Mitt
Romney knows how to do a cost-benefit analysis, and he's determined
that it's better to be dogged by reporters for failing to release his
tax returns for the duration of the 2012 campaign than it is to make the
documents public. Never mind that a majority of Americans – and a third
of Republicans – think he should come clean.
It's beyond obvious
that whatever's in those returns must be enough to do serious damage to
Romney, or even sink his candidacy completely.
What might it be,
exactly? In the vaccuum Romney has created by not disclosing, any number
of theories have been floated as to what his returns could reveal. For
your convenience, we've collected 10 theories that are making the rounds
in the political press.
1. Mormon Tithes
Mormons
are expected to fork over 10 percent of their income to the Church of
Latter Day Saints. And that fact leads us to two theories.
First, Rachel Zoll of the Associated Press
speculated
that Romney doesn't want to remind evangelical Christians that he
belongs to what many consider a non-Christian “cult.” “The Republican
candidate's commitment to the church is a double-edged sword in the
contest for the presidential nomination,” she wrote. “Many GOP voters
are Christians who do not consider Mormons to be part of historic
Christianity. Romney supporters worry that details of his church
donations contained in the tax returns could fuel opposition to him
based on his religion.”
But it may be the other way around – perhaps he doesn't want to piss off Mormons. After all, the right-wing
Daily Caller
reported that in 2010 and 2011, the two years for which Romney released
partial returns, it looks like the former Mormon bishop under-tithed
the church, paying 7 percent of his income one year and 9.7 percent over
the two-year period. As the
Caller noted,
“Romney recently told Fox News Sunday host Chris Wallace, 'I made a
commitment to my church a long, long time ago that I would give 10
percent of my income to the church, and I’ve followed through on that
commitment. So, if I had given less than 10 percent, then I think people
would have to look at me and say, ‘Hey, what’s wrong with you fella —
don’t you follow through on your promises?’”
Of course, if he were sheltering additional income in offshore accounts, then the degree to which the
Caller says he shortchanged the Mormons might be even greater.
2. Things That Might Infuriate the Base
Mitt
Romney, who just four years ago was dubbed the “conservative
alternative” to John McCain is probably, as he claims, “severely
conservative.” But when he wanted to become governor of Massachussetts,
he played to that state's politics, swearing to protect a woman's right
to choose, saying that climate change isn't a socialist plot and
generally being reasonable. He passed the precursor to Obamacare, which
he now condemns as a sign of looming tyranny.
Rick Newman at
US News and World Report wonders
whether Romney really stopped supporting those causes when he claims to
have converted himself into a far-right Republican. Could he have a
bunch of itemized deductions to, say, Planned Parenthood listed on those
returns? We'd be wrong
not to speculate.
3. Harry Reid, Lazy Blogger
That's how Wonkette
characterized
Senate Majority Leader Harry Reid's unsourced, second-hand rumor that
Mitt Romney paid no taxes at all over a 10-year period. (This is very
unlikely, due to the Alternative Minimum Tax.)
But many, many
people have speculated that the reason Mitt doesn't want to reveal his
tax returns is that they will show that he paid a significantly lower
rate than his campaign has claimed in the years prior to 2010.
4. It's the IRAs
Mitt
Romney has an Individual Retirement Account, just like you probably do!
But unlike you, Mitt has somewhere between $20 and $101 million in his
account.
We know that the maximum amount one can contribute to an
IRA account is $17,000 per year (employers can match that with up to
$30,000). So that would be a pretty impressive performance – what an
investor!
Or what a cheat. Michael Graetz, a professor of tax law
at Columbia University and a former official in the senior Bush's
Treasury Department,
suggested
that to get such a fat IRA, “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.”
He continues:
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.
5. The Mini-Mitts
Graetz
has a second theory about what Mitt might be hiding, and it also has to
do with dramatically under-valuing his assets in order to screw over
Uncle Sam.
It has to do with a trust he set up for his five sons
in 1995. Graetz explains that until this year, there was a $1 million
life-time exemption on such gifts, and after that they should have been
taxed at between 29-44 percent. So Mitt would have been on the hook for
between $29 and $44 million in gift taxes.
“Based on his
aggressive tax planning,” writes Graetz, “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.”
Wouldn't
he get busted with such a brazen strategy to avoid paying taxes? After
all, that's some pretty serious tax fraud. Well, catching Mitt in this
kind of scheme might be harder than one would think. Graetz explains
that “every good tax professional knows that gift tax returns are rarely
audited, except after the transferer’s death. And normally the I.R.S.
cannot challenge such a return after three years from its filing.”
6. Is It All About 2009?
BusinessWeek's
Joshua Green thinks Romney may not want to reveal his taxes for one
year in particular – 2009. That's because Romney probably took some
significant losses when the economy crashed in 2008. Green
explains:
It’s
possible he suffered a large enough capital loss that, carried forward
and coupled with his various offshore tax havens, he wound up paying no
U.S. federal taxes at all in 2009. If true, this would be politically
deadly for him...
The “zero tax in 2009” theory—again, this is
sheer speculation—gains further sustenance when you consider it’s the
only year for which nobody knows anything about Romney’s taxes. He’s
revealed what’s in his 2010 and 2011 returns, and he reportedly
submitted 20-some years’ worth of returns to the McCain campaign when he
was being vetted for vice president in 2008. Steve Schmidt, McCain’s
chief strategist in that campaign, said on MSNBC,,, that while he didn’t
examine Romney’s returns himself, nothing that McCain’s vetters found
in them disqualified Romney from consideration.
7. CEO, President and Chairman of Bain
You
probably know that Mitt claims he retired – or perhaps retired
“retroactively” – from Bain Capital in 1999. You probably also know that
almost three years later, as the Huffington Post
reported,
“Romney was listed as the CEO, chairman and president of the company...
in documents filed with the Securities and Exchange Commission; took a
six-figure salary; signed corporate documents related to major and minor
deals and attended board meetings for at least two Bain-affiliated
companies.”
It's possible that releasing his returns could clarify
exactly what involvement he had with Bain after 1999. And that might
reveal that Romney was,
contrary to his claims,
involved in Bain's decision to invest in Stericycle, a medical waste
company that disposed of aborted fetuses. Ben LaBolt, an Obama campaign
spokesman, told Fox News: "If he released more documents, like further
tax returns, we would know the extent of his involvement at Bain during
this period.”
8. Is Mitt a Felon?
Relatedly,
in 2011, Mitt Romney signed a financial disclosure form and sent it to
the Federal Election Commission. In it, he stated emphatically that he
had no active role in the company after February 1999. That claim
appears to be contradicted by a number of other documents.
It's
a felony to lie on an FEC financial disclosure form. Some forms of tax evasion are also felonies. Mitt's tax returns might offer proof that he committed a crime.
9. Are There Other Non-Disclosures?
There's lying on a disclosure form, and then there's not filing required forms. The
LA Times reports
that “at least 23 funds and partnerships listed in [Mitt's] 2010 tax
returns did not show up or were not listed in the same fashion on
Romney’s most recent financial disclosure, including 11 based in low-tax
foreign countries such as Bermuda, the Cayman Islands and Luxembourg.”
More tax returns might reveal other investments that Romney has failed to disclose, as he is required to do by law.
10. There's Nothing – It's Just His Sense of Entitlement
Esquire's James Wolcott
doesn't think there's any there there.
Sure, Romney's tax returns would provide an object lesson in how the
ultra-rich avoid paying their fair share of taxes, but everyone already
knows that those at the top of the pile game the system. For Wolcott,
the issue comes down to Romney refusing to bow to the little people on
principle.
It is helpful always to remind yourself that, in the
mind of Willard Romney, there are only two kinds of people — himself and
his family, and the Help. Throughout his career, and especially
throughout his brief political career, Romney has treated the Help with a
kind of lordly disdain...
The Help has no right to go pawing
through the family books, giggling at the obvious loopholes and tax
dodges, running amok through all the tax shelters, and probably getting
their chocolate-y fingerprints all over the pages of the Romney family
ledger. And, certainly, those members of the Help in the employ of the
president of the United States, who is also part of the Help, have no
right to use the nearly comically ostentatious wealth of the Romney as
some sort of scrimey political weapon. He does not have to answer to the
Help. I mean, jeepers, he's running for office.
This isn't
stubbornness. That's often an acquired trait. What this is,
fundamentally, is contempt. Contempt for the process, and contempt for
the people who make their living in that process, and contempt for the
people whose lives depend on that process. There are rules for the Help
with which Willard Romney never has had to abide, and he has no
intention of starting now. My dear young fellow, this simply is not
done.
The Most Likely Explanation
Given
Romney's refusal to release his returns, this kind of speculation is
entirely predictable. But the most likely reason Romney doesn't want to
release his returns is that they'll cast a bright light on the
aggressive tax avoidance strategies the super-rich use every day –
strategies David Cay Johnston outlined so well in his excellent book,
Perfectly Legal. The Romney campaign keeps assuring us that he paid all taxes required by law, and that very well might be the problem.
A
Vanity Fair investigation
into the trickle of tax documents that Romney has disclosed – under
intense pressure – found that they “provided a lavish smorgasbord for
Romney’s critics. Particularly jarring were the Romneys’ many offshore
accounts.”
To give but one example, there is a
Bermuda-based entity called Sankaty High Yield Asset Investors Ltd.,
which has been described in securities filings as “a Bermuda corporation
wholly owned by W. Mitt Romney.” It could be that Sankaty is an old
vehicle with little importance, but Romney appears to have treated it
rather carefully. He set it up in 1997, then transferred it to his
wife’s newly created blind trust on January 1, 2003, the day before he
was inaugurated as Massachusetts’s governor. The director and president
of this entity is R. Bradford Malt, the trustee of the blind trust and
Romney’s personal lawyer. Romney failed to list this entity on several
financial disclosures, even though such a closely held entity would not
qualify as an “excepted investment fund” that would not need to be on
his disclosure forms. He finally included it on his 2010 tax return.
Even after examining that return, we have no idea what is in this
company, but it could be valuable, meaning that it is possible Romney’s
wealth is even greater than previous estimates. While the Romneys’
spokespeople insist that the couple has paid all the taxes required by
law, investments in tax havens such as Bermuda raise many questions,
because they are in “jurisdictions where there is virtually no tax and
virtually no compliance,” as one Miami-based offshore lawyer put it.
While
James Wolcott thinks that it's “hardly a secret anymore” that “our tax
code — and, indeed, our entire economic system — has been gamed to
benefit the folks in Romney's economic stratum,” most people probably
don't have a firm grasp on precisely how the vaunted “job creators”
avoid paying their fair share, and the release of Romney's returns would
offer a teachable moment.
As real estate billionaire Leona
Helmsley once said, “Only the little people pay taxes.” That's not the
message Mitt Romney wants to convey during a campaign that has a lot to
do with tax cuts for the wealthiest.
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