“Circumstantial Evidence”: Harry Reid Gets Under Mitt Romney’s Skin
Harry Reid has always been an unusual character. He’s often dismissed as a lightweight by Republicans (Senator Tom Coburn recently called him “incompetent and incapable”), but he is also an adept legislative maneuverer who has notched some extraordinary victories, perhaps none more notable than getting every Democrat in the Senate, even ones like Ben Nelson and Joe Lieberman who live to make trouble for their own party, to vote for the Affordable Care Act. He’s very soft-spoken, speaking most of the time in a near-whisper, but he’s also willing to wield a shiv with an enthusiasm few in his party can muster.
And now, Reid is doing the kind of work that surrogates are supposed to do for presidential candidates: go out and make the kind of biting, maybe even questionable attack on the opponent that the candidate himself doesn’t want to be seen making. Reid has charged that a source at Bain Capital has told him privately that Mitt Romney didn’t pay any taxes for 10 years, and that’s why Romney won’t reveal his tax returns. When asked for concrete evidence beyond the word of an anonymous source, Reid says, “I don’t think the burden should be on me. The burden should be on him. He’s the one I’ve alleged has not paid any taxes. Why didn’t he release his tax returns?” Romney replied that Reid should “put up or shut up,” and offered an unsubstantiated charge of his own: “I’m looking forward to having Harry reveal his sources and we’ll probably find out it’s the White House.”
This episode gives us yet another case study in how different Republicans and Democrats are. If the parties were reversed, I guarantee you that you would not be able to find a single Republican to criticize what their colleague was doing. They’d meet the “McCarthyism!” charges with a laugh. But Democrats are conflicted, as they usually are about hardball politics (Jon Stewart tore Reid a new one over it). So let’s take a moment to sort through just how we should feel about this.
As a general principle, people shouldn’t toss around explosive charges without having evidence to back them up. And everyone is assuming that what Reid is saying is false, but there is at least some possibility that it’s true. It’s highly unlikely, but it’s possible. We can probably also assume that Reid didn’t make this up out of whole cloth—somebody did tell him this, though whether the person ought to be believed is something we can’t know.
Is this really akin to the birther controversy, as some have charged? It might be, if Romney had already released his tax returns and everyone knew what was in them. Remember that Obama released his birth certificate during the 2008 campaign, not to mention the fact that there were birth announcements in Hawaii newspapers. There was never any question but that the birthers were nuts, and Obama was never hiding anything. In this case, however, Romney is hiding something. His argument is that even though he will certainly demand to see multiple years of tax returns for his nominee for Secretary of Agriculture, and even though he’s certainly demanding to see multiple years of tax returns for the people he’s considering to be his running mate, the public doesn’t get to see his tax returns for more than one year. The absolute gall of his position—that he wants to be president of the United States, but doesn’t think he should have to give a full accounting of his finances—is really something to marvel at.
So just like it’s possible for the police to frame a guilty man, Reid is making what’s probably a false charge about a matter that Romney is improperly concealing from the electorate. If Romney wanted to, he could refute the charge and humiliate Reid tomorrow, just by releasing his returns. But it’s obvious that those returns contain something (or maybe multiple somethings) that Romney believes would be so damaging to his candidacy if voters knew about it that he’s willing to suffer all this bad press, and give the Obama campaign all this ammunition, to keep anyone from finding out.
And frankly, Mitt Romney has run his campaign in a manner so disreputable—constantly questioning Barack Obama’s patriotism, twisting his words out of context at every opportunity, running up a record of mendacity that stands out even among modern campaigns—that it’s hard to feel any sympathy for him when someone hits him a little below the belt.
By: Paul Waldman, Contributing Editor, The American Prospect, August 3, 2012
“Implausible Assumptions”: Mitt Romney’s Tax Promises Are Mathematically Impossible
The sub-campaign to define Mitt Romney’s tenure at Bain Capital, as I never tire of pointing out, is merely about softening up the Republican nominee for the major fight of the campaign: Obama’s charge that his economic program is merely a retread of the Bush-era program of tax cuts for the rich. Over several months, Romney has laid the groundwork for his own defense. He has promised that his tax plan will not cut taxes for the rich (below the levels established under Bush). Recall that Romney’s old campaign line about how he wasn’t concerned about the very poor was also packaged with a supposedly parallel line about not being concerned about the very rich — neither group would receive any particular targeted benefit from his program.
Romney’s plan has been to hold together these promises by shrouding his tax and budget plans in a veil of secrecy. Romney has promised to reduce tax rates across the board by 20 percent, which would offer huge tax cuts for the rich. But he has promised to close unspecified deductions in the tax code so as to offset the cost, and leave the rich paying the same effective tax rate. Indeed, Romney has boasted about his strategy, noting that its lack of detail means it “can’t be scored,” and thus Obama can’t prove that his plan really would cut taxes for the rich.
But oh yes, he can.
The Brookings Institution and the Tax Policy Center today released a study of Romney’s proposals, insofar as they are known. The finding was simple. Romney’s promises, it found, are mathematically impossible. The amount of revenue available from tax deductions for the rich is smaller than the amount of revenue lost by cutting tax rates for the rich. Even if Romney sincerely scoured the tax code and wiped out every last tax break for the rich that he hasn’t promised to preserve (he has promised to keep in place tax incentives for saving, like the capital gains tax break), the rich will pay lower rates and a lower share of the tax burden.
It’s worth noting that the study embraces implausibly friendly assumptions as to how Romney would go about this. It assumes he would ruthlessly purge the tax code of breaks for the rich, even highly popular ones like the charitable deduction. It further assumes that, in order to wring every last penny out of the rich, Romney would cut off all deductions immediately for every dollar in income over $200,000 a year. (In reality, nobody would create a tax code that meant going from $200,000 a year to $200,001 would jack up your taxes by thousands of dollars — you would ramp up the tax deduction phase-in, which would reduce taxes for the rich even more. But the paper bends over backwards to grant Romney this implausible assumption.)
What’s more, the paper assumes that Romney’s plan would increase economic growth, meaning it wouldn’t have to find dollar-for-dollar replacements for all its lost income. To measure this cheerful scenario, the paper adopts a model created by Greg Mankiw — who is, of course, a Bush administration veteran and one of Romney’s main economic advisers.
Piling implausibly optimistic assumption upon implausibly optimistic assumption, the paper nonetheless concludes that Romney will cut taxes for the rich. That means it would result in some combination of higher taxes for the middle class or higher deficits. If you take Romney at his word that he would hold tax revenue steady at its current levels, then he would be implementing a significant shift in the tax burden from the rich to the middle class. 95% of all taxpayers would pay more taxes, in order to finance a tax cut for the most affluent.
And remember, this is assuming the most favorable possible case for Romney. Under more realistic assumptions — that he won’t close every single penny in tax deductions benefitting the rich, and that his plan won’t spur economic growth to the degree a Republican like Mankiw hopes it would — then the transfer from the non-rich to the rich would be even higher. All of which shows why, despite the constant drumbeat of conservative pleas for him to unveil more policy specifics, Romney is going to keep his proposals as vague as possible.
By: Jonathan Chait, Daily Intel, August 1, 2012
“Mitt’s Financial Mysteries”: Romney Didn’t Send His Money Overseas For The Weather
PRESSURE is mounting for Mitt Romney to release more of his financial records. Mr. Romney has made public only his 2010 tax returns and has said his 2011 documents will be released soon. “That’s all that’s necessary for people to understand something about my finances,” he said recently. He is “simply not enthusiastic,” he also said, about giving the Obama campaign “hundreds or thousands of more pages to pick through, distort and lie about.”
But it is a good bet that Mr. Romney’s vetters have picked through more than two years of returns of his vice-presidential contenders. And the Senate typically requires more for confirmation to a cabinet or even a subcabinet post. Until Mr. Romney recognizes the right of voters to understand the finances of their leaders, all we are left with is speculation.
Some commentators have suggested, for example, that — like tens of thousands of other Americans who have taken advantage of an Internal Revenue Service amnesty — he might not have declared and paid taxes on his Swiss bank account. I can’t imagine that he would have engaged in such blatant tax cheating. He is far too smart for that.
Another suggestion is that in 2009 he paid income taxes significantly below the 13.9 percent he paid in 2010. This is more plausible, and potentially more damaging politically, even if perfectly legal.
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.
Given the extraordinary size of his I.R.A., we have to presume that Mr. Romney valued the assets he put in his retirement account at far less than he would have sold them for. Otherwise it is quite a trick to turn contributions that are limited to $30,000 to $50,000 a year into the $20 million to $101 million he now has there. But we cannot be certain; his meager disclosure of tax records and financial information does not indicate what kind of assets were put into the I.R.A.
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.
Moreover, we have no clue whether Mr. Romney paid any gift tax on transfers, now valued at $100 million, to a trust he set up in 1995 for the benefit of his five sons. Until this year, the federal gift tax had a lifetime exemption of $1 million, and it taxed gifts in excess of that amount at rates between 29 and 44 percent. A gift of $100 million to one’s children could, therefore, require paying a tax of as much as $29 million to $44 million.
But every good tax professional knows that gift tax returns are rarely audited, except after the transferor’s death. And normally the I.R.S. cannot challenge such a return after three years from its filing. But if the values of the gifts were not properly appraised and disclosed on Mr. Romney’s gift tax returns, a challenge may still be possible. If he did not file any gift tax return, he would still be liable for the tax, plus interest and penalties.
Based on his aggressive tax planning, revealed in the 2010 returns he has released and his approval of a notably dicey tax avoidance strategy in 1994 when he headed the audit committee of the board of Marriott International, my bet is that — if Mr. Romney filed a gift tax return for these transfers at all — he put a low or even zero value on the gifts, certainly a small fraction of the price at which he would have sold the transferred assets to an unrelated party. Otherwise, he should be happy to release his gift tax returns. According to a partner at Mr. Romney’s trustee’s law firm, valuing carried interests, such as Mr. Romney’s interests in the private equity company Bain Capital, at zero for gift tax purposes was common advice given to clients like Mr. Romney in the 1990s and early 2000s.
If detected, undervaluing large gifts to one’s children could provoke large penalties from the I.R.S. These are the kinds of tax penalties that even multinational corporations try to avoid because they fear how the public would react to the adverse publicity that would inevitably follow.
To settle these questions, Mr. Romney should release his gift tax returns, or other documents showing how he valued his transfers to his family’s trust and to his I.R.A., and at least three additional years of income tax returns.
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: Michael Graetz, Op-Ed Contributor, The New York Times Opinion Pages, July 30, 2012
“You’re Not Just A Chump”: Mitt Romney Thinks You’re A Sucker
You don’t have accounts in the Caymans? What a chump.
Back in January, when he was asked during a primary debate about the taxes he pays, Mitt Romney made the somewhat odd assertion that “I pay all the taxes that are legally required and not a dollar more. I don’t think you want someone as the candidate for president who pays more taxes than he owes.” As I’ve written before, this would seem to indicate that Romney believes that if you don’t have a team of accountants who can ferret out every last loophole to minimize your tax bill then you’re just a sucker, so pathetic that you are unworthy of occupying the highest office in the land. But maybe I was being unfair. After all, I’ve been critical of the campaign habit of reading too much into any particular statement a candidate makes. We all say things that upon reflection we’d like to put another way or take back completely, so maybe Romney didn’t quite mean it the way it sounded.
But once you repeat a statement like that more than once, we can be pretty sure you do in fact mean it. And based on what he said in an interview yesterday with ABC News, we can be pretty sure Mitt Romney genuinely believes that if you paid an extra dollar to the federal government, then you’re not just a chump, you’re such a chump we wouldn’t want you to be president:
From time to time I’ve been audited as happens I think to other citizens as well and the accounting firm which prepares my taxes has done a very thorough and complete job pay taxes as legally due. I don’t pay more than are legally due and frankly if I had paid more than are legally due I don’t think I’d be qualified to become president. I’d think people would want me to follow the law and pay only what the tax code requires.
Think about this for a moment. Romney thinks that paying more than you owed, or even failing to take advantage of every last loophole and tax shelter you could, is so despicable it’s disqualifying, as though it were a moral transgression on par with, I don’t know, stealing a car or abusing your wife or something.
Not only that, both times he has said this he projects the belief onto other people as well. “I don’t think you want someone” the first time, “I’d think people would want me” this time. If I had to hazard a guess, I’d say this has its roots in Romney’s time in the private equity world. If you’re investing with a private equity firm, you want the leader of that firm to be smart, thorough, and ruthless. You want him to squeeze every last penny he can from every available source, and of course minimize the taxes he and you will pay. If he says, “I could have set up an elaborate network of shell companies in the Caribbean, but I decided not to,” you might think he had failed you, since the only goal in the endeavor is to make as much money as possible and keep the government’s hands off it.
But the presidency isn’t the chairmanship of a private equity firm, and maybe, just maybe, the qualities that make one effective at the latter aren’t precisely the qualities we want in the former.
Finally, I’d be remiss if I didn’t note that the real issue is that we have a tax system that allows people like Mitt Romney, who takes in about $20 million a year despite the fact that he hasn’t actually held a job in five years other than running for president, to pay a laughably low tax rate, while people who actually work for a living pay a far higher proportion of their income in taxes. Weirdly, Romney thinks that system is just peachy, and he would actually like to tilt it even farther in favor of the wealthy.
By: Paul Waldman, Contributing Editor, The American Prospect, July 30, 2012
“Mitt vs Stubborn Facts”: A Difficult Relationship For The Romney Campaign
John Adams once said, “facts are stubborn things.” These days, another Massachusetts politician has found that saying to ring especially true.
While it’s still unclear how Mitt Romney can be the CEO, chairman, president and sole shareholder of Bain Capital, a company that he claims no responsibility for, it’s become increasingly evident that candidate Romney simply doesn’t want to talk about the facts of his business record.
In an interview with CNN’s Piers Morgan, Romney suggested that to question his experiences is to “attack success.” If this is the case, and if we’re also not supposed to talk above a whisper about Mitt’s record as governor, including his signature accomplishment in health care reform, then which parts of his biography remain on the table?
Romney clearly prefers his largely undisclosed experiences in the private sector over his publicly poor record in Boston. At every turn, Romney and his campaign have attempted to steer the discussion toward business matters for just this reason.
But when the Washington Post took him up on it last month and published an article headlined “Romney’s Bain Capital invested in companies that moved jobs overseas,” the Romney campaign was caught flatfooted. The Post found that Bain Capital, the firm Romney spent much of his professional life building up, had invested in companies that had not only shipped jobs overseas — a practice of some concern to working- and middle-class Americans — but had pioneered the practice.
Romney’s campaign pushed back hard, claiming that the Post had its facts wrong. The campaign met with the Post’s editors and demanded a retraction, claiming that Romney had left Bain in 1999, supposedly before the outsourcing investment began. The Washington Post listened to the Romney side of the story but stood its ground.
Now we know why. The Boston Globe reported two weeks ago that Romney had signed official documents claiming to be the president and CEO of Bain Capital as late as 2002, when the company was actively building up firms that outsourced American jobs. He didn’t just say this casually at some dinner party; he swore it was the truth on Securities and Exchange Commission filings.
What did the Romney campaign do this time? It hit the “repeat” button and demanded a retraction from the Globe. Who are you going to believe, the campaign asked its hometown paper, me or your lying eyes? Once again, the investigative journalists stood by their reporting.
Since the Globe story, the hits have kept coming. The AP reported this week that Romney stayed in “regular contact” with Bain during his so-called absence, “personally signing or approving a series of corporate and legal documents through the spring of 2001.” Several sources are now saying that Romney made repeated trips to Boston to meet with Bain executives during this period, even though he recently told CBS’s Jan Crawford that he doesn’t “recall even coming back once to go to a Bain or a management meeting” during the period in question.
So despite what the Romney campaign claims, media interest in this story has nothing to do with attacking personal success in the private sector. It has nothing to do with avoiding the real issues of the campaign.
It has everything to do with attempting to get to the bottom of a situation in which what a candidate is saying seems to have come unglued from the stubborn facts.
Americans know that a level playing field empowers a successful economy. You want to talk about soaking the rich? Mitt Romney’s father, George Romney, paid an effective tax rate of nearly 37% in 1967. The elder Romney didn’t complain and released his tax returns to prove his compliance with the law of the land he wanted to lead. In 2010, Mitt Romney’s tax rate bobbed and weaved its way below 15% — and we know that only because the public had to pry his return (he has released only a full one) out of his clenched hands.
Even more fascinating than the fact that Romney’s father released 12 years’ worth when he ran for president in 1968 is the reason why. “One year could be a fluke,” the elder Romney said, “perhaps done for show.”
This country has a noble habit of withholding elected office from people who have trouble with the facts. Romney could end these discussions overnight by releasing his tax returns, as he has been called on to do by Republicans like Alabama Gov. Robert Bentley, former Mississippi Gov. Haley Barbour and Iowa Sen. Chuck Grassley.
Until he makes peace with the facts, Romney will be stuck at the intersection of what is both a character issue and a policy issue. If Romney won’t stand by his record at Bain, just like he won’t stand by his record as governor of Massachusetts, how exactly is the American public supposed to evaluate the candidate? And if he won’t disclose his own relationship with tax loopholes and offshore tax havens, leaving voters more questions than answers, how can the American people trust him to reform our tax code in a way that closes loopholes, eliminates free-riding and ensures that everyone is playing by the same rules?
Facts and the Romney campaign have a difficult relationship these days. But they do share one thing in common: They’re both stubborn.
By: Donna Brazile, CNN Contributor, CNN Opinion, July 27, 2012
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