Mitt Romney yesterday admitted for the first time that his tax rate is about 15 percent, lower than the rate paid by millions of middle class families. Romney is able to pay such a low rate (even though the top income tax rate is 35 percent) because his income comes overwhelmingly from investments and he is able to use a pernicious loophole available to wealthy money managers.

Romney has been refusing to release his tax returns, finally conceding to releasing his 2011 return after he files it in April. However, only releasing his 2011 returns would give Romney the opportunity to keep under wraps some of the financial engineering he may have done to avoid taxes before the last calendar year. As Reuters noted, those returns “could shed light on how Romney and Bain use offshore strategies to avoid taxes.” In fact, ABC News reported today that Romney has millions of dollars parked in several Bain funds that are set up in tax shelters in order to help their investors avoid U.S. taxes:

Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven…As one of the wealthiest candidates to run for president in recent times, Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune. In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

Even if these funds don’t help Romney directly dodge U.S. taxes, which the campaign claims they don’t, they convey a host of advantages to Bain and Romney, including “higher management fees and greater foreign interest” from investors looking to avoid U.S. taxes. As the Washington Post’s Suzy Khimm noted, “just one of these offshore-linked funds — Bain Capital Fund VIII, based in the Cayman Islands — generated $1 million for the Romneys in 2010.”

Offshore funds are attractive to investors, since they help with tax evasion, and more investor interest translates into more profit for Bain and Romney. As we’ve noted, Romney has a lucrative retirement deal with Bain that is paying him millions each year.

In contrast to Romney’s steadfast refusal to release his tax returns, George Romney (Mitt’s father) released 12 years worth of tax returns when he ran for president in 1968. Those returns showed that the elder Romney paid a 37 percent effective tax rate.

Mitt Romney yesterday finally admitted that he pays a tax rate of about 15 percent, though he continues to put off releasing his full tax returns. However, when Mitt’s father, George Romney, ran for President in 1968, he released 12 years of tax returns, which revealed that he paid a 37 percent effective tax rate. From the Sarasota Herald-Tribune, November 25, 1967:

Romney became a millionaire on company stock options after he introduced a compact car as president of American Motors Corp. The figures show his adjusted gross income ranged from $661,427.68 when he was president of American Motors Corp. to a low of $78,483.85 last year. The figures indicate he paid $1,099,555.18 in taxes on an income of $2,972,923.58.

These numbers show Romney paying a 36.9 percent effective tax rate (but this was also a time when the top income tax rate was 70 percent). Lee Fang noted that the returns also “showed that George Romney donated 19 percent of his income to church, 4 percent directly to charity, and most surprisingly…that the Michigan governor ‘seldom took advantage of tax loopholes to escape his tax obligations.’”

Romney, meanwhile, is the beneficiary of a huge tax loophole that lets private equity managers like himself pay a lower tax rate on their earnings than millions of middle class families. He has also advocated a tax plan that would cut his own taxes nearly in half, while raising taxes on half of middle class families with children.

In his State of the State address yesterday, New Jersey Gov. Chris Christie (R) announced his plan to institute a 10 percent tax cut across all income tax brackets. Celebrating his rather draconian budget cuts over the past two years, Christie said, “because we have put our fiscal house in order, we can budget for our priorities and give tax relief to all of our people.”

Not surprisingly, this tax cut will benefit the wealthy significantly more. While a family making $600,000 would keep $4,000 of their income, a middle-class family making $50,000 would save only $130:

High-income families would get the biggest boost from his proposed tax cut. Families making more than $500,000 now pay just under 9 percent of their incomes in state taxes. Under Christie’s plan, the highest rate would drop to just over 8 percent, meaning that the annual state income tax paid by a family with $600,000 in taxable income would drop from about $39,000 to around $35,000.

A family making $50,000 would see its tax bill fall from about $1,270 to about $1,140.

Noting that millionaires would reap $7,200 from the tax cut, New Jersey Assembly Speaker Sheila Oliver (D) said, “A 10 percent across-the-board income tax cut might make a nice sound bit, but ultimately it benefits the wealthiest far more than low and middle income earners.” State Senate President Stephen Sweeney (D) just called it “a B.S. tax cut.” “This is another windfall for multi-millionaires at the expense of schools, because that’s where the money comes from,” he said.

Indeed, Christie took an $820 billion bite out of public education in 2010, a cut so severe that it violated the state’s constitution. Christie merely labeled the court “crazy” and complained that he had no way of balancing the budget without gutting education, even when atwo percent tax increase on millionaires would completely plug the hole.

Even now, Christie has not mentioned how he plans to pay for the 10 percent income tax cut that could cost the state over $1.1 billion. But he still managed to blast the state Supreme Court regarding his education cuts. He called on the court to “admit” that its ruling “requiring poor, often urban schools to get increased funding was ‘a failure‘ because pupil performance at those schools has not improved.” Judging by his past and future plans, neither has the governor’s.

If Mitt Romney is trying to shed his image as an out-of-touch banker, yesterday did not help. On the same day the GOP frontrunner revealed that he pays a much lower tax rate than many middle-class Americans, the founder and CEO of the world’s largest private equity fund hosted Romney and a select group of other financial elites for a top-dollar fundraiser and strategy session at his ultra-posh Manhattan home.

The venue was the Park Avenue apartment of Stephen Schwarzman, the 66th richest person in the world, a 24-room duplex once owned by John D. Rockefeller Jr. that Schwarzman purchased for “$30-something-million” — the highest price ever paid for a New York apartment at the time. There’s even a book about Schwarzman’s building: 740 Park: The Story of the World’s Richest Apartment Building. (Mega-conservative donor David Koch and former Merrill Lynch CEO John Thain also live in the building, though no word if they attended the fundraiser.)

But more noteworthy than Schwarzman’s apartment is the conversation that was likely going on inside. CNBC reports the discussion was sure to be how to “counter attacks from President Obama about Romney’s record at the helm of private equity-firm Bain Capital.” Here’s one approach of Schwarzman’s from 2010 that Romney probably shouldn’t follow:

“It’s a war,” Schwarzman said of the struggle with the [Obama] administration over increasing taxes on private-equity firms. “It’s like when Hitler invaded Poland in 1939.”

Attendees at the board meeting (who provided details on condition that they and the organization not be identified) were shocked. “War? Hitler? Poland? A little over the top for a proposal to make hedge-fund managers pay their fair share in taxes,” one attendee says about the comments.

The tax in question is a particularly pernicious loophole (called “carried interest”) that lets private equity executives and hedge fund managers pay a lower tax rate on their income than other working Americans. As ThinkProgress economics editor Pat Garofalo notes in the Atlantic, “private equity managers are allowed to pay the [lower] capital gains rate on the profits they make managing someone else’s money, not for any risk that they take themselves.” It’s a loophole that benefits only people like Schwarzman, who are already extremely wealthy, and does nothing to encourage investment. Congress has tried to eliminate it several times, but has been always been thwarted by concerted lobbying and Republican intransigence.

The GOP 2012 presidential candidates are headed to South Carolina for its Saturday primary largely in lockstep about economic policy. Across the board, the candidates have proposed tax plans that would give huge tax cuts to the already wealthy and blow a hole in the federal budget, while doing next to nothing for the middle class.

In South Carolina specifically, the candidates’ plans would give tens of thousands of dollars (or hundreds of thousands, depending on the plan) in tax breaks to the richest 1 percent of Americans. Citizens for Tax Justice broke down the plans by candidate and income percentage:

As the table shows, the smallest tax break for the richest 1 percent in South Carolina would be Mitt Romney’s, at about $69,000. Newt Gingrich wins the race for largest tax break for the 1 percent, at more than $212,000. In South Carolina, where the median income is about $43,000, the richest 1 percent have an average income of about $945,000.

Overall, the GOP candidates’ tax plans give tax breaks to the wealthy that are up to 270 times as large as those they deign to give to the middle class. Several of them, in fact, would raise taxes on many middle class families. Romney, for instance, would raise taxes on half of middle class families with children, due to his elimination of an expanded child tax credit implemented by President Obama.

Defying 50 years of precedent set by presidential candidates from both parties, Mitt Romney has so far refused to release his income tax returns, despite calls from the other GOP candidates to do so. Yesterday, he admitted that his effective tax rate is probably about 15 percent — much lower than that of many middle-class families — and said he will probably release his returns in April if he wins the nomination, but only for 2011, which could allow him to hide any embarrassing tax shelters or income sources from previous years.

Now it seems even Romney’s supporters are uncomfortable with his evasiveness on his tax returns. On MSNBC’s Morning Joe today, New Jersey Gov. Chris Christie (R), one of Romney’s most prominent endorsers who has campaigned with the GOP hopeful on the trail, urged Romney to release his tax returns for several years back:

CHRISTIE: First of all, listen, the way I’ve conducted myself in public life all a long is I’ve released all of my tax returns. And I did it during the campaign. I went back a number of years and released my tax returns. And I released them every year after I filed them, right after I filed them to the public of New Jersey so they can see everything, and I think that’s the right way to go and that’s what I would tell governor to do.

He says he’s going to release them in April, and I hope he does. The fact of the matter is that’s what I would advise him to do…That’s the way I’ve conducted myself in public over time, and I were asked by governor Romney, that’s what I would urge him to do as well.

Watch it:

It’s worth noting that Romney’s father, former Michigan Gov. George Romney released 12 years of tax returns when he ran for president.

Meanwhile, Bloomberg News notes that it’s understandable why Romney is reluctant to release his returns: “Romney, one of the richest men to seek the presidency, probably benefits from a controversial tax break that allows him to pay a lower overall rate than do millions of American wage-earners.”