“One question is just the amount of the expenses. At half a million dollars, you have to wonder what all of that is. What’s problematic is that these expenses are being deducted at the ordinary income tax rate of 35 percent, while the related income is mostly subject to the preferential long-term capital gain tax rate of 15 percent.”
~Rebecca Wilkins, senior tax policy counsel at Citizens for Tax Justice
This is just really ridiculous. This should be disqualifying this man for president. He claims on his tax returns for 2010 for tax purposes that he has an active role in Bain capital and due to his signing off on that – he gets tax treatment of 15% minus deductions instead of 35% marginal tax rates. He did this by using a loophole called “carried interest” that allows fund managers the ability to pay 15% on their payoff instead of 35% even though they’re investing someone else’s money. Romney will not say publicly that he will eliminate this loophole (source); thanks to this loophole … Romney could have very well made $100 million in lower taxes.
So – politically … he basically says “I’m an active partner with Bain Capital – I should only pay 15%”, but he basically tells voters “I am not an active partner with Bain. I left Bain Capital in 1999 and I made all this money because I’m successful. And the rich pay too much.” I’m paraphrasing what he is basically saying here but it makes absolutely NO sense.
Now – Romney’s contention is that he used a blind trust on his investments but as Romney said in 2002 when he ran against Teddy Kennedy … a blind trust is “an age old ruse.” He wants it both ways people.
Huffington Post explains his exploitation of tax loopholes HERE:
But according to his 2010 tax return, when the Internal Revenue Service comes calling in April, Romney has a different answer: The presumptive GOP nominee reaps lucrative tax breaks for “active” participation in the private equity firm he founded, as well as a host of other investments.
With those active investments, he is also securing a tax break few Americans enjoy: When he wins, he’s paying a 15 percent rate on the gain. When he loses, he’s writing it off at 35 percent, meaning that tax policy is subsidizing Romney’s risk in his Bain investments.
These kinds of deductions are only available to “active” participants in business partnerships. While Romney filed as an active participant for tax purposes, there is no evidence that he took part in Bain management decisions in 2010, and he has denied doing so.
But the NY Times does an excellent job of explaining how Romney’s payoffs from Bain keep coming as part of his “retirement” deal and how that translates into real people losing their jobs HERE:
Though Mr. Romney left Bain in early 1999, he received a share of the corporate buyout and investment profits enjoyed by partners from all Bain deals through February 2009: four global buyout funds and 18 other funds, more than twice as many over all as Mr. Romney had a share of the year he left. He was also given the right to invest his own money alongside his former partners. Because some of the funds and deals covered by Mr. Romney’s agreement will not fully wind down for several years, Mr. Romney is still entitled to a share of some of Bain’s profits.
During his political career, Mr. Romney has promoted his experience as a businessman while deflecting criticism of layoffs caused by private equity deals by noting that he left Bain in 1999. But records and interviews show that in the years since, he has benefited from at least a few Bain deals that resulted in upheaval for companies, workers and communities.
One lucrative deal for Bain involved KB Toys, a company based in Pittsfield, Mass., which one of the firm’s partnerships bought in 2000. Three years later, when Mr. Romney was the governor of Massachusetts, the company began closing stores and laying off thousands of employees. More recently, Bain helped lead the private equity purchase of Clear Channel Communications, the nation’s largest radio station operator, which resulted in the loss of 2,500 jobs.
You can find the full graphic from the NY Times online HERE.
But what the NY Times didn’t know then that we know now is that Romney actually was the lone shareholder, CEO and Chairman of Bain Capital until 2002. The Boston Globe and Mother Jones have both written about this HERE. And even though he left officially in 2002 … ”he received a share of the corporate buyout and investment profits enjoyed by partners from all Bain deals through February 2009.” And if you don’t know why that matters – we wrote about that HERE; an excerpt:
If you’re not getting all this … Romney wants you to think he’s not responsible for all the bad things that happened after he left (as if there weren’t enough bad things prior to 1999) … sending jobs overseas, laying off middle class workers, screwing them on their pensions and being a job creator in China and a job destroyer in America. He’s trying to rewrite all the facts of his life … and he’s offering very little in the way of disclosure in order to prevent you from knowing this. This includes his bank accounts in offshore tax havens like Bermuda where some of these job destroying companies were created.
Bloomberg News even acknowledges that “Romney privatized the gains and socialized the losses.” HERE. That’s his M.O. That’s how he made his money. But he claims no responsibility for that even though he continues to profit from countless thousands being laid off while Bain Capital laughed all the way to the bank.
Now we have some idea at least how Romney was able to amass as much as $100 million into his offshore IRA in the Caymans; he just kept turning over that money from his Bain deals and funneled it in whatever form it needed to be funneled in order to evade as many taxes as possible. You can read more about that HERE. And we know that he funnels money through the Caymans despite his lack of transparency due to data dumps like this one from Gawker HERE where 21 different Bain deals – mostly in the Caymans - have been exposed and we’re starting to get some idea of how Romney avoids paying his taxes.
As we’ve shared more on what has been found in the Gawker file dump HERE – it is clear that Romney did not pay all his taxes:
“Bottom line: Mitt Romney has not paid all the taxes required under law.”
~Victor Fleischer — Professor of Law at the University of Colorado
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