Opinion

Ben Walsh

How generous is Mitt Romney?

By Ben Walsh
September 25, 2012

Mitt Romney’s campaign likes to trumpet its candidate’s generosity. The summary of Friday afternoon’s docu-dump of Mitt and Ann Romney’s 2011 tax returns hailed the couple’s “generous charitable donations”. They made $13.7 million and donated $4 million, which is impressively described as “amounting nearly 30% of their income”.

John Podhoretz, looking through the misleading income-to-donations lens, thinks Romney is an “extraordinarily, remarkably, astonishingly generous man”. Conor Friedersdorf is less hyperbolic, but still throws out praise: Romney “seems to be a very generous guy…good on [him] for giving lots of money to charity”.

Giving away almost a third of your annual income sounds laudable, but for someone of Mitt Romney’s wealth, charity should be assessed by net worth, not income. The Romneys’ net worth is currently estimated at $250 million. $4 million is just 1.6% of that net worth.

It’s an odd kind of generous for a man to be worth a quarter of a billion dollars, earn $13.7 million on that $250 million (a 5.5% return), and then donate 30% of that $13.7 million.  No wonder he conflates paying taxes with giving to charity. Generosity is generally tied to the concept of relinquishing wealth — and that is not what Romney is doing. If Romney’s massive base of wealth continues to appreciate at its mediocre 2011 rate of return, and if he continues to give at the same rate as he did this year, then in a decade, he’ll have a net worth of  $373 million and will have made $53 million in donations. $53 million is real money, but the trend here is all wrong. As Romney ages, his net worth should go down, not up.

If they really wanted to make an impact on causes they care about with the massive wealth they’ve accumulated, the best thing for the Romneys to do is give away as much as possible, as soon possible. Charitable contributions are most effective when they are front-loaded. Romney, at 65 years old, won’t end up with lower net worth than he has now unless he gives much, much more aggressively. Right now, he’s on track to just keep on accumulating.

Once you reach the Romneys’ level of rich, you have to give with determination to counteract the structural momentum of your wealth. As Ezra Klein said, “that’s the nice thing about being rich: It makes you richer”. On its current trajectory, the Romneys’ wealth will just go on gathering. They have and will continue to make donations, but but not at a level that even comes close to reducing their net worth. In contrast to the 11 additional billionaires who have taken the Gates/Buffet pledge to give away half of their wealth in their lifetimes, the Romneys aren’t chipping into their net wealth — and don’t seem to have a plan to. Instead, they’re content to make relatively small annual gifts. In fact, back in January, Romney thought he had actually given an an even lower lower portion (19%) of his income to charity than is now being reported, thanks to an inaccurately high estimate of his income.

There is, however, one cause Romney has devoted a large portion of his net worth to: his political campaigns. He spent $44.6 million of his own money losing to John McCain in the 2008 Republican presidential primary. When he ran for governor of Massachusetts, he self-financed $6 million of the $9.4 million the campaign spent in total. If Romney gave to charities annually like he gave to his first presidential campaign, he’d give away half his current net worth in just four years. And if he made that commitment, I’m sure Bill Gates and Warren Buffet would happily share a stage with him to laud his generosity.

Comments
29 comments so far | RSS Comments RSS

“As Romney ages, his net worth should go down, not up.” Ben, I just couldn’t disagree more. If a person gives away their principal, they will not earn as much interest on that principal in the long run, and eventually, the principal will just run out. Conversely, donating an ever increasing portion of income while at the same time building the principal provides a way to donate in perpetuity at an exponential rate. You want a long-term sustainable method of providing welfare for the poor, that sounds like the way. One last thought: You cut a check parting with $13 million each year and tell me if you don’t think you’re being generous. Just a thought.

Posted by pyco | Report as abusive
 

Good points all, but IMO a more important issue presented is – what happens to the wealth of Mitt et.ux. when they are both gone? Passing it on to another generation of the ‘born rich’ perpetuates the development of an hereditary ruling class. A 100% estate tax solves that, and raises some real money too.

Posted by MrRFox | Report as abusive
 

Obviously if you compare the entirety of ones wealth to one years worth of donations it would look small, although still much larger then the VP’s.

Maybe you should stop being dumb and compare the entirety of ones wealth to the entirety of ones giving. Your current comparison makes you seem stupid.

Posted by PierreLaser | Report as abusive
 

This is not one of your smarter posts. Romney is certainly a better allocator of capital than almost anyone else he would put in charge of his money. Therefore, he should donate a portion of his earnings and not eat into his nest egg. Its like being an endowment. You do not criticize an endowment for using 4% of their assets/year while generating a 6-7% return. Romney is superior at asset management so why should he eat away at his nest egg to give money today. His money is useful at A) creating jobs through investment B) providing a steady stream of charitable donations throughout his lifetime.

He also isn’t that old yet so I would see no reason for him to spend down his current net worth in order to be more charitable today. Instead as a good allocator of capital he should steadily use the returns on investment to help society as he sees fit. Investment is also a form of charity since it creates jobs and improves the productivity of our economy.

Posted by sditulli | Report as abusive
 

“Investment is also a form of charity”

Not even close. Charity: [char-i-tee], noun:

1. generous actions or donations to aid the poor, ill, or helpless
2. something given to a person or persons in need; almsis estate to a charity.
5. benevolent feeling, especially toward those in need or in disfavor

In other words, nothing like Mitt Romney’s public persona. At all. Maybe even the opposite.

Posted by SteveHamlin | Report as abusive
 

Well let’s assume Mitt dies worth $400 million. His wife takes half that tax free, leaving $200. If there is a 45% inheritance tax then this would leave $110 million (I know the tax isn’t that high on the entire amount but for convenience let us assume that it is) to be divided among his five kids. Each would be getting around $22 million. Some of them might use that to invest and make more; others might squander it or make foolish investments. Then when his wife dies if things hadn’t changed the same thing would happen again. Say the smartest of them got $50 million all told. It is easy to run through that if you are used to living high which I expect they are. Just a first rate apartment in NYC in a prestige building can cost 50 million. So I doubt there is much chance of creating a Romney dynasty here. As with the Kennedys numerous offspring can do away with a big fortune in a generation or two at most. Romney has five.

Posted by Chris08 | Report as abusive
 

Wow, Ben Walsh you are innumerate.

This article is so intellectually lazy that he hurt to read it and is why I decided to comment on it. First let’s remove the polarizing Mitt Romney from the article and focus on the math. The author claims that we should look at net worth, not net income. HOWEVER, the author must have not done well in math because he is dividing apples and oranges.

Total net worth is accumulated over the span of a lifetime; therefore, it should only be compared with total contribution over the span of a lifetime.

Here are your choices Einstein:

Lifetime of Contributions / Total Net Worth
Annual Contributions / Annual Income

I’m not sure who did the authors college math courses, but remediation is in order!

Posted by ClubbieTim | Report as abusive
 

Chris08, Romney has already set up a family trust with $100,000,000.00 in it for the benefit of his 5 children. People with estates at this level of wealth don’t wait to die before implementing a tax avoidance strategy. His $100,000,000 IRA is another example. Wanna try to explain that one?

Posted by sfcanative | Report as abusive
 

Being that Romney must give 10% of his money to the church, it is tithed money (more like a Union due than given the church voluntarily, and the Mormon uses the money to build malls, buildings and entertainment parks and very little of that enormous amount is used to do good work for those in need … a lot of it is used for projects such as lobbying against gay marraige) Sadly even that money must be allocated as charitable in spite of the fact that charity has little to do with it.

I am curious that Romney himself said he made 40 million in 2010 and 2011. Although it was an estimate, how curious that a man of such extreme wealth and plethora of tax lawyers, could be so many millions out in the ‘estimate.” He made the statement in 2012… and based his charitable contributions on that income.

Romney’s other tax deduction, oops I mean “charity”, is front loaded so he can get deductions well before they are used for any other purpose and also make himself look entirely altruistic, when very little is actuality used for charitable purposes.

Plus the deduction for the charity that he didn’t yet receive will be taken next year to lower his taxes or within the next 3 years…

I give a lot more than 10% of my money to charities which I ensure are giving 80% directly to help others. I directly give through angel group (100%) where I was alligned to buy furniture directly for a family so they could pass a home inspection and get their kids back after cleaning up their lives. We are being charitable and THAT is an investment for their future and their children’s future. That is charity.

I also volunteer many hours a week, make soup for soup kitchens (and *gasp* even serve it!) and have spent countless hours helping others in many ways so that people can have a hand up. Knowing what it truly means to be generous and give back to the world,and being in environments where all of the people I volunteer with are generous and empathetic, it makes me rather ill to hear Romeny defined as “extraordinarily, remarkably, astonishingly generous man.” By definition he is none of the above. Only the greedy elite would consider him so.

As you said Felix:

“It’s an odd kind of generous for a man to be worth a quarter of a billion dollars, earn $13.7 million on that $250 million (a 5.5% return), and then donate 30% of that $13.7 million. No wonder he conflates paying taxes with giving to charity. Generosity is generally tied to the concept of relinquishing wealth — and that is not what Romney is doing.”

Oh and sditulli, you made me throw up a little with that remark. Now capitalism is charity? Pffffffft! What absolute hogwash.

I am Canadian, so please, no remarks about me being an angry Democrat as I have no skin in your game. I do know a greedy liar when I see one.

Posted by youniquelikeme | Report as abusive
 

Felix, you didn’t even go where you should have: what are those “charitable” donations?

Giving to the Church that tries to excommunicate those who point out he’s not a good candidate, let alone a good man? Giving to places that will name buildings after him? Or Equestrian Associations?

Credit where due: the Gates Foundation takes on things that will never affect Bill Gates, such as malaria eradication and providing contraceptive access to those who cannot afford it. (One may quibble that their actions in some areas–public education, say–are misguided at best, harmful at worst, but Bill, like Mitt, never set foot into a public school where he wasn’t being paid or feted.)

Posted by klhoughton | Report as abusive
 

Oops, sorry, Ben, not Felix.

Compares to Gates or Buffett, Willard is not “charitable”; he gives for his Glory, not his G-d’s, as the dude in the third Raiders movie asks.

Romney is sounding brass, tinkling cymbal, or, to borrow from Tom Lehrer in another context, “full of words and music and signifying nothing.”

(Far be it for me to complain about someone else singing off-quay with no sense of pitch; suffice to say, I recognize in Willard a compadre in the chorus.)

Posted by klhoughton | Report as abusive
 

“Romney is certainly a better allocator of capital than almost anyone else he would put in charge of his money.”

sditulli, if Romney were truly munificent, he could establish a foundation whose assets he could continue to invest as he sees fit – he and his heirs just wouldn’t be the beneficiaries. He could even just sign the giving pledge without actually giving everything away now. That would be more impressive than his nice, but hardly unusual contributions to date.

Posted by loudnotes | Report as abusive
 

It is quite presumptuous to tell someone, presidential candidate or not, what he ought to do with his money and what is the “right” amount to donate to charity and the “right” time to do so. That’s my particularly so when my best guess is that Romney’s charitable donations in 1 year are quite likely greater than the charitable donations that Mr. Walsh (or any individual amongst the commenters) will donate over a lifetime.

It seems reasonable to assume that someone donating 30% of income to charity on an annual basis also plans to donate a substantial percentage of his estate to charity, and I don’t see why that timing differential is particularly important.

Posted by realist50 | Report as abusive
 

realist50, Mitt is quite rich is he not? I am actually considered barely above the poverty line according to my income. (I am getting a reduced retirement income and not old enough for benefits) My meager “wealth” is from the unfortunate death of my parents and having invested since I was in my early 20′s and I use much of that to give bursaries and charitable gifts to schools and charities as well.

I am not being tithed and most of what I do and give cannot be used as a tax deduction. Do you REALLY want to realistic-ally make the comparison that I as a commenter will never give as much as Romney?

You cannot see the significance of the work I do that is charitable and the donations I give, as the amounts are miniscule by comparison. But those people I help are in need right now. I am saving lives, educating children that are not mine and helping families and individuals get back on their feet so they can contribute to society… right now.

I tend to consider what Mitt has done to benefit himself, right now, in his tax write offs, to actually increase his wealth and prestige, to appear more altruistic to the population. He has manipulated his income to makes his charitable donations look even better. (foregoing receiving realized income in the 2011 tax year is a trick only very expensive tax lawyers can finagle) The trusts for Romney s charity and others in Bain also donate to each others trusts.

(I also have to realistically consider how he enhanced his income by squeezing businesses to bankruptcy, outsourcing, firing people, stealing pensions, investing unethically and curiously also in China and Russia when he has called them enemies, and hiding money in tax havens, perhaps even illegally in Swiss accounts, and using tax loopholes to game the system to enrich his coffees)

So when we consider how many lives Romney has destroyed to get where he is today, compared to me (Mitt Romney: thousands vs me: none) I believe in terms of comparable value, my charitable work and donations have considerable worth.

(Sorry Ben, but on the main page Felix’s picture is at the top. I will also remind Chris08 that Romney has a 100 million Family Trust which is not included in his wealth and Romney wants to eliminate the estate tax if he is made President.)

Posted by youniquelikeme | Report as abusive
 

Felix is a very bright fellow, but like most mainstream media liberal Democrats, from time to time he can’t help himself and he gets lost in the real world. This piece is just pathetic.

Regarding a matter that has already been disclosed and is in no way disputed, in the 3 years prior to running for President, Barrack Obama gave less than 1% of his >$1 million income to charity. His net worth also went way up during those years, in part because his wife’s salary magically went up 3x once he was elected Senator, in part because he published a successful book, but also because of an unusually fortunate real estate deal he did with his former business associate, the now convicted felon, Tony Rezko. (Hey Felix: did you ever do a shady real estate deal with a convicted felon? Funny, me neither.)

If I’m wrong and Felix was more balanced here than it seems, someone please alert me to the nasty column Felix wrote about Barrack and Michelle hoarding 99% of their ill-gotten gains.

Finally, as for Romney being relatively boastful about his giving, good grief: the Obamas never fail to remind us how fortunate we are just to be among them.

My strong suspicion is that if you worked at a hardware store with Mitt and Barrack and you fell upon hard times, there’s little doubt Mitt would help you out and Barrack would stiff you.

Posted by solotar | Report as abusive
 

Just a thought for everyone, according to SteveHamlin’s post Mitt Romney is donating to charity. He doesn’t have to donate to charity, but he does. President Obama doesn’t have to donate to charity but he does. They both donate, albeit different percentages of their respective worth, which is the point isn’t it? Helping those less fortunate is a noble act and both the incumbent and the challenger should be thanked, not criticized for their donations.

Posted by Brown_Inc | Report as abusive
 

younique, you make an excellent point when you discuss the social value (or social damage) that produced Romney’s fortune in the first place. I’ve had people tell me that I’m a fool to work as a teacher — I would do more good by taking a Wall Street job and giving half my income to charities. Isn’t this more or less the path that Mitt Romney is following?

But I won’t judge others. Glass houses. I wonder, how charitable is Felix with his upper-5% income? He could do a lot of good if he were content to live on $50k/year and gave the rest to charities.

I’m sure you could level similar charges against me (if I were so foolish as to share the details of my finances). We could all do more — which is why it is distasteful to rebuke Romney for his giving.

Posted by TFF17 | Report as abusive
 

Well TFF, I was making a point, being Romney was being touted as an extraordinarily, remarkably, astonishingly generous man. Were you so rich as he and called out those who didn’t pay income tax (because they didn’t make enough income and some ironically by (R)tax credits) while using tax havens and dubious shelters, I assure you I would be happy to admonish you in kind.

Sorry that you find those remarks tasteful, given what I had to say, yet find my remarks distasteful. Good for you for not judging others!

Here is another point. How much is actually going to charitable work and helping others and how many declared the same charitable tax deduction when so many of charities and trusts are “giving” to each other.

One example:

BAIN CAPITAL CHILDRENS CHARITY LTD
Bain doesn’t list which charities they give to, but says they: provide financial support to over 125 charitable organizations globally that benefit children and young people in a unique and valuable way.

~~~~~~~~~~~~~~~~~
Annual Revenue & Expenses

Fiscal Year Starting: Jan 01, 2010
Fiscal Year Ending: Dec 31, 2010

Total Revenue $1,430,373
Total Expenses $1,370,191

The 990 filing: exempt purpose achievements

Bain Capital Children’s Charity, Ltd, conducts golf and other informal fundraising events to benefit various charitable organizations which support the general welfare of children and young adults.
~~~~~~~~~~~~~~~~~

Yes, everyone could do more to actually benefit society, rather than pretend there charitable giving when it is simply a tax exemption.

Posted by youniquelikeme | Report as abusive
 

Sigh. I have no clue as to why whether a presidental candidate is wealthy or not, and what he may or may not do with such wealth has any bearing on the election. You may or may not agree with a candidate’s qualifications, life, or beliefs, but this stuff just goes off the deep end.

Really, why are we doing this, other than the fact that Felix posts some words? We have had wealthy candidates of both parties, and certainly post-presidents such as Bill Clinton make a ton of money afterwards. To be fair, I have to continue to admire Jimmy Carter, who was probably a below average President, but attempted to become a moral compass for a society who didn’t particularly want one.

Posted by Curmudgeon | Report as abusive
 

Huh? Don’t know what you are talking about, younique. I wasn’t criticizing anything you said — if anything I was criticizing Felix’s original post. My only response to you was “good comment”. Chip on your shoulder, maybe?

“I would be happy to admonish you in kind.”

You are welcome to do so if it floats your boat. As I said, we could surely do more than we do.

Posted by TFF | Report as abusive
 

I would really like to bring back some balance to a what was once a really good blog that for some reason has completely gone off the rails. Are you listening, Felix? I suspect not.

Posted by Curmudgeon | Report as abusive
 

TFF, the glass house comment etc, and using “you” after saying my name might be why … also saying you were not judgmental made me go … HUH? If you were agreeing with me it was lost after the first sentence. (plus you said I might level similar charges against you and I agreed)

Curmudgeon, the last 4 blogs were by Ben Walsh. It seems Felix took a long weekend.

Posted by youniquelikeme | Report as abusive
 

The income/worth debate is clever but really doesn’t address the issue of truly generous charitable donations. Isn’t donating without getting anything in return, not even a tax donation, the truly generous charitable donation? A LOT of people with dramatically less income or worth than even average income make these donations all the time. The fact Romnoid elected to temporarily forego a portion of his deduction to cook the figures on his tax rate doesn’t qualify. The fact these figures showed up on their tax returns disqualifies both these guys as truly, unselfishly generous ..

Posted by Woltmann | Report as abusive
 

“Giving away almost a third of your annual income sounds laudable, but for someone of Mitt Romney’s wealth, charity should be assessed by net worth, not income. The Romneys’ net worth is currently estimated at $250 million. $4 million is just 1.6% of that net worth.”

Can the Democrat media get any more loathsome than to attempt to attack Romney’s charitable giving?

Romney’s wealth was built over the past 40 years and he donated to charity in every one of those years.

Posted by BartDePalma | Report as abusive
 

It’s interesting to see how generous Mitt & Ann Romney are compared to Barack Obama. Obamas’s half brother lives in a shack in Kenya and has an income of $20/year. You think he would be charitable enough to help him out…

Is this the type of President the American people want?

Posted by FabrizioP | Report as abusive
 

I’d be interested in seeing where the “donations” went.
The Mormon church requires everyone donate to the Church.
Some of the money goes to helping the less fortunate but , as any church, a lot of it goes to building elaborate churches and supporting their massive outreach programs.
I don’t consider donating to a churches building fund as charitable giving. Nor do I regard funding conversion programs as charity.
To me, charity has more to do with helping poor people

Posted by Naksuthin | Report as abusive
 

Based on Romney’s comments about the 47% of the US population who mooch off the 53% “maker” class, charitable donations of any amount should pose a moral dilemma for him.

Why? He said the 47% take no responsibility for their lives. In Romney’s view, they would either a) squander the gift or b) become addicted to it, as they would government handouts. In effect, these folks are beyond help.

Posted by Frankie5angels | Report as abusive
 

Brings to mind the story in the Bible in which the rich person who tossed in a few bucks was unfavorably compared to the very poor widow “who gave all she had”. Heaven’s calculator and metrics differ from ours and since Mitt’s the one who always brings religion and how generous he is to his church into it as a sign of what a really generous fellow he is (although very humbly, saying he doesn’t want to talk about it but lets do it anyway), perhaps he needs to re-read the Bible. I realize the Mormons are a very heterodox sect, but surely they can’t argue with the big JC!?!

Posted by iMom | Report as abusive
 

I just wanted to remind people who feel Romney is generous that the tithe is considered not only Romney’s duty, but his ticket to being a ruler of his own heavenly kingdom in the afterlife. He also cannot attend his church or use the power structure of the church if he doesn’t tithe.

It has little to do with goodness of heart. (and even his self-named charity is a tax deduction he front loads to his benefit, with lots of deductions but little being used for charity)

Although the Mormon church is not the only one to use a money grab (extort by using such promises to excessively or exorbitantly charge) it would be wise to remember when comparing how generous he is in THIS life and why.

Posted by youniquelikeme | Report as abusive
 

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