“Americans Who Do Not Pay Taxes”: Isn’t Mitt Romney A Member Of The 47 Percent?
Mitt Romney, a son of privilege who used family connections and family advantages to accumulate a “vulture capitalist” fortune, and who now collects multimillion-dollar checks for doing absolutely nothing, claims to have identified 47 percent of Americans “who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them.”
Most of these people, Romney gripes, “pay no income tax.”
That, Romney suggests, makes them non-entities in his political calculus.
“My job is is not to worry about those people,” says Romney, who predicts all the “dependent” voters will back Barack Obama this year. “I’ll never convince them they should take personal responsibility and care for their lives.
But Romney should not be so dismissive of the tax-avoiding class. After all, he’s one of them.
The nonpartisan Tax Policy Center says roughly 46 percent of Americans paid no income tax for the last year where numbers are available, 2011. Slightly less than half of those who do not pay take advantage of tax breaks designed to ease the burden on elderly Americans who live on fixed incomes. Roughly a third of them do not pay because they are beneficiaries of tax credits designed to help the working poor and children to get by.
In other words, the Americans who do not pay taxes are, for the most part either low-income workers or retired low- or middle-income workers. They are not dodging tax responsibilities. They are filing forms and taking exemptions that were designed to relieve or eliminate tax burdens for those who are least able to pay.
The Tax Policy Center offers the example of a working couple making minimum wages who have two children and earn under $26,400 a year. Using standard deductions and specific exemptions designed for families in their circumstance, they can file a form that has a zero in the amount due column.
Tens of millions of American households—many of them our hardest-working citizens—find themselves in this category. Remember that, according to the Census Bureau, 46.2 million Americans lived in poverty in 2011.
Mitt Romney is not a member of this class of Americans. As a quarter-billionaire, he is part of a multi-generational elite—the most privileged 1 percent of the 1 percent—that has never ever had to worry about making ends meet at the end of the month.
But Mitt Romney has something in common with the working poor.
Like them, he benefits from federal programs that are designed to allow some Americans to avoid paying some or all of the taxes that would otherwise be due from them.
Roughly 13 percent of high-income Americans use itemized deductions—mortgage interest, health payments, or charitable contributions, education tax credits, or tax-exempt interest—to zero out their taxes.
Mitt Romney has not released the tax returns that his dad said a candidate for the presidency owes the American people—forms for the twelve years before their candidacy. So we do not know if he is an actual member of the 47 percent.
By Mitt Romney’s own admission, his accountants make sure that he does not “pay any more (taxes) than are legally due.”
All indications, from Romney and his campaign, are that he has taken full advantage of: tax exemptions, tax credits, tax havens and tax loopholes.
What sort of loopholes? We get an indication from documents filed by the firm that continued to stream money into Romney’s personal accounts long after he quit as a partner.
“The Bain documents posted [in August] show that Bain Capital will go to great lengths to help its partners and its investors avoid tax,” explained Rebecca Wilkins, senior counsel at Citizens for Tax Justice. “Beyond simply putting their funds offshore, the Bain private equity funds are using aggressive tax-planning techniques such as blocker corporations, equity swaps, alternative investment vehicles and management fee conversions.”
That’s how someone who makes tens of millions of dollars says he pays around 13 percent of his annual income into the US Treasury, as opposed to the top marginal tax rate of 35 percent. For 2011, he estimated that he would pay $3.2 million on income of $21 million.
If Mitt Romney had paid at the 35 percent rate that he is supposed to be paying at, the check he wrote would have been for $7.4 million.
So he avoided paying $4.2 million in taxes.
That’s the same as the total amount that—were they paying at the marginal rate that would apply to the working poor if there were no exemptions—would be paid by roughly 1,100 of the low-income families Mitt Romney dismisses as “dependent.”
At the very least, it would seem that Mitt Romney has earned honorary membership in the 47 percent.
By: John Nichols, The Nation, September 18, 2012
“Trust Me, Trust Me Not”: Mitt Romney’s Bain Capital Under Investigation For Tax Avoidance
The New York Times is reporting that Bain Capital, the private equity firm founded by GOP presidential nominee Mitt Romney, is among a number of firms being investigated by New York Attorney General, Eric Schneiderman, for failing to pay taxes.
The New York AG’s Taxpayer Protection Bureau has issued subpoenas to at least twelve financial firms, including Bain, looking into whether the companies converted management fees (taxed as ordinary income) paid by investors into fund investments which are taxed at a dramatically lower rate.
The controversial tax avoidance scheme came to light last month when Bain Capital internal financial information was published online by Gawker.com , however the investigation had reportedly commenced prior to the publication and is not believed to be tied to the document dump.
The tax strategy — which is viewed as perfectly legal by some tax experts, aggressive by others and potentially illegal by some — came to light last month when hundreds of pages of Bain’s internal financial documents were made available online. The financial statements show that at least $1 billion in accumulated fees that otherwise would have been taxed as ordinary income for Bain executives had been converted into investments producing capital gains, which are subject to a federal tax of 15 percent, versus a top rate of 35 percent for ordinary income. That means the Bain partners saved more than $200 million in federal income taxes and more than $20 million in Medicare taxes.
While Governor Romney has not been active at Bain Capital for quite some time, he does continue to receive profits from the company and held investments in some of the funds that utilized the tax avoidance strategy.
The Romney campaign issued a statement indicating that the Governor had not benefited from the practice.
R. Bradford Malt, an attorney for Governor Romney who manages the Governor’s investments and trusts, argued that investing fee income is a common, accepted and totally legal practice. “However, Governor Romney’s retirement agreement did not give the blind trust or him the right to do this, and I can confirm that neither he nor the trust has ever done this, whether before or after he retired from Bain Capital.”
According to Jack S. Levin, a finance lawyer who has represented Bain Capital, the practice has been in use by investment firms for twenty years and is something the IRS knows about.
The investigation will, inevitably, raise questions as to whether or not Attorney General Schneiderman, who has strong contacts to the Obama Administration, is attempting to embarrass Romney as we head towards the November election.
Still, prominent investment firms, including Blackstone Group and The Carlyle Group, have noted in regulatory filings that they have not participated in diverting management fees into investments in their funds.
By: Rick Ungar, Contributor, Forbes, September 1, 2012
“Passing And Punting On The Trail”: Mr. Thirteen Percent’s “Just Trust Me Campaign”
Mitt Romney, returning to New Hampshire on Monday with his new running mate, lasted only about 30 seconds before stumbling right into the issue that has dogged his candidacy like no other.
“Gosh, I feel like I’m almost a New Hampshire resident,” the winner of the state’s Republican primary told the crowd at Saint Anselm College in Manchester. “It would save me some tax dollars, I think.”
D’oh! Does Mr. Thirteen Percent really want to remind everybody how determined he is to keep his tax returns private?
Maybe so. The Republican standard-bearer seems to take a stubborn pride in his refusal to cough up details. My colleague Greg Sargent argues that Romney seems to be running a “just trust me” campaign that extends beyond 1040s and into the policy realm. It’s an intriguing observation, and so I kept an ear out for specifics as I listened to Romney and Paul Ryan hold their joint town hall meeting at Saint Anselm. Sure enough, they spoke and fielded questions for about an hour but deftly avoided detail.
“I’m going to do five things when I’m in Washington,” Romney announced. This was a promising start.
“Number one, we’re going to take advantage of our energy resources,” he offered. Excellent! Drilling? Pipelines? Nuclear? Romney did not say: Just trust him.
“Number two, I’m going to make sure that our schools are second to none,” Romney said. “We need our kids to have the skills to succeed. That’s number two,” he went on. Thus ended the education-policy segment of the program.
“Number three, I want trade that works for America,” Romney said. The closest he got to specifics here was to say he would “crack down on cheaters like China when they play on an unfair basis.”
“Go, Mitt!” somebody shouted.
Mitt did go — right to No. 4, to “show America that this team can put America on track to a balanced budget and stop the deficit spending.”
“Mitt, Mitt, Mitt, Mitt, Mitt!” the audience chanted.
He moved on to No. 5: reducing regulations. And here he had a specific, sort of: “I want to make sure that we get Obamacare out of the way and replace it with something which will help encourage job growth in this country.”
Replace it with . . . something?
Of course, Romney is hardly the first presidential candidate to avoid specific commitments and promises. His opponent, President Obama, was caught on a hot mike telling Russia’s Dmitry Medvedev to wait until after the election for a new Russia policy.
The difference with Obama, though, is he has already established a track record in office. By declining to put meat on the bones of his policy proposals, Romney wouldn’t have any mandate from the voters if he does defeat Obama. In policy speeches, he’s somewhat more specific than he is at typical campaign stops, but even then there’s nothing resembling a comprehensive plan for budget balancing, job creation or tax reform.
Romney and Ryan, in rolled-up sleeves and open collars, took the stage at Saint Anselm to the orchestral tune “Tryouts,” from the college-football film “Rudy.” This was appropriate, because the two men were about to pass and punt on issue after issue.
Ryan, the policy wonk of the pair, teased the crowd with the prospect of specific proposals (“We’re going to win this debate about Medicare!”) but then floated the idea of letting younger Americans, when they retire, “have a choice of guaranteed coverage options, including traditional Medicare.” That is a specific policy — but it hasn’t consistently been Ryan’s; he got the House last year to approve his plan phasing out traditional Medicare.
Still, that was apparently enough detail for one day. “I won’t go into all the things that we’re proposing to do to get jobs back, because I want to leave something for Mitt to talk about,” Ryan said. “The point is, we’re offering you solutions.”
Just trust them.
In fact, Romney didn’t furnish the promised proposals, and his foreign policy didn’t get much more elaborate than “American strength is critical.”
The audience members were friendly, but they wanted more details. His plan to reduce the debt?
“We want to grow this economy and cut federal spending.”
His tax plan? “I will not raise taxes on the American people.”
His Afghanistan plan? “Bring our men and women home, and do so in a way consistent with our mission.”
His plan to reduce student costs? “Make sure that when you graduate, you can get a job.”
Just trust him.
By: Dana Milbank, Opinion Writer, The Washington Post, August 20, 2012
“I Can’t, I’m Mormon!”: A Special Cause, Mitt Romney’s Pious Baloney On Tax Returns
After months stonewalling on releasing more tax returns, Mitt Romney invoked a brand-new explanation for demurring in an interview with Parade magazine set to hit newsstands this weekend: religion. “Our church doesn’t publish how much people have given [to the LDS Church]. This is done entirely privately. One of the downsides of releasing one’s financial information is that this is now all public, but we had never intended our contributions to be known. It’s a very personal thing between ourselves and our commitment to our God and to our church,” Romney told the magazine when asked about his returns, according to the Salt Lake Tribune.
While it’s certainly understandable that Romney would prefer to keep his church giving private, this isn’t really a convincing argument for hiding his returns. For one, he’s not actually hiding anything as the cat’s already out of the bag. We already know how much Romney gave to the Mormon church in 2010 and 2011, the years for which he has released tax returns. Mormons are encouraged to tithe 10 percent of their income and, indeed, Romney gave about that — $4.1 million of the $40 million he earned in those two years. His Tyler Charitable Foundation gave another $4.8 mil to the faith. So if we already know how much he gave in 2010 and 2011, why should any other year be kept secret?
Secondly, the whole reason presidential candidates release tax returns is because former Republican presidential candidate George Romney started the tradition in the late 1960s by releasing 12 years of returns. George Romney was also a Mormon and a leader in the church, but apparently had no problem with how much he had given to the church (he was also Mitt Romney’s father). Over the 12-year period covered by the returns, George and his wife, Lenore Romney, gave 19 percent of their income to the LDS church.
Moreover, most churches (or synagogues or mosques or temples) expect their congregants to donate, and since every presidential nominee since forever has been religious, at least publicly, Romney is asking to be excused from a standard that everyone else has been held to. There’s nothing in his answer that suggests Mormons should have special cause to be exempted, and it’s reasonable to assume that a protestant like Barack Obama or a Methodist like George W. Bush would also prefer to keep their religious giving private, if given their druthers. But they both released their tax returns. (For what it’s worth, Obama was pretty stingy in his religious donations, giving just 1.4 percent of his income.)
If Romney wants to keep the rest of his tax returns private — as he certainly does, and has promised to do — he’ll need to come up with a better reason than this pious baloney, to quote Newt Gingrich.
BY: Alex Seitz-Wald, Salon, August 24, 2012
“Politics Over People”: Romney Endorses Mass Public-Sector Layoffs
Mitt Romney chatted with Bloomberg Businessweek Editor Josh Tyrangiel for a good-but-brief interview, which was published today, and which turned out to be quite informative (thanks to Tricia McKinney for the heads-up).
Tyrangiel asked, for example, about the famous Bain Capital photo featuring Romney and his colleagues posing with cash, and what Romney thinks of the image now. “Oh, that was a moment of humor as we had just done what we thought was impossible,” he said.
The editor also tried to ask the tax-return issue in a new way: “If you’re an investor and you’re looking at a company, and that company says that its great strength is wise management and fiscal know-how, wouldn’t you want to see the previous, say, five years’ worth of its financials?” Romney dismissed the comparison, saying, “I’m not a business.”
I was also delighted to see Tyrangiel ask how Romney intends to balance the budget without raising taxes, without cutting defense, and without touching Social Security. Romney responded by talking about eliminating “Obamacare,” which, of course, would make the deficit worse, not better.
But what I found most interesting was an exchange that probably won’t get as much attention. Tyrangiel asked a fantastic question about the economy: “One thing that distinguishes this recovery is that public sector jobs, government jobs, have already fallen by 650,000. Given the conservative goal of shrinking government, is this a positive development or a negative one?” Romney didn’t give a straight answer, but his take was nevertheless illustrative of a larger point.
“Well, clearly you don’t like to hear [about] anyone losing a job. At the same time, government is the least productive — the federal government is the least productive of our economic sectors. The most productive is the private sector. The next most productive is the not-for-profit sector, then comes state and local governments, and finally the federal government. And so moving responsibilities from the federal government to the states or to the private sector will increase productivity. And higher productivity means higher wages for the American worker. All right?
“America is the highest productivity nation of major nations in the world, and that results in our having, for instance, an average compensation about 30 percent higher than the average compensation in Europe. A government that becomes more productive, that does more with less, is good for the earnings of the American worker, and ultimately it will mean that our taxes don’t have to go up, that small businesses will find it easier to start and grow, and we will be able to add more private sector jobs.”
It’s far from clear that Romney’s correct about the federal government being the “least productive of our economic sectors,” but for the sake of conversation, let’s say that’s true. Let’s just assume that those rascally federal bureaucracies are just too darned “unproductive.”
This is still a deeply misguided policy position.
Remember, the question from Tyrangiel has to do with the economic recovery: is it good or bad that America has been trying to dig itself out of a brutally-deep economic hole while simultaneously laying off 650,000 public-sector workers — on purpose.
Romney’s response is about a long-term vision — a more efficient and productive federal sector will eventually be good for the private sector. That may or may not be true, but the Republican is badly missing the point: how can the economy get better in a hurry if we’re deliberately putting 650,000 out of work? The answer is, we can’t, but apparently Romney doesn’t much care.
For that matter, Romney may struggle with the details of basic economics, but it’s disconcerting that he doesn’t realize who these people are. “The federal government is the least productive of our economic sectors”? What does that have to do with school teachers, police officers, and firefighters who’ve been laid off in droves in communities nowhere near the Beltway?
By: Steve Benen, The Maddow Blog, August 9, 2012
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