Republican presidential hopeful Mitt Romney released his 2010 tax returns yesterday and America learned he paid an effective tax rate of 15 percent on $21.6 million of income. Slate took this information and put an interesting spin on it: "How long would it take the GOP candidate to earn what you made in a year?" It allows you to compare your own annual income to Romney's.
Being the salary experts we are at PayScale.com, we decided to take some common American jobs and utilize the calculator on Slate's article to show the disparity between Mitt and the average American worker. In addition, using the tax rate calculator provided by CPA Site Solutions, we will also show the estimated effective tax rates paid by these average American workers.
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Mitt's vs. Average American Worker: Earnings and Tax Rates
Using our extensive database of over 30 million profiles, we found the national median pay for mid-career workers (10 or more years of experience) for five common jobs in America. These jobs cover a breadth of industries and job functions: social worker, high school teacher, registered nurse, mechanical engineer and software developer.
Below is each job's mid-career, national, median, annual pay, the amount of time Romney would need to work to earn this pay (accordng to Slate's Calculator) and their effective tax rate assuming they are filing as a single (using CPA Site Solutions' calculator):
- National Median Pay: $51,500
- In 2010, Romney could earn this amount in 20.8 hours (half a full-time work week)
- Tax Rate: 12.9%
High School Teacher:
- National Median Pay: $51,800
- In 2010, Romney could earn this amount in 21 hours (just over half a full-time work week)
- Tax Rate: 12.9%
- National Median Pay: $64,200
- In 2010, Romney could earn this amount in 26 hours (just over 3/5 of a full-time work week)
- Tax Rate: 15.2%
- National Median Pay: $79,200
- In 2010, Romney could earn this amount in 32 hours (4/5 of a full-time work week)
- Tax Rate: 17.1%
- National Median Pay: $86,100
- In 2010, Romney could earn this amount in 35 hours (5 hours shy of a full-time work week)
- Tax Rate: 17.7%
As you can see from above, Mitt Romney would be able to earn any of these average American salaries in under a week. Additionally, over half of the positions examined pay a higher effective tax rate on their income than Mitt Romney did on his.
Two caveats should be mentioned on the above figures: 1) the majority of Mitt's 2010 income came from capital gains rather than actual wages and thus taxes work out differently and 2) his earnings are volatile, meaning there is no guarantee he had $20 million in income in 2011.
However, in a time when Romney earns over 500 times more than the average worker ($20.5 Million vs. $38,800, according to the 2010 US Census) and can offer to throw away $10,000 on a bet, it will be interesting to see how Romney's opponents use this information in the coming election campaign, and how he talks about it himself.
Even though you are unlikely to earn pay as high as Romney, do you wonder how your pay compares to others like you? When you want powerful salary data and comparisons customized for your exact position or job offer, be sure to build a complete profile by taking PayScale's full salary survey.
Analytics Manager, PayScale, Inc.