Romney is an Olympic-level athlete at the tax avoidance game: Bush 41 Treasury official

by Idéfix Tue Jul 31, 2012 12:17 pm

Michael Graetz is a professor of tax law at Columbia, and he served in the Treasury under the first president Bush. He writes today in The New York Times that the problems with Romney's choice to park his money in foreign tax havens extend beyond the possibilities suggested by other analysts so far. Until Romney releases more returns, some of this is informed speculation at best. But based on the available information, Graetz concludes that Romney was playing the tax avoidance game.

http://www.nytimes.com/2012/07/31/opinion/the-mysteries-of-mitt-romneys-financial-records.html?_r=1

After all, the one year’s tax returns that he has released raise doubt about his campaign’s claims that his offshore accounts did not save him one penny of tax. Putting business assets into an individual retirement account invested in a Cayman Islands corporation allows Mr. Romney to avoid the “unrelated business income tax” — a 35 percent levy — on at least some of his I.R.A.’s earnings, a tax that he would have had to pay if his I.R.A. were held directly by a financial institution in the United States.

With an I.R.A. account of $20 million to $101 million, the tax savings would be more than a few pennies.

The I.R.A. also allows Mr. Romney to diversify his large holdings tax-free, avoiding the 15 percent tax on capital gains that would otherwise apply. His financial disclosure further reveals that his I.R.A. freed him from paying currently the 35 percent income tax on hundreds of thousands of dollars of interest income each year.

Mr. Romney’s Cayman Islands and Bermuda corporations also probably allowed him to avoid limitations on deductions for investment expenditures that would otherwise apply. So we don’t need any more tax returns to know that Mr. Romney is an Olympic-level athlete at the tax avoidance game. Rich people don’t send their money to Bermuda or the Cayman Islands for the weather.

No one should begrudge Mr. Romney or his family the wealth they have earned. But if he has not paid the taxes that apply to transfers of such wealth, this should concern us all. After all, who do you think pays for the shortfall?

by Propagandhi711 Tue Jul 31, 2012 1:46 pm

I know this is the partisan season but tax avoidance cuts both ways: obama's golden boy jeff immelt hides huge amounts of taxes - oh wait, that's a corporation so it does not reflect badly on the person running the company so nevermind. we can discuss democrats' tax related malfeasance after elections are over. it's important to get obama re-elected first.

by Idéfix Tue Jul 31, 2012 2:03 pm

Propagandhi711 wrote:I know this is the partisan season but tax avoidance cuts both ways: obama's golden boy jeff immelt hides huge amounts of taxes - oh wait, that's a corporation so it does not reflect badly on the person running the company so nevermind. we can discuss democrats' tax related malfeasance after elections are over. it's important to get obama re-elected first.

No, let's talk about the Democrats' tax-related malfeasance right now. Jeff Imelt is not running for election, nor is the General Electric Corporation. There are at least two degrees of separation between Obama and GE's tax issues. Romney's tax issues, OTOH, are his own.

by truthbetold Tue Jul 31, 2012 10:44 pm

The important question is did romney bent or broke any laws?if not thr problem is a mild political problem.

by Idéfix Tue Jul 31, 2012 11:15 pm

truthbetold wrote:The important question is did romney bent or broke any laws?if not thr problem is a mild political problem.

If he bent any tax rules, that will be more that a minor political problem. Everything he has done is highly likely to be completely legal, but if he has evaded US taxes by parking money abroad (legally), that will be a big political problem for him -- not least because his campaign has argued that he has not done that.

by MaxEntropy_Man Wed Aug 01, 2012 6:31 am

panini press wrote: ....nor is the General Electric Corporation.

corporations are people too my friend.

by MaxEntropy_Man Wed Aug 01, 2012 6:35 am

the only thing the obama people need to investigate is whether pushing this issue is going to lose them votes from their own base or whether they're going to be losing the votes of undecided voters. to me this is as juicy an issue as it's ever going to get given that romney's only vices are going to be drinking milk and eating ice cream. i don't want the obama campaign to give up on this issue. this is a goldmine.

by MaxEntropy_Man Wed Aug 01, 2012 6:57 am

Propagandhi711 wrote:I know this is the partisan season but tax avoidance cuts both ways: obama's golden boy jeff immelt hides huge amounts of taxes - oh wait, that's a corporation so it does not reflect badly on the person running the company so nevermind. we can discuss democrats' tax related malfeasance after elections are over. it's important to get obama re-elected first.

https://www.youtube.com/watch?v=iiirLwA5whA

by Idéfix Wed Aug 01, 2012 11:31 am

MaxEntropy_Man wrote:the only thing the obama people need to investigate is whether pushing this issue is going to lose them votes from their own base or whether they're going to be losing the votes of undecided voters. to me this is as juicy an issue as it's ever going to get given that romney's only vices are going to be drinking milk and eating ice cream. i don't want the obama campaign to give up on this issue. this is a goldmine.

I can't imagine the Dems losing many votes by asking for Romney's tax returns. It's not like the ultra-rich overwhelmingly vote for them, or that the ultra-rich are a big voting block. Obama may lose some campaign cash by offending the ultra-rich, but so be it.

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Romney is an Olympic-level athlete at the tax avoidance game: Bush 41 Treasury official

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Re: Romney is an Olympic-level athlete at the tax avoidance game: Bush 41 Treasury official