“Bottom line: Mitt Romney has not paid all the taxes required under law.”
~Victor Fleischer — Professor of Law at the University of Colorado
There is a slow drip, drip, drip of information that is coming out of the leak of 950 documents from various offshore tax shelters that Gawker exposed; you can find all of those files and information on that document dump HERE.
Victor Fleischer — Professor of Law at the University of Colorado points out that Romney would have had to be the one to sign off and approve these deals that were created to avoid paying $220 million in taxes for Romney and his Bain partners. As the professor points out – the “fee conversion” used to manipulate the tax code was set up at the time of the fund’s formation in 2000 and since Romney was the CEO, chairman and lone shareholder at the time … he could have been the only one to sign off on these deals legally. By now – we know that despite Romney’s claims that he left Bain Capital retroactively in 1999 …. he actually left in 2002. Professor Fleischer writes HERE:
Bottom line: Mitt Romney has not paid all the taxes required under law.
(UPDATE: Yes, Romney left Bain in 1999 or 2002. But as part of his severance agreement, he continues to receive interests in these funds, which he has reported on his financial disclosures.
Romney here is not like a passive mutual fund investor. He helped engineer the funds in the first place. For at least some of the funds, the fee conversion was set in place at the time of the fund’s formation — in the case of Fund VII, when Romney was the sole shareholder of the management company that actually waived the fees (2000). It seems reasonable to infer that fee conversions were in place for earlier vintages of Bain Capital funds as well. I haven’t yet reviewed all of the Gawker documents, but we are talking hundreds of millions of dollars in tax liability on these funds — one hundred million in Fund IX alone (20% of the $500 million converted), another $70 million in fund X. It is unthinkable that in the 1990s through 2002, when Romney was putting together funds, that he was unaware of the fee conversion strategy, or that he was unaware that he continued to benefit from it today.
If you read through Professor Fleischer’s – you’ll see that these deals were structured simply to avoid Bain Partners paying the regular income tax rate and instead paying the capital gains tax rate through a tax loophole that Bain Capital lobbied for in the 90′s called “carried interest”. The carried interest loophole allows guys like Romney (and George Soros) the ability to pay taxes at 15% minus deductions as opposed to 35% minus deductions which is why Romney will not share his taxes. I have a few thoughts on this.
#1 – Romney will NOT say whether or not he’ll eliminate the carried interest loophole that only benefits the rich. (source)
#2 – Romney has personally avoiding paying taxes due to the carried interest rule; I wouldn’t be surprised if he saved almost $100 million from it himself. That’s money that the middle class has to pay because he won’t pay his share.
#3 – Romney STILL wants to cut taxes for the rich.
#4 – This is why you’ll never see Romney’s tax returns; he claims he never paid lower than 13% but if he knows he’s not sharing his tax returns … he can tell you anything he’d like. I do not believe his story. I wouldn’t be surprised if he paid 5% on his taxes due to what many tax experts say is available to the rich and since Romney has shown thus far that he’s willing to break tax law through aggressive tax avoidance schemes in order to lessen his tax bill to the lowest amount possible.
#5 – What Romney has done appears to be against the law. I have resisted this language up till now but now I am convinced that the tax schemes he engineered at Bain were unlawful and thus – he did not pay his full amount of taxes. We sent Capone to jail for tax evasion … this guy just wants to be President.
#6 – It is precisely all of these reasons that offshore tax shelters were used instead of conducting business transparently in the United States.
In addition to those findings – here is what has been found thus far:
Gawker found deals that were part of Romney’s retirement package that were created in 2002 despite Romney’s assertions that he left retroactively in 1999. This is important because of all of the things that Bain Capital did between 1999 and 2002 that were morally repugnant that Romney does not want to take responsibility for despite being the sole shareholder, CEO and Chairman of Bain at the time. He profited from all of those deals but claims he was not responsible. Yeah – ok.
The NY Times shares how Romney and his Bain partners manipulated tax law in what appears to be illegal tax avoidance schemes to avoid paying $220 million in taxes that otherwise would have gone to the U.S. Treasury. You can read about that HERE.
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