“I can tell you we follow the tax laws, and if there’s an opportunity to save taxes, we, like anybody else in this country, will follow that opportunity.”
Just remember when you read this story that Mitt Romney likes to say President Obama wants to “punish success” … President Obama is foreign … he’s unAmerican … he’s the other … he is trying to make this country into “something else”. Just remember the vast majority of billionaires in this country are spending over $1 billion to defeat this president so they can continue to take advantage of existing tax law loopholes that exist like what is in this article. This isn’t just Mitt Romney … this is every major donor and billionaire that stands to lose if he loses.
How is it possible that Mitt Romney could potentially have over $100 million in his IRA account when the most you can contribute to an IRA per law is $30,000 per year? The Wall Street Journal, Bloomberg, Reuters – they all acknowledge this. You need to understand that the rules of the game are stacked against you. YOU can’t take advantage of these laws … they were designed specifically for really wealthy people like Mitt Romney. This is sickening. I’d say there are very few things as un-American as being unwilling to pay your taxes, and that much is clear here – these billionaires have no loyalty to country or even their common man … only their bank accounts. Here is what you need to know about how IRA’s are SUPPOSED to work…
Remember – an IRA is TAX EXEMPT. And – Romney issued himself as CEO, Chairman and lone shareholder a SEP-IRA plan which is funded entirely by the employer and provides various tax benefits on the business side … so they can skip on taxes on both ends. And yet despite being able to contribute a maximum of $30,000 … somehow this tax exempt IRA has been able to effectively be laundered through various offshore bank accounts using a loophole that allows so-called “blocker corporations” in tax havens like the Cayman Islands to limit or effectively eliminate paying taxes. We will not know all the facts until we see his “long form 1040″.
These offshore bank accounts and his tax returns are at the core of all of this. News organizations have been able to figure all of this out despite the absolute MINIMUM level of transparency required by law and not a single paper more.
Bloomberg explains Romney’s “magical IRA” HERE:
While there are limits to the amount that can be contributed tax-deferred to an IRA, there are no restrictions on the amount of money that the contributed capital can earn and can continue to earn, on a tax-deferred basis, even after the contributions have stopped. (The Internal Revenue Service will get its pound of flesh from Romney when he takes the money out of the IRA.) The only limit is the skill, or luck, of the IRA’s owner. If you are the Warren Buffett of IRA investors, it is conceivable that you could turn $450,000 into as much as $102 million — an increase of 227 times — but not very likely, especially as in the last decade or so, the stock market has been a roller coaster. Mere investing mortals would be lucky to still have $450,000 in the account. (The median American family has $42,500 in traditional IRAs, according to the Investment Company Institute.)
The Wall Street Journal explains how Romney is likely avoiding paying taxes on his IRA by using offshore bank accounts HERE:
It isn’t known whether Mr. Romney paid UBIT. His filings suggest use of a strategy involving offshore funds sometimes employed to avoid it, according to several experts.
One method used by tax lawyers is to have the IRA invest through an offshore affiliate of the private-equity firm, known as an offshore blocker corporation, which in turn invests the same money in the private-equity partnership. The tax is avoided because the IRA technically is investing in the offshore corporation, not in a private-equity partnership.
Tax experts say that might explain why Mr. Romney’s IRA includes holdings in Bain entities based in offshore locations, including one Cayman Islands entity that Mr. Romney listed as having a value between $5 million and $25 million.
Michael Knoll, a University of Pennsylvania law professor, said using offshore blocker corporations to avoid UBIT “is a form of tax planning that happens all the time.”
Asked about the offshore investments in Mr. Romney’s IRA, his aide said they were “in compliance with rules created to keep it tax deferred, just like it was intended to be.”
Dan Shaviro says HERE:
From the first two items above, it may be a reasonable guess that Romney had a lot more gross income in 2009 than 2010 and 2011, yet paid less tax or even zero tax.
This might have had to involve, not just zeroing out capital gains via “loss harvesting” in response to the down 2009 stock market. but also creating tax shelter losses to offset ordinary income.
We know from attachments to the 2010 return that some of his “blind trusts” were engaged in transactions identified by the IRS in Notice 2002-35, which pertains to fake loss-generating scams that involved abusing and misinterpreting the notional principal contract regulations. So far as the blind trust aspect of that is concerned, note that Romney himself once called blind trusts an “age-old ruse.” But I am unclear about how much to make of the 2010 disclosure, given that it would have undermined expecting to get the tax benefits if the deals at issue were complete scams. So it has struck me as conceivable that the blind trusts did something in the ballpark of required 2002-35 disclosure but less extreme and more legally defensible.
Politifact rates as TRUE that Romney is stashing millions away in places like Switzerland and the Caymans HERE:
David S. Miller, a tax attorney with Cadwalader, Wickersham & Taft LLP in New York, told PolitiFact that tax-exempt entities, including IRA accounts, sometimes invest through Cayman Islands corporations to reduce their U.S. taxes. “Congress did not deliberately allow tax-exempts to reduce their U.S. taxes by investing through Cayman Islands corporations,” Miller said. “However, the practice is widespread and the IRS has approved of it.”
Miller agreed that it’s accurate to call the Cayman Islands a tax haven.
“That phrase usually refers to whether the jurisdiction imposes taxes and the Cayman Islands doesn’t,” he said.
Other, more nuanced advantages exist for high net-worth individuals who put their money in foreign corporations. For example, a high net-worth individual can’t deduct the management fee paid to a fund manager, but a foreign corporation can.
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