“Ich Bin Ein Small Business”: Small Is So Beautiful To Mitt Romney
Our subject for today is the care and feeding of small businesses.
“I love you guys,” Mitt Romney told a teleconference hosted by the National Federation of Independent Business. “I love the fact that you’re working hard to follow your dreams and to build businesses. I — I love you guys. I love the fact that you’re — that you’re working hard to — to follow your dreams and to — and to build businesses.”
To summarize: We love you, guys.
And they’re everywhere! The Small Business Administration defines a small business as one with fewer than 500 workers, and that’s 99.7 percent of everything out there. “There are 5.7 million firms with employees in this country, and about 5.7 million have fewer than 500 employees — rounding slightly,” said Robert McIntyre, the director of Citizens for Tax Justice.
It’s sort of metaphysical, when you get right down to it. I am you as you are me and we are one and we are all small businesses. Ich bin ein small business. No wonder politicians want to get on their good side.
All of this takes us to President Obama’s call for Congress to extend the Bush tax cuts for families with incomes below $250,000 a year. Most people, the president said, believe it is wrong to “raise taxes on middle-class families.” It was certainly a triumphant moment for the administration’s economic policies. In 2008, who among us could have hoped that four years in the future, middle-class Americans would be making $250,000 a year?
But Romney called the idea “a massive tax increase on job creators and on small business.” He also denounced it as “another kick in the gut to the middle class in America,” thus signaling his determination to broaden the American middle even further, as well as to call everything the president does a “kick in the gut” for the rest of this campaign season.
How do we feel about this argument, people? We are not talking about business taxes, in the normal sense of the word. If we were, it would quickly become so incredibly confusing that you would be begging me to go back to the matter of the dog Romney once tied to the roof of his car.
The typical American business owner does not pay corporate taxes. He or she subtracts expenses from revenues and declares the bottom line as income. There are many, many advantages to this approach. You can avoid corporate tax rates, and it’s a lot easier to deduct things. If you’re a baker of gourmet cupcakes, you can subtract the entire cost of your new $50,000 ovens from your income, right up front, as well as lunch with your best friend who is also an occasional cupcake purchaser.
“There are rules, of course, but both the rules and the implementation of the rules are fuzzy,” said William Gale, the co-director of the Tax Policy Center.
And everybody can get into the game! Including partners in hedge funds and law firms and investment banks. “Here’s the beauty — each of the hedge fund principals themselves is a small business,” said Gene Sperling, director of the National Economic Council. Sperling is a small business himself because he gets occasional royalty payments for co-writing a few episodes of “The West Wing.”
This flight to small is so popular that the Congressional Research Service concluded that if taxes on high incomes went up, it would actually create more small businesses because more rich people would want to “seek self-employment because the opportunities for tax evasion and avoidance are greater.”
Small business growth. It’s what makes America great.
When the Republicans claimed that capping the Bush tax cuts at $250,000 would hurt small businesses, the Obama administration quickly retorted that only about 3 percent of the small business owners have incomes above $250,000.
Yeah, said the Republicans, but that little slice still represents more than 900,000 people, and half of all the nation’s business income.
Yeah, said the Democrats, but that’s because of the hedge fund managers and law partners and movie stars with rental property.
Yeah, said the Republicans, but the high-end sort-of-small businesses will still cut back on jobs or investment if their taxes go up. Taxes rise, bad things happen. It’s an article of faith. The Hartford Financial Group said it did a survey that showed just that, although as Robb Mandelbaum pointed out in The Times, only 2 percent of the small businesses surveyed actually cited taxes as their prime concern.
We do know these things: Republicans do not like income taxes, even for very wealthy people. Possibly particularly for very wealthy people. Barack Obama, who also has royalty income, is a small business. Possibly the only small business the Republicans do not love.
By: Gail Collins, Op-Ed Columnist, The New York Times, July 11, 2012
“A No Show At A Mob Front”: Mitt Romney’s Unnecessary Lie
If you’re planning on running for president, here are a few quick things you should probably do:
- Make sure your tax returns and finances are in order
- Make sure you’re not blatantly lying about some major portion of your biography.
Mitt Romney seems to have decided to do neither, I guess because he thought no one would check? Maybe Romney should have taken his fortune out of the various offshore tax havens where he stores it before he decided to run for president, because the thing is every presidential candidate is going to be prodded to release his tax returns and financial information. If you don’t want to be criticized for a Swiss bank account and a mysterious $102 million IRA, either don’t run for president or don’t have those things!
But much, much more important than not looking like a shady tax-dodger is “not telling a fairly easily disprovable lie.” Like “I quit Bain Capital in 1999,” a thing Mitt Romney says all the time when he wants to respond to criticism of various awful things Bain Capital has done since 1999. Except the Boston Globe (and Mother Jones and TPM) have now reported that Romney continued to be Bain Capital’s “sole stockholder, chairman of the board, chief executive officer, and president” until a couple years after 1999. Romney was drawing at least $100,000 a year from Bain Capital and was still listed as the guy in charge on SEC documents and financial disclosures through 2002.
What’s worse is that his resigned in February 1999 line was even apparently contradicted by multiple contemporary news accounts, with two from August of 2001 saying Romney had just or was about to quit Bain. The New Yorker’s Andrew Prokop says, “It seems clear there was a period 1999-2001 where Romney was retaining the CEO job because he thought he might return to it after Olympics,” which flatly contradicts Romney and Bain’s statements. Romney’s best defense, as Andrew Sullivan points out, is that he was drawing a massive salary for doing nothing — like a “no-show” at a mob front.
The only reason Romney wanted everyone to think he quit Bain completely in 1999 to begin with was in order to avoid being accused of being responsible for “outsourcing.” Now, I am 100 percent positive that Romney, as a rich conservative former financial professional, does not consider outsourcing a bad thing. He almost definitely considers it a net positive for the American (and world) economy. The fact is, most elected Democrats support policies that encourage outsourcing — on this there is basically universal consensus among the political and economic elite. Romney — and plenty of others! — believe that companies like Bain Capital perform a public good, even though to some it just looks like parasitic capitalism at its worst. But: Outsourcing and closing down factories and slashing wages and busting unions and laying people off are all things Mitt Romney supports on a philosophical level, and I’m sure it’s galling to him that he has now been caught in a lie designed to cover up actions he feels were totally right and beneficial for the nation as a whole.
How much will it hurt him, that everyone now knows he is a liar? I am guessing “Swiss bank account” actually “hurts” him more, because the Romney campaign was smart enough to call Obama a liar at the exact same time as the national media was getting ready to call him a liar, and for your average person, that just sounds like two politicians saying mean things about each other.
By: Alex Pareene, Salon, July 12, 2012
“Not Squaring With Common Sense”: Romney Stayed Longer At Bain Beyond The Date He Said He Ceded Control
Government documents filed by Mitt Romney and Bain Capital say Romney remained chief executive and chairman of the firm three years beyond the date he said he ceded control, even creating five new investment partnerships during that time.
Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”
Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.
The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.
Contradictions concerning the length of Romney’s tenure at Bain Capital add to the uncertainty and questions about his finances. Bain is the primary source of Romney’s wealth, which is estimated to be more than $25o million. But how his wealth has been invested, especially in a variety of Bain partnerships and other investment vehicles, remains difficult to decipher because of a lack of transparency.
The Obama campaign and other Democrats have raised questions about his unwillingness to release tax returns filed before 2010; his offshore assets, which include investment entities based in Bermuda and the Cayman Islands and a recently closed bank account in Switzerland; and a set of “blind trusts” that meet the Massachusetts standards for public officials but not the more rigorous bar set by the federal government.
Romney did not finalize a severance agreement with Bain until 2002, a 10-year deal with undisclosed terms that was retroactive to 1999. It expired in 2009.
Bain Capital and the campaign for the presumptive GOP nominee have suggested the SEC filings that show Romney as the man in charge during those additional three years have little meaning, and are the result of legal technicalities. The campaign declined to comment on the record. It pointed to a footnote in Romney’s most recent financial disclosure form, filed June 1 as a presidential candidate.
“Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way,’’ according to the footnote. Romney made the same assertion on a financial disclosure form in 2007, during his first run for president.
Evidence emerged last week in a report by Mother Jones that Romney had maintained an ongoing leadership role at Bain beyond February 1999. Citing SEC documents, the magazine said Romney had control of Bain Capital’s shares in Stericycle, a medical waste company, in November 1999. Talking Points Memo reported this week on additional SEC filings listing Romney’s position with Bain in July 2000 and February 2001.
According to a statement issued by Bain Wednesday, “Mitt Romney retired from Bain Capital in February 1999. He has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies, since that time.”
A former SEC commissioner told the Globe that the SEC documents listing Romney as Bain’s chief executive between 1999 and 2002 cannot be dismissed so easily.
“You can’t say statements filed with the SEC are meaningless. This is a fact in an SEC filing,” said Roberta S. Karmel, now a professor at Brooklyn Law School.
“It doesn’t make a whole lot of sense to say he was technically in charge on paper but he had nothing to do with Bain’s operations,” Karmel continued. “Was he getting paid? He’s the sole stockholder. Are you telling me he owned the company but had no say in its investments?”
The Globe found nine SEC filings submitted by four different business entities after February 1999 that describe Romney as Bain Capital’s boss; some show him with managerial control over five Bain Capital entities that were formed in January 2002, according to records in Delaware, where they were incorporated.
A Romney campaign official, who requested anonymity to discuss the SEC filings, acknowledged that they “do not square with common sense.” But SEC regulations are complicated and quirky, the official argued, and Romney’s signature on some documents after his exit does not indicate active involvement in the firm.
A spokesman for the SEC said the commission could not comment on individual company filings or address the meaning of Romney’s name and title on the documents.
Karmel, the former SEC commissioner, said the contradictory statements could have legal implications in some instances.
“If someone invested with Bain Capital because they believed Mitt Romney was a great fund manager, and it turns out he wasn’t really doing anything, that could be considered a misrepresentation to the investor,’’ she said. “It’s a theory that could be used in a lawsuit against him.”
Romney first deployed the defense that he left the firm in February 1999 as a candidate for governor in 2002, when Democrat Shannon O’Brien featured a laid-off worker from a Kansas City steel mill that went bankrupt in 2001, after Bain Capital had reaped a handsome profit from its investment in the company. “Romney has taken responsibility for making the initial investment but has said he could not be blamed for management decisions at the company,” the Globe reported at the time.
Romney’s exit from Bain Capital also served as a ready-made rebuttal when in May President Obama’s reelection campaign began its public scrutiny of Romney’s business record with an ad focusing on former laborers at the same mill, GST Steel. But the SEC filings examined by the Globe indicate Romney remained at the helm of Bain Capital when the steel mill declared bankruptcy, in February 2001.
And financial disclosure documents Romney filed in Massachusetts show that he was paid as a Bain Capital executive while he directed the Olympics.
When he was named chief executive of the Salt Lake Organizing Committee on Feb. 11, 1999, Romney declared that he would not accept the job’s $285,000 annual salary until the Games were over and he had proven his turnaround worth.
Romney continued to draw a six-figure salary from Bain Capital, according to State Ethics Commission forms.
In Romney’s 2002 race for governor, he testified before the state Ballot Law Commission that his separation from Bain in 1999 had been a “leave of absence” and not a final departure.
By: Callum Borchers and Christopher Rowland, The Boston Globe, July 12, 2012
“Sending A Message To White Moderates”: Mitt Romney “Expected” Boos From People Who Want “Free Stuff”
Members of the NAACP will no doubt be excited to know they weren’t just used as props to send a message to white moderates that Mitt Romney would be all inclusive and stuff—they were also used to send a message to the Republican base that Romney is not afraid to talk sternly to and be booed by the colored people:
“I think we expected that,” he said on Fox Business Network, referring to the audience’s negative response. “I am going to give the same message to the NAACP that I give across the country, which is that Obamacare is killing jobs.”
See that, Republican base? Mitt Romney really really hates Obamacare, no matter who he’s talking to. Does that not light your hair on fire? Well, I hope you saved some of your hair, because here’s another hair-lighter: Speaking at a Montana fundraiser later in the day, Romney took it a step past having expected the boos, saying:
When I mentioned I am going to get rid of Obamacare, they weren’t happy … That’s okay, I want people to know what I stand for, and if I don’t stand for what they want, go vote for someone else, that’s just fine. But I hope people understand this, your friends who like Obamacare, you remind them of this, if they want more stuff from the government, tell them to go vote for the other guy—more free stuff. But don’t forget nothing is really free.
So he was making a stand at the NAACP convention, making sure people knew they were not going to be getting any free stuff from him, no sir (not unless you’re super rich and by “free stuff” you mean giant tax breaks). Steve Benen puts this in context with a reminder that black people aren’t the only ones whose desire for free stuff Romney likes to talk about. In fact, he also thinks women needing preventive health care and young people struggling to pay their college tuition are just in search of free stuff.
To an outsider, Romney is doing a pretty good job looking like the asshole the Republican base wants its candidate to be, but the fact that at this late date he is still forced to send signals to the Republican base that he’s one of them, rather than being able to take their commitment to him for granted and focus solely on making white moderates think he’s inclusive, is a sign of weakness no matter how he tries to spin those boos.
By: Laura Clawson, Daily Kos, July 12, 2012
“Mitt’s Tax Calculation”: The Swiss Bank Guy Or The Swiss Bank Guy Hiding Something
His opponents and the press are turning up the heat and even one of his big-name supporters has publicly called on him to give in, but Mitt Romney is adamantly refusing to release new information about his taxes.
If this story line sounds familiar, it should: Romney was in a very similar spot six months ago, and it didn’t take him long to fold.
It was back in January that Romney tried to duck calls to release tax records, believing he could run out the clock at least until he’d secured the Republican nomination. But his personal finances were becoming an issue, with Newt Gingrich and Rick Perry depicting him as a “vulture capitalist” and stoking resentment among working-class Republicans, and his opponents suggested that Romney might be concealing embarrassing and politically damaging information.
“Listen,” Perry said in a debate just before the South Carolina primary, “here’s the real issue for us as Republicans: We cannot fire our nominee in September. We need to know now.”
Perry didn’t survive South Carolina, but when Romney was trounced by Gingrich, the pressure to release his taxes grew. In a debate, Romney was confronted with the example of his own father, who had released 12 years of returns in the run-up to his own 1968 presidential bid, explaining at the time that “one year could be a fluke.” Asked if he’d follow his father’s lead, Romney was evasive, prompting loud jeers and taunts from the live audience. The tax story was taking on a life of its own; even Chris Christie, one of Romney’s top primary season supporters, piped up to say that the candidate should produce his returns.
Finally, a week before Florida’s Jan. 31 primary, Romney gave in, releasing his 2010 returns and an estimate for 2011. It wasn’t nearly as comprehensive as what his father did, but it was something – and it became readily apparent why he’d been so reluctant. Among other things, the records showed that Romney had made $45 million in income over the past two years, even though he wasn’t actually working, and that his effective tax rate for 2010 had been just 13.9 percent. Investments in Swiss bank accounts and offshore holdings in the Cayman Islands and Bermuda were also revealed.
There was also the matter of speaking fees. Before releasing his returns, Romney had hinted that he paid a low effective tax rate, explaining that most of his income over the last 10 years had come from investments (which are subject to a 15 percent tax rate) and noting that “I get speakers fees from time to time, but not very much.” But it turned out he’d actually taken in $347,327.62 in speaking money from February 2010 to February 2011 alone, making the episode another “wealth gaffe” for Romney.
This wasn’t enough to stop Romney from winning his party’s nomination. His main competition came from Gingrich and Rick Santorum, so it would have taken a lot more to sink him. But it suggests a similar cave-in may be just around the corner now, with Romney’s taxes once again becoming a major issue.
The impetus this time is a series of media reports examining Romney’s complicated personal finances and raising questions about how much money he has parked offshore, and why. The Obama campaign has taken the new reporting and run with it, demanding that Romney release multiple years of tax records (and taunting him with the example of his own father). The official Romney line, of course, is that there’s nothing to see here and that he’s already provided ample disclosure, but not every Republican is reading from the same script. On Sunday, for instance, Haley Barbour said he’d release more information if he were in Romney’s shoes.
It’s hard to believe there’s anything in Romney’s tax history as sinister as some Democrats are suggesting. But it’s also hard to believe that if Romney were to release records for more years they wouldn’t feature the same sort of embarrassing revelations found in his 2010 return. Obviously, this is something his campaign would like to avoid. But as the story of Romney’s refusal gains traction, the Romney team may be faced with a new calculation: Is there more harm in looking like you’re hiding something than in just putting the information out there, suffering through a news cycle or two, and moving on?
Actually, in a way, there may be no harm at all for Romney in releasing more tax records. The Obama team already has all the material it needs to paint him as the Swiss bank account guy. At least this way, they won’t be able to say he’s the Swiss bank account guy who’s hiding something.
By: Steve Kornacki, Salon, July 11, 2012
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