Vanity Fair
Where the Money Lives
For
all Mitt Romney’s touting of his business record, when it comes to his
own money the Republican nominee is remarkably shy about disclosing
numbers and investments. Nicholas Shaxson delves into the murky world of
offshore finance, revealing loopholes that allow the very wealthy to
skirt tax laws, and investigating just how much of Romney’s fortune
(with $30 million in Bain Capital funds in the Cayman Islands alone?)
looks pretty strange for a presidential candidate.
Romney’s personal tax rate is a particular
point of interest. In 2010 and 2011, Mitt and Ann paid $6.2 million in
federal tax on $42.5 million in income, for an average tax rate just shy
of 15 percent, substantially less than what most middle-income
Americans pay. Romney manages this low rate because he takes his
payments from Bain Capital as investment income, which is taxed at a
maximum 15 percent, instead of the 35 percent he would pay on “ordinary”
income, such as salaries and wages. Many tax experts argue that the
form of remuneration he receives, known as carried interest, is really
just a fee charged by investment managers, so it should instead be taxed
at the 35 percent rate. Lee Sheppard, a contributing editor at the
trade publication Tax Notes, whose often controversial articles
are read widely by tax professionals, is nonplussed that the Obama
campaign has been so listless on the issue of carried interest. “Romney
is the poster boy, the best argument, for taxing this profit share as
ordinary income,” says Sheppard.
In the face of such arguments,
Romney’s defense is that he never broke the rules: if there is a
problem, it is in the laws, not in his behavior. “I pay all the taxes
that are legally required, not a dollar more,” he said. Even so. “When
you are running for president, you might want to err on the side of
overpaying your taxes, and not chase every tax gimmick that comes down
the pike,” says Sheppard. “It kind of looks tacky.”
The assertion that he broke no laws is widely accepted. But it is worth
asking if it is actually true. The answer, in fact, isn’t
straightforward. Romney, like the superhero who whirls and backflips
unscathed through a web of laser beams while everyone else gets zapped,
is certainly a remarkable financial acrobat. But careful analysis of his
financial and business affairs also reveals a man who, like some other
Wall Street titans, seems comfortable striding into some fuzzy gray
zones.
Read it at Vanity Fair:
http://www.vanityfair.com/politics/2012/08/investigating-mitt-romney-offshore-accounts
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