Mitt Romney’s Tax Dodge

Romney

Romney (Photo credit: Talk Radio News Service)

Mitt Romney at one of his presidential campaig...

Mitt Romney at one of his presidential campaign rallies. (Photo credit: Wikipedia)

Romney Signs Wind Turbine In Iowa

Romney Signs Wind Turbine In Iowa (Photo credit: Talk Radio News Service)

Mitt-Romney

Mitt-Romney (Photo credit: Wikipedia)

How does a private-equity kingpin worth at least $250 million pay a lower tax rate – just 14 percent – than many teachers and firemen? By exploiting tax loopholes that favor the rich and hiding his money in the world’s most notorious havens for tax cheats. That’s what Mitt Romney has done, according to his 2010 and 2011 tax returns, a trove of secret Bain Capital documents unearthed by Gawker, and exposés by Bloomberg and Vanity Fair. “The bottom line,” says Rebecca Wilkins, senior counsel at Citizens for Tax Justice, “is that these are ways to reduce your taxes that are only available to rich people.”

Are Romney’s tax dodges legal? It’s impossible to say for sure, given how little he has disclosed. But tax experts note that there are plenty of red flags, including an investigation by New York prosecutors into tax abuses at Bain Capital that began on Romney’s watch. “He aggressively exploits every loophole he can find,” says Victor Fleischer, a professor of tax law at the University of Colorado. “He’s pushing the limits of tax law beyond what many think is reasonable.” Indeed, a look at Romney’s finances reveals just how skilled he is at hiding his wealth – and paying a fraction of his fair share in taxes.

SWISS SECRECY

On his 2010 tax return, Romney disclosed that his wife Ann’s trust held $3 million in a Swiss bank account at UBS, which had just been busted by the IRS for abetting criminal tax evasion by U.S. citizens. As part of a $780 million settlement, UBS was forced to turn over the names of thousands of its long-secret clients, who were then offered a partial amnesty: disclose their hidden assets, pay penalties and avoid prosecution. Romney – who had omitted the Swiss account on previous financial disclosures – suddenly came clean. Did he reveal his secret account to avoid prosecution for tax evasion? “He’s not quite denied that,” says Daniel Shaviro, a professor of tax law at NYU. The record of paying an IRS penalty on the Swiss account could explain why Romney has been so determined to keep his 2009 tax return under wraps.

Greed and Debt: The True Story of Mitt Romney and Bain Capital

BERMUDA SHELL GAME

Romney has buried an unknown, and perhaps significant, chunk of his wealth in what SEC filings describe as “a Bermuda corporation wholly owned by W. Mitt Romney” – driving speculation that the candidate is worth far more than he has disclosed publicly. Wealthy Americans frequently launder investments through such offshore shell companies, passing themselves off as foreign investors – a scam that makes them exempt from paying U.S. taxes, even on profits from American deals. Romney created his shell company, Sankaty High Yield Asset Investors, in 1997 and reportedly involved it in many of Bain’s biggest deals, including the takeover of Domino’s Pizza. Yet he failed to report its existence on any financial disclosures prior to his 2010 tax return, even though it is under his control. “What is this corporation? What does it do? Why was it set up in a tax haven?” asks Wilkins. “There’s a reason why it’s in Bermuda.”

LUXEMBOURG SHELTER

In 2000, when Romney was CEO of Bain, the firm hit the jackpot: A $40 million investment in the Italian yellow pages during the tech boom returned an astonishing $1 billion. Romney himself reportedly ended up with $50 million – a cut larger than Bain’s initial investment. To evade taxes on the gains, Romney steered the profits through Bain subsidiaries in Luxembourg, Europe’s most notorious tax shelter, where the money would be exempt from foreign taxes. In 2009, as a board member for Marriott, Romney also helped the hotel chain use the same tax tricks to shelter more than $200 million in Luxembourg. Marriott wound up paying less than half the corporate tax rate – just 16.9 percent.

Mitt Romney’s Real Agenda

CAYMAN CASH

Romney has nearly $30 million stashed in at least a dozen Bain funds in the Cayman Islands, where, as one filing boasts, investments are free from “income, estate, transfer, sales, or other Cayman Islands taxes.” But because some of those funds are directly invested in U.S. companies, they likely disclose their investors to the IRS, making them unattractive to tax cheats. So Bain also raises capital for its deals by selling shares in “feeder funds” – intermediary entities that invest in Bain’s official funds, but don’t have to make disclosures to the IRS. “If you want to cheat, they’ve rolled out the red carpet for you,” says Wilkins.

Has Romney paid all his taxes on the shady funds? Only he and the IRS know for sure. But even if Romney never cheated personally, the feeder funds he appears to have invested in cater to tax criminals, making it easier for him and his Bain partners to raise capital and rake in big management fees.

Romney is profiting from one form of tax evasion in the Caymans: equity swaps. Under this racket run by top Wall Street banks, American firms pay out their profits – tax-free – to investment funds based in the Caymans. According to a Senate investigation, the purpose of these complex instruments is “to dodge payment of U.S. taxes on U.S. stock dividends.” Romney has more than $1.25 million invested in four funds that profit from equity swaps – including two managed by Goldman Sachs.

RETIREMENT TRICKS

Romney has stockpiled as much as $87 million in his IRA – even though contributions to such retirement accounts are limited to just $30,000 a year. “Congress never intended IRAs to be used to accumulate that kind of wealth,” says Wilkins. To get around the limits, Romney appears to have directed his IRA to invest in a special class of Bain stock. By assigning an artificially low value to the shares, Bain ensured that any returns would be wildly inflated – as much as 30 times the initial investment. By buying rigged stock with his limited IRA dollars, Romney got to reap the bonanza tax-free.

Romney also padded his IRA by investing in “blocker funds” that Bain has set up in the Caymans. Such funds attract tax-exempt investors – like college endowments or Romney’s IRA – that want to avoid paying the Unrelated Business Income Tax, a 35 percent penalty designed to prevent tax-exempt investors from having an unfair advantage over for-profit businesses in private-equity deals. But by buying shares in offshore blocker funds that then invest in Bain and other takeover artists, investors like Romney bilk the Treasury out of $100 million a year. “It’s an absurdly easy escape,” says Shaviro.

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Mitt Romney is lying again.

Mitt Romney

Is Lying. Again.

POSTED: AUGUST 30, 4:44 PM ET | By TIM DICKINSON

mitt romney
Mitt Romney
Chip Somodevilla/Getty Images

 

On the eve of his speech at the Republican convention, Romney and his campaign have launched a new site touting Mitt’s private-sector experience:SterlingBusinessCareer.com.

Under a section called “Fixing Businesses,” the campaign lays out the legend of Romney’s 1990 return to the consulting firm Bain & Company, describing his turnaround effort there as an “incredible success” that returned the firm to profitability “in just a year.”

 

bain 1

 

That is a lie.

Federal records obtained by Rolling Stone through a Freedom of Information Act request reveal that Bain & Company lost money in both 1991 and 1992 — with Romney at the helm.

This December 22, 1992 analysis for the FDIC lays out the truth about Bain & Company’s mounting losses (both “operating” and “net”) in a section called “Historical Operating Performance.” (FDIC was owed more than $30 million by Bain & Company after the 1991 failure of the Bank of New England.):

 

bain 2

 

Here’s the hard truth: Romney’s turnaround effort at the consulting firm was a fiasco. In fact, Bain & Company was only rescued from the brink of collapse by the federal government. In 1993, the FDIC agreed to wipe away more than $10 million it was owed by Romney’s firm because it believed that “the company will fail if the debt is not modified.

For more on the true story behind the government bailout that saved Romney’s career, read this piece from the magazine.

View other highlights from the FDIC documents obtained by Rolling Stone here.

“We don’t need someone to think”

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 10, 2011, after receiving the “Defender of the Constitution Award”. (Photo credit: Wikipedia)

 

English: at CPAC in .

English: at CPAC in . (Photo credit: Wikipedia)

 

English: Christopher Hitchens at a party at th...

English: Christopher Hitchens at a party at the house of Grover Norquist following the CPAC convention in January 2004 (Photo credit: Wikipedia)

 

English: Former Congressman Newt Gingrich of G...

English: Former Congressman Newt Gingrich of Georgia speaking at CPAC 2011 in Washington, D.C. (Photo credit: Wikipedia)

 

English: Official photograph portrait of forme...

English: Official photograph portrait of former U.S. President George W. Bush. Português: Foto oficial de George W. Bush, presidente dos Estados Unidos da América. (Photo credit: Wikipedia)

 

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 11, 2011. (Photo credit: Wikipedia)

 

English: Grover Norquist at a political confer...

English: Grover Norquist at a political conference in Orlando, Florida. (Photo credit: Wikipedia)

 

Grover Norquist, conservative general, explains it all. (Credit: Jeff Malet)

 

On Friday evening, conservatives and Occupy forces talked trash outside the Conservative Political Action Committeeconference (CPAC) in Washington, D.C. To my right stood two Occupy soldiers, Michael and Mo, both African-American, shouting slogans about the 1 percent. To my left, a cluster of jacket-and-tied CPAC men shouted sound bites about freedom  In between them stood a line of grim-looking, blue-suited officers of the Metropolitan Police Department, both white and African-American, quite possibly thinking,These people are nuts.

Both sides came equipped for a war of words. Michael is a young Iraq war vet from Alaska who once admired George W. Bush, and is now an Occupier par excellence. He offered the high-decibel insight that “The system has failed!” Standing next to him, Mo, a big guy and a regular at the now-evicted OccupyDC camp, shouted, “The 1 percent are using you guys.”

“The 1 percent?” a CPAC man volleyed back. “God bless ‘em. What’s wrong with making money?”

Another CPAC-er tossed this verbal firecracker: “Just because you’ve failed, doesn’t mean the system’s failed.”

That was rich, the Occupiers thought. Michael had done a tour of duty in Iraq — probably one more than the CPAC man had done. Mo was personally offended. “I haven’t failed,” he said, his face crinkling up at the insulting assumption. “I havea job.” He shook his head and turned away like: There’s no talking to these people. And the CPAC gang turned away, no doubt thinking: There’s no talking to these people.

The CPAC cluster hungrily took up the chant of “Steak! Steak! Steak!” Occupiers replied with a mocking chant of “White power! White power! White power!” And so the confrontation dissolved.

“Truth on our side” 

But inside the big hotel, there was no such failure of communication. Several thousand energized, if anxious, conservative activists launched themselves into the 2012 presidential campaign with a display of divisions — but also an unmistakable resolve to end the presidency of Barack Obama by any legal means necessary. Their mood was upbeat, and barely shaken by the falling unemployment rate and the president’s recent uptick in the polls.

 

Jefferson Morley

Jefferson Morley is a staff writer for Salon in Washington and author of the forthcoming book,Snow-Storm in August: Washington City, Francis Scott Key, and the Forgotten

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)

Race Riot of 1835 (Nan Talese/Doubleday).

speaking at CPAC in Washington D.C. on Februar...

speaking at CPAC in Washington D.C. on February 12, 2011. (Photo credit: Wikipedia)

 

 

“We don’t need someone to think” – Salon.com

Grover Norquist, conservative general, explains it all. (Credit: Jeff Malet)

On Friday evening, conservatives and Occupy forces talked trash outside the Conservative Political Action Committee conference (CPAC) in Washington, D.C. To my right stood two Occupy soldiers, Michael and Mo, both African-American, shouting slogans about the 1 percent. To my left, a cluster of jacket-and-tied CPAC men shouted sound bites about freedom  In between them stood a line of grim-looking, blue-suited officers of the Metropolitan Police Department, both white and African-American, quite possibly thinking, These people are nuts.

Both sides came equipped for a war of words. Michael is a young Iraq war vet from Alaska who once admired George W. Bush, and is now an Occupier par excellence. He offered the high-decibel insight that “The system has failed!” Standing next to him, Mo, a big guy and a regular at the now-evicted OccupyDC camp, shouted, “The 1 percent are using you guys.”

“The 1 percent?” a CPAC man volleyed back. “God bless ‘em. What’s wrong with making money?”

Another CPAC-er tossed this verbal firecracker: “Just because you’ve failed, doesn’t mean the system’s failed.”

That was rich, the Occupiers thought. Michael had done a tour of duty in Iraq — probably one more than the CPAC man had done. Mo was personally offended. “I haven’t failed,” he said, his face crinkling up at the insulting assumption. “I have a job.” He shook his head and turned away like: There’s no talking to these people. And the CPAC gang turned away, no doubt thinking: There’s no talking to these people.

The CPAC cluster hungrily took up the chant of “Steak! Steak! Steak!” Occupiers replied with a mocking chant of “White power! White power! White power!” And so the confrontation dissolved.

“Truth on our side”

via “We don’t need someone to think” – Salon.com.

“We don’t need someone to think” – Salon.com

Grover Norquist, conservative general, explains it all. (Credit: Jeff Malet)

On Friday evening, conservatives and Occupy forces talked trash outside the Conservative Political Action Committee conference (CPAC) in Washington, D.C. To my right stood two Occupy soldiers, Michael and Mo, both African-American, shouting slogans about the 1 percent. To my left, a cluster of jacket-and-tied CPAC men shouted sound bites about freedom  In between them stood a line of grim-looking, blue-suited officers of the Metropolitan Police Department, both white and African-American, quite possibly thinking, These people are nuts.

Both sides came equipped for a war of words. Michael is a young Iraq war vet from Alaska who once admired George W. Bush, and is now an Occupier par excellence. He offered the high-decibel insight that “The system has failed!” Standing next to him, Mo, a big guy and a regular at the now-evicted OccupyDC camp, shouted, “The 1 percent are using you guys.”

“The 1 percent?” a CPAC man volleyed back. “God bless ‘em. What’s wrong with making money?”

Another CPAC-er tossed this verbal firecracker: “Just because you’ve failed, doesn’t mean the system’s failed.”

That was rich, the Occupiers thought. Michael had done a tour of duty in Iraq — probably one more than the CPAC man had done. Mo was personally offended. “I haven’t failed,” he said, his face crinkling up at the insulting assumption. “I have a job.” He shook his head and turned away like: There’s no talking to these people. And the CPAC gang turned away, no doubt thinking: There’s no talking to these people.

The CPAC cluster hungrily took up the chant of “Steak! Steak! Steak!” Occupiers replied with a mocking chant of “White power! White power! White power!” And so the confrontation dissolved.

“Truth on our side”

via “We don’t need someone to think” – Salon.com.