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.

Advertisements

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.

Douglas Gross Iowa chairman, Romney 2008…Take me to that meeting. Tell me where it was and what you were there to do.

English: Presidential candidate Mitt Romney ta...

English: Presidential candidate Mitt Romney talks with patrons at the Senate Coney Island Restaurant, 34359 Plymouth Road, Livonia, Michigan, June 9, 2011 (Photo credit: Wikipedia)

 

Steve Forbes

Steve Forbes (Photo credit: Wikipedia)

 

Mitt-Romney

 

  1. And he believes that this country is the only hope for freedom in this world.

    … What does that mean?

    Because there are other countries that have freedom, but without the strongest country in the world supporting freedom, other philosophies could take over. The philosophy of Russia trying to use its natural resources to become a superpower again, they don’t have freedom. China trying to use some of our free-enterprise system, but they don’t have freedom. You don’t have freedom of education, freedom of where you’re going to live, what job you’re going to have, or let alone religion.

    And then you have the radical Islamists that want to destroy everything in the West at every opportunity in democracy, at any event. And Western Europe and other places that have some freedom, they don’t have the ability to sustain it on their own anymore. They could be subsumed by the other philosophies in this world.

    The United States is the place that has the opportunity to defend freedom around the world and to give people great opportunity. This country has lifted more people out of poverty than any country in the history of mankind, and Mitt believes we can do a better job at it.

    A friend of mine, Rich Schwarm and I — Rich is a former political Republican party chair in Iowa — we flew out and met with [senior Romney adviser] Beth Myers and a number of the key people and discussed the campaign.

    I remember the initial discussion of the campaign, the strategy of the campaign. They were very interested in what the caucuses were about. They really couldn’t quite figure them out, and they also wanted to know how he should be positioned if he wanted to have a chance of winning the caucuses.

    I remember that I had read some material on him previously, particularly something I think Mike Murphy had written, talking about how he adopted a position on abortion, one when he became governor, and then two now that he was running for president. And I was concerned about that.

    They had received advice that he needed to dive right if he wanted to have a chance in Iowa, particularly on social issues. And I remember at the first meeting, I indicated to him that I thought that was a mistake, that he had to be whoever he was. If you’re trying to dive one way or another, you’re going to lose your authenticity and not be successful. …

     

     

  2. Douglas Gross   Iowa chairman, Romney 2008

    Read the full interview »

    After that discussion, then we went to dinner with both the governor and his wife, Ann, at the top of the Ritz-Carlton, overlooking the Boston Common. I suspect they thought that this country boy from Iowa would have stars in his eyes associated with that kind of a setting.

    I’ve dealt with people who have been running for president. That’s one of the opportunities you have in Iowa is you have an opportunity to deal with people who would like to be president, and you don’t have stars in your eyes. You see the world very clearly. And you feel that one of our jobs as Iowans is sort of do the job interview and see what these folks are made of, and if they have the capabilities to be a successful president.

    What I had read about him, and the information I had learned about him, I was impressed with him from the standpoint that I thought he understood big issues. I thought the country was facing big problems, and this is a guy who could tackle those. He had both the intellectual capacity, the organizational capacity to do that.

    But there were some things that still bothered me, and I wanted to talk to him about those things that might bother me. They were the three M’s. …

 

Perry’s propaganda is hardly intended to change laws

Mitt Romney

Image via Wikipedia

 

Mitt Romney - Economic Plan “can’t be scored”

PBS logo seen at the end of its programs from ...

Image via Wikipedia

Brochure from 1961 with basic advice about Soc...

Image via Wikipedia

English: In the United States, Social Security...

Image via Wikipedia

English: Scanned image of author's US Social S...

Image via Wikipedia

English: In the United States, Social Security...

Roosevelt Signs The : President Roosevelt sign...

Image via Wikipedia

But.  Decoy issues are smoke-screens for a far more radical agenda to shred federalism, if not the 20th C.  What President Perry would deliver goes well beyond “fixing” a program or two.  The core fringe mania is “taking back the country,” per a Perry-Manifesto conspicuous from rightwing ravings. As a public service, I here collate ten, nearly Biblical commandments for a born-again country.  Were God to move in such mysterious ways, President Perry’s first inauguration speech will teem with excess.  You heard it here first.

The Real Perry Manifesto

Mandate #1 – Let us declare our Founders endorsed only small, minimalist government, limited to taxation, currency, repayment of loans and border defense against enemies (armed invaders, immigrants, revolutionaries, deviants, etc.).  Thus, every welfare or social notion since the New Deal is unconstitutional and un-American, namely: Medicare, Social Security, Dept. of Education, EPA, all civil rights laws, funding for science, pandemic diseases, global warming, evolution, PBS, NPR, etc.

Mandate #2 – Because God destined this a Christian nation (with evangelical rule), we should rededicate a true America to be a Dominionist stronghold answerable to a literalist reading of the Holy Bible, as interpreted by born-again preachers and heads of believers’ colleges.  Elections are fine when the elect govern.

Mandate #3 – Abortion shall not only be banned but advocates imprisoned for committing “sins against God’s law.”  Abortion doctors should be indicted for murder, liable to capital punishment.  Women committing abortion shall be fined heavily; or, if poor, be open to impregnation by approved Christians to offset the killing of the unborn.

Mandate #4 – Sexuality outside of marriage will be punished by jail or, if teens and gays, humiliation in public stocks.  Pregnancy outside of marriage shall be illegal, but no child will be aborted, without exception.  Since “gay rights” is an oxymoron, no one can be gay and have any rights.  Just like old times, homosexuality will be sinful, illegal and a mental condition.

Mandate #5 – The Pentagon will be granted direct taxing ability, plus the right to draft heterosexual males, whenever and wherever.  For warrior males over 50, crippled or beyond military service, Pentagon-run camps will establish gung ho patriotism weekends.

Mandate #6  – Gun ownership will be universal for men, optional for women.  No school or location limitations, though counties may restrict minority access.  Any white male over 18 not carrying a gun can’t vote, drink, own property or carouse in public.

Mandate #7  – The old-time religion will become the cultural norm, excepting racial slavery.  Adult males will head households, women will take orders, and children only speak when spoken to.  County government will track Sunday school, tithing, and church services, henceforth signs of the patriotic elect known as “true Americans.”

Mandate #8  – By majority rule, states may nullify any federal stature, especially regarding civil rights, invasions of privacy, or restrictions on alcohol or drug consumption or cultivation.  States by two-thirds majority vote may secede or rejoin the union at will, thus providing a healthy dynamism that checks federal over-reach.

Mandate #9  – Since labor or workers’ union are not mentioned in the Constitution, all unions will be banned and dismantled, not just in the public sector.

Mandate #10 – Federal taxes shall not be raised without a two-thirds vote of Congress; however, taxes shall be lowered by a simple majority of House members.   Every candidate for president, vice-president or senator must provide a long-form American birth certificate, plus evidence of never having been Muslim, socialist, or alien from outer space.

 

Social Security Poster: old man

Image via Wikipedia