Mitt Romney won’t release his tax returns beyond two years in which he was already actively campaigning for president, and the political press seems to have forgotten about it since Romney’s early October surge in the polls.
So it’s left to the investigative journalists to dig up bits and pieces of Romney’s tax-avoidance strategy. What we get is far from a complete picture, but it shows how the system is stacked in favor of our plutocrats, who often pay lower taxes than middle class families.
Bloomberg’s Jesse Drucker, who has been reporting on Bain Capital and Romney’s taxes, has another excellent report on how the candidate used obscure loopholes to avoid paying the government what he owed. Drucker has written about Romney’s intentionally defective grantor trust, showed how he helped Marriott scam (John McCain’s word) the IRS.
For this one, Drucker used the Freedom of Information Act to get records about another Romney trust, which uses the Mormon church’s tax-exempt status to save him from paying taxes, parking money there to defer tax bills while keeping almost all of the proceeds himself.
Effectively, the Romneys put up a trust that pays them 8 percent of its assets a year until they die, at which point the Mormon church gets what’s left in the account.
Congress restricted this tactic, the so-called charitable remainder trust, a year later after being abused by rich tax avoiders, but Romney’s was grandfathered in.
When Romney’s lawyers and accountants created it, the church was supposed to end up with just 8 percent of its assets, while Romney got 92 percent. But the investments haven’t been doing well, so Romney’s withdrawals, at 8 percent a year, have been steadily reducing the money in the trust, and Bloomberg quotes an expert saying the church will eventually get “probably close to nothing.” Romney makes out regardless while the other stakeholders—his church and the government—lose out. It’s basically the private-equity business model brought to tax planning.
The current investing strategy favors the Romneys over the charity because they get a guaranteed payout, said Michael Arlein, a trusts and estates lawyer at Patterson Belknap Webb & Tyler LLP.
“The Romneys get theirs off the top and the charity gets what’s left,” he said. “So by definition, if it’s not performing as well, the charity gets harmed more.”
This isn’t to say that Romney hasn’t given generously to the Mormon church. He has, though of course that tithing also lowers his taxes significantly. But he’s not above using the church like this so he can keep his tax bill below 15 percent.
— Further Reading:
Romney’s gift to reporters. A Bloomberg investigation details yet another aspect of the candidate’s tax avoidance.
Good for him. And thank God for church-state independence! Still, try as you may, Ryan, you're not getting me to vote for either party of the progressive-warfare state. Ain't happenin'!
#1 Posted by Dan A., CJR on Wed 31 Oct 2012 at 07:21 AM
At one time, we had people who cared about the country. What was it that JFK said: "Ask not what your country can do for you, Ask, what you can do for your country". Not with those wealthy today. Frankly, these tax cheats (Romney and the rich) should be jailed whenever they are caught cheating. How is it that he can write off a horse (a venture that never brought in any revenue)? My accountant told me that you can only deduct expenses to the extent of the revenue produced. I think that Romney is a greedy tax cheat. Why would anyone who can formulate a reasonable thought vote republican anyway?
#2 Posted by Bill, CJR on Wed 31 Oct 2012 at 08:01 AM
The Columbia Graduate School of Bull Crap. Journalism is Dead. You are training advocates, not journalists.
#3 Posted by John H. Getze, CJR on Wed 31 Oct 2012 at 08:12 AM
Another fact to investigate: Romney says that investors should pay the low capital gains tax because corporations pay taxes on profits before they pay dividends. This is true for C corporations but not S or LLC companies. These profits go to the entity that ownes the company like a trust in the Caymen Islands there by avoiding taxes until the profits are repatriated. Another dodge is to have a company ofshore and bill the US company for services and take all the profit off shore and then pay capital gains when the money comes back to the US.
I'm sure Romney is using this method to dodge the US tax system.
#4 Posted by Chris, CJR on Wed 31 Oct 2012 at 08:19 AM
@Bill: Romney is no more of a 'tax cheat' than anyone else who takes ANY deduction on their income tax return. Tax avoidance is not only legal, but it's also encouraged...even by the IRS. In fact, it would be a pretty stupid individual that didn't take advantage of every opportunity to pay fewer taxes.
How in the world can anyone blame Romney for paying whatever it is he paid in taxes? He wasn't a legislator that made tax law. He's just another citizen following the tax code.
Bill, when you release YOUR tax returns and they show that you passed on deductions to which you were entitiled, you will at least earn my 'Solid Citizen' award despite your desire to fund inefficient, ill-conceived federal spending.
Oh, and why would anyone who can form a reasonable thought think that four more years of Obama has any chance of making us a more fiscally sound nation? Obama has never met a dollar he didn't want to spend, and that strategy may very well be THE major factor in the continuing decline of our economy.
#5 Posted by Len Rinzler, CJR on Wed 31 Oct 2012 at 08:19 AM
"When Romney’s lawyers and accountants created it, the church was supposed to end up with just 8 percent of its assets, while Romney got 92 percent."
Did you mean this the other way around?
#6 Posted by question, CJR on Wed 31 Oct 2012 at 08:29 AM
@ Len Rinzler:
Tax *planning* is encouraged, and everyone should do it. Tax *avoidance* is highly frowned upon. It's not illegal by any means, but it is certainly sketchy, which is why many of the methods Romney uses or has used have since been *made* illegal.
Just because something is legal doesn't mean it's totally right.
#7 Posted by Chelsea, CJR on Wed 31 Oct 2012 at 08:57 AM
What is with this perpetual slandering of "private equity". Did you ever think of investigating where the $s come from to form the funds that exist? Pension fund asset managers of all kinds, with significant participation by retirement funds managing $ for municipal and state workers. Billions worth. All those teachers, firefighters, policemen, university professors, school administrators, civil servants.....benefiting from the returns...from, on balance...much improved companies that experience private equity ownership.
#8 Posted by Steve Hauser, CJR on Wed 31 Oct 2012 at 09:02 AM
Let's not beat up poor Mitt Romney, who is doing what any sensible rich person would do. Let's instead beat up the system that is currently exacerbating the transfer of wealth from the bottom to the top in an ever-increasing spiral of tumorous cancerous greed. For that, you can thank the Supreme Court which has allowed the plutocrats to make their "voice" heard over everyone else's. This is the Decline of an Empire all over again.
#9 Posted by Amskeptic, CJR on Wed 31 Oct 2012 at 09:09 AM
Another CJR article that acts as combo of dogwhistle and flypaper to the wingnuts.
Yeah, Steve Hauser, it's not as if cities couldn't invest their pension funds well, and even better, without the Bain Capitals of the world.
John Gehtze's non-reality based world: truth = advocacy. Lies = proper politics.
#10 Posted by SocraticGadfly, CJR on Wed 31 Oct 2012 at 09:36 AM
Certainly something to be upset about. Upset that the POTUS with control of both houses of congress for two years did nothing to change the tax code.
It takes a lot of nerve so ask someone "Do think it's fair that you only paid 14% in taxes" when you are the POTUS and party in control of the Senate (House and Senate for two years) and you didn't do anything to CHANGE - yes I went there - DID NOTHING TO CHANGE the tax code allowing this.
Obama has no desire to CHANGE anything. If he did, he would have. Obama care is his legacy and trademark. He'll do anything to save it, nothing else matters. He and the member of congress all take advantage of the same tax code loopholes discussed here as if Mitt Romney is the only one. Send the tax cheats, Charlie Rangel and Tim Geitner to jail first, then worry about fixing the legal tax loopholes Mitt Romney and the other 1%ers employ.
#11 Posted by JML, CJR on Wed 31 Oct 2012 at 09:39 AM
So, the Romney's benefit from.....an entitlement?
"The current investing strategy favors the Romneys over the charity because they get a guaranteed payout..."
#12 Posted by MB, CJR on Wed 31 Oct 2012 at 10:09 AM
To JML,
Once again you've fallen into the clutches of another big lie of the republican party. Obama had control of both houses exactly 59 days. You can look it up. In order to control the Senate, you need 60 seats. That has happened for only 59 days of his presidency. So, again, the republican party lies, MSM sweeps the facts under the table, or doesn't even point out that it's a lie.
Stop watching Fox and listening to Rush. Get your facts straight. Otherwise, you kind of look like an idiot.
#13 Posted by KPS, CJR on Wed 31 Oct 2012 at 10:13 AM
It is amazing how republicans will just give their candidate a pass on things like this. I never would have thought America would be willing to elect a tax cheat who avoids any responsibility to his country. I guess I am gullible I mean the last republican president was a draft dodger. Why is the republican party defunct of morality and patriotism???
#14 Posted by Erik, CJR on Wed 31 Oct 2012 at 10:32 AM
Curious as to why there is such a rigorous debate about how a private citizen, Mr. Romney, used perfectly legal applications of the the existing tax law, but almost non-existent debate about whether the current sitting President disregarded his duties as Commander in Chief resulting in the death of four Americans in Benghazi. Seems to me that non-biased journalism in the United States is non-existent.
#15 Posted by SJH, CJR on Wed 31 Oct 2012 at 10:54 AM
LIBERALISM, ILLUSTRATED
Trick or treat!....
Ryan is in a Level 14 Panic over this election!
A "plutocrat" in office?! The horror!
Well.. When Obama releases his medical records, or the emails behind his wife's $300,000 raise at the "non-profit" hospital where she "worked" after Obama won the Senate seat... Or when he releases the name of his drug dealer(s) to have them prosecuted (as is his constitutional duty).. Or when he names the ghost writers of the books that made him a multimillionaire (i.e, a "plutocrat")...
When Obama does these things... Ryan's latest anti-capitalist screed may gain a little credibility.
Until then, it's nothing but juvenile, whiny leftist activism posing as "professional journalism".
#16 Posted by padikiller, CJR on Wed 31 Oct 2012 at 11:11 AM
Ok...Mr transparent Obama, where are the college records? What about Benghazi? Why no pictures from the situation room on that night? Forget about tax returns no one died right??? What about the heroes who died at the Benghazi Consulate including our ambassador. The more information that comes out the worse it looks for Mr. transparent.
#17 Posted by joe the plumber, CJR on Wed 31 Oct 2012 at 11:20 AM
Buncha hypocrites. I love the quote about JFK in a comment. Might want to tell that guy that Kennedy's money came from bootleg liquor and other illegal activities--followed by actively using trusts and other mechanisms to avoid paying taxes.
Chose your heros carefully.
#18 Posted by yawolac, CJR on Wed 31 Oct 2012 at 11:58 AM
I agree that this seems scammy, but he would not be able to be grandfathered in if it wasn't legal at the time. I know quite a few friends that scammed the system to get on food stamps.
The problem I see isn't so much the rich people. It is that the tax laws have these loopholes that let them keep more than the working class. These loopholes are what needs to go need to go.
#19 Posted by Moderation Man, CJR on Wed 31 Oct 2012 at 12:36 PM
Render to Caesar the things that are Caesar's.
But then again, Romney IS NOT Christian, so he doesn't have obligation to follow the teachings of Christ.
Tax "deductions" for charities should be eliminated. If someone wants to give, FINE!
Give if YOUR money if you want, but don't subsidize YOUR religious organization with my tax dollars.
Some joker praised separation of Church and State. Yes, it is a good thing, but wake up, the current tax deduction scheme is just the opposite. We ARE subsidizing religion.
If
#20 Posted by unkjwea, CJR on Wed 31 Oct 2012 at 01:06 PM
Everything Romney is doing is legal and legit. But everything Ryan wrote is accurate, too.
It's a tax dodge, plain and simple, disguised as a charitable contribution. Ryan fails to provide a link to the current Bloomberg story, so I can't check, but there's a good possibility that Romney ALSO took a big charitable deduction when he made the original contribution to the trust, if it is an irrevocable trust.
This is an example of tools available to the wealthy to avoid paying their fair share of taxes. Yes, if you fall into that category, you'd be a fool not to take advantage. But be honest: you ARE taking advantage.
#21 Posted by Brian O'Connor, CJR on Wed 31 Oct 2012 at 01:38 PM
The things you're all kinda missing is that:
a) we still don't have the bloody records. This is unprecedented for a figure running for public office. It should render him inoperable as a candidate since, if he can't be open about his personal records, how open is he going to be with your government's.
b) yeah, from what we can piece together, what he's done was legal. Why was it legal? Because people like him wrote the laws to make it legal. The legal system and tax system exists to set up incentives for behaviors we want to encourage or discourage. He's running for an office which will give final approval for legislation encouraging or discouraging behaviors which he has profited from.
Do you, the public, agree with those behaviors and think that vampire capitalism needs further incentives? If so, vote for Thurston Howell and his mad hatter party.
If you believe America should be a more decent and fair place, vote for people who will write laws and appoint the judges through which America can be transformed. This is what the conservatives have done for 50 years, they are at war while we attempt to be civil. From what we can tell, how Mitt Romney made his money is wrong for the type of country we aspire to be. It does not represent America well.
So you need to elect the representatives who do. It's that simple.
#22 Posted by Thimbles, CJR on Wed 31 Oct 2012 at 02:23 PM
So Romney gets tax deductions from donating money to charity. He's a bad person for donating millions of dollars? I think your priorities are in the wrong place.
#23 Posted by stevenaanderson, CJR on Wed 31 Oct 2012 at 02:46 PM
When I was a kid, the term "knee-jerk liberal" was often heard. What would be the term for someone who reflexively filters out any indication of actions by a candidate that don't fit into the "patriotic and moral" advertising campaign of the GOP? Or worse, leaps to 4-year-old's defense: "You do it, too!" (whether or not that's true). It's simple - the very wealthy use every available method (and there are lots for the very wealthy) to avoid paying taxes. Some of these are legal, some were legal, and some are of questionable legality, at best. In any event, why is this acceptable to the rest of us, who have seen most of our money siphoned off into the hands of the very wealthy over the past 30 years? We make less now than we did then, we pay more now than we did then, and we get less for it. Meanwhile, the very wealthy get more now, pay less now, and get as much for it, if not more. Is it coincidence that the country did hugely better economically back when tax rates on the very rich were high, and money kept moving back out of the top and down to the bottom? Nowadays, the only money movements are from the rest of us up to the very top, and circulating at the top. The only "trickling down" we see is the liquid gold from the gentlemen like Romney who are using the country as a pot to piss in.
#24 Posted by JohnR, CJR on Wed 31 Oct 2012 at 03:36 PM
Remember the good ol' days? Back when CJR did stuff like this?
"Klein calls it government-as-ATM: contractors make deposits in the form of campaign contributions and withdraw massive contracts to perform core functions like securing borders and interrogating prisoners.
"At this late hour in the Bush administration, no benefit of the doubt can be granted. This 'philosophy' of government should be viewed as nothing more than an invitation to graft, dressed up with lipstick. "
It's a good thing that Obamney doesn't take part in, or oversee, such a system.
Oh, wait...
#25 Posted by Dan A., CJR on Wed 31 Oct 2012 at 10:47 PM
Embarrassingly bad journalism. These are estate management tools that have nothing to do with Romney's income tax rates. The author is so busy stewing about evil plutocrats that he doesn't have time to learn that estate taxes and income taxes aren't the same thing.
I don't even like Romney, but this analysis is cringe-worthy.
#26 Posted by Charlie, CJR on Thu 1 Nov 2012 at 11:57 AM
There are some on this board who are trying to steer the conversation away from Mitt Romney's dubious financial planning and onto Benghazi. These folks use Fox News as their main or only news source. Depend on it.
#27 Posted by WC Dave, CJR on Thu 1 Nov 2012 at 02:00 PM
"Embarrassingly bad journalism. These are estate management tools that have nothing to do with Romney's income tax rates."
Unless you include capital gains which is only an embarrassingly large amount of where Mitt Romney gets his money (because capital gains is taxed embarrassingly low to begin with and Mitt likes to book his actual income as carried interest so that he pays even less). You can look this stuff up, you know.
http://www.investorwords.com/830/charitable_remainder_trust.html
So yeah, what was your point again? (WDIEB*)
*why do I even bother.
#28 Posted by Thimbles, CJR on Thu 1 Nov 2012 at 03:46 PM
Everybody in America but the looniest of the leftists knows that getting rich and staying rich are GOOD things.
The "rich" in American get that way because they do SMART things and if they stay that way it's because they do SMART things.
The "poor" in America who stay that way do so because they do STUPID things,
There is nothing (but laziness and the Gubmint anti-work incentives) stopping any able-bodied "poor" American from busting ass and thereby becoming a "rich" American.
Nobody with any brains is buying into the nonsensical leftist "plutocrat ate my baby" schtick.
As I predicted here MONTHS ago...
I continue to predict that, absent a miracle or tragedy, Romney will win by 310+ electoral votes and a 6%+ margin on Tuesday.
I know these predictions fly in the face of the polls and the offerings of the "professional journalists"... But I believe they are understated, if anything.
I guess we'll see in five days, right?
Get ready to say "President Romney" and lend him your support!
#29 Posted by padikiller, CJR on Thu 1 Nov 2012 at 05:25 PM
Indeed.
We will see in five days what will prevail: A respect for factual reality (the water is six feet deep in the basement, no matter how much I want to believe otherwise). Or a sort of pre-modern/post-modern mash up of one's own fervent/fevered desires (I feel something to be so, I need it to be so, I want it to be so, and therefore it is. The basement is dry and anyone who says otherwise wears devil's horns for a hat).
#30 Posted by whm, CJR on Thu 1 Nov 2012 at 09:59 PM
It's time we ended tax exempt status for these right wing churches. They're doing WAY to much fund raising and political organizing for the evil Rpublican Corporate Ho Party
#31 Posted by Rev. Chris Ward, CJR on Sun 4 Nov 2012 at 09:03 AM
"Romney will win by 310+ electoral votes and a 6%+ margin on Tuesday.
... Get ready to say 'President Romney' "
So ...... only 8 points off on the popular vote -- and 100+ votes in the Electoral College.
How does that compare to the polls and the professional journalists?
#32 Posted by hwm, CJR on Wed 7 Nov 2012 at 10:26 PM