners.