After fumbling the ball on his tax returns for several weeks, Mitt Romney finally released one year of tax returns (2010) yesterday, far less than the gold standard set by his father, George Romney, who released 12 years’ worth during his 1968 run for the White House. In 2010 Romney earned $21.7 million from profits, dividends and interest. He had no income from salary. In 2010 he paid about $3 million in federal tax, for an effective rate of 13.9%, far less than the top rate of 35% on salary income. No one is suggesting Romney did anything illegal, but many people will soon be suggesting that the tax laws should be changed so that people with very high incomes pay the top rate in the tax code. Expect President Obama to make this point in his State-of-the-Union speech tonight. In a year where the 99% vs. the 1% is becoming a big issue, the fairness of the tax laws is bound to become a major campaign theme and one that is certain to cause trouble for Romney. If he tries to pull a Buffett and says: “People like me should pay a higher rate than their secretaries” nobody will believe him. He has said that people earning under $200,000 should be exempt from capital gains taxes, but he has never suggested taxing capital gains as ordinary income for people earning over $200,000.

Romney’s wealth is estimated to be about $220 million, give or take a few tens of millions. This means he got something like a 10% return on his investments (unless it turns out he is still getting profits from his time at Bain Capital). At a time when many people have had large losses in the stock market and interest rates are at a historic low, 10% looks pretty good. This could work for Romney by showing his business acumen but first people are going to want to know how he managed this feat.

After Romney became governor of Massachusetts in 2003, some of his assets were placed in a blind trust overseen by Boston lawyer and private equity specialist R. Bradford Malt. If Malt did a good job of minimizing taxes and this information leaks out, the issue of fairness is bound to come up again and again. The problem isn’t that Romney or Malt broke any law–in all likelihood people that smart adhered precisely to the letter of the law–the problem is the law itself and whether it should favor the very rich at the expense of ordinary Americans. This is a debate that Obama would love and which must give Romney nightmares.

via President, Senate, House Updated Daily.