Tuesday, June 26, 2012

Horse of a Different Color: How the American People are Subsidizing Ann Romney’s Uber-Rich Sport of Dancing With Horses

Guest post by Jame

By now, many Americans know that Ann Romney is engaged in the sport of dressage. The French word dressage, pronounced “dres-AZH”, describes a sport where horses are trained to perform tightly-controlled maneuvers resembling a sort of horse ballet. These movements, called piaffes, are done in response to the rider’s body signals. Riders in dressage competitions wear tails and top hats. Describing dressage, Randi Rhodes said, “I’m sorry, but if you’re doing piaffes in dressage, you’re not part of an athletic competition;
you’re part of a Broadway musical.” (I would love to hear a horse’s response to this!)

A precisedly fitted saddle allowing proper rider communication can cost up to $10,000. Of course, the costs of purchasing and maintaining the horse are extra. A good dressage horse can cost several hundreds of thousands of dollars. With stable groomers, board and pasture fees, ferriers, veterinarian fees, and groomers, a dressage horse exhibited on the international circuit can cost around $200,000 per year to maintain. Over the years, Ann Romney has acquired almost a dozen dressage horses.

Ann Romney currently engages in upper-level dressage competition, which is called Grand Prix. One of her horses*, a 15-year old Oldenburg mare named Rafalca, will be competing as part of the U.S. Equestrian Team in the International Olympics in London in late July. Rafalca, who could be worth $700,000 to $800,000, is now so famous that she even has her own twitter account: @rafalcaromney. (*Actually, the Romneys claim that they own only a share of Rafalca: more on that later.)

All the Romneys’ horses are kept at a horse-training estate called the Acres, located in Moorpark, CA, northwest of Los Angeles. The Acres estate was purchased by Amy Ebeling before she married Jay Ebeling; Jay Ebeling has long been Mrs. Romney’s dressage instructor. Jay will be riding Rafalca in London at the Olympic competition next month.

Dressage is a very disciplined sport for both horse and rider. However, if a rider is overly agressive or the horse is required to perform too intensely without sufficient rest, dressage can eventually cause pain – or even disability – to a horse’s joints and hooves. Ann Romney is a disciplined dressage competitor. Though she rode horses as a young girl, she did not become involved in dressage until about 10 years ago. At some point, she concluded that dressage was a big help for the pain she suffered from MS. Practicing almost relentlessly, and under Ebeling’s tutelage, she has won both gold and silver medals in the show ring – victories that usually come to people who began dressage as children.

Ebeling, who emigrated to America from Germany with almost no money, found in Anne Romney a deep-pocketed patron whose finances have helped advance his cause. Records show that the Romneys loaned Ebeling from $250,000 to $500,000 for the Acres, which has a Mediterranean-style guest house that the Romneys also use as an occasional getaway. In return, Ebeling has served as a horse scout for Romney, and she has accompanied him on several horse-buying trips to Europe. (Just imagine the right-wing uproar if Michelle Obama had done such a thing!) She spent most of the winter of 2005-2006 at the Acres, riding Baron, one of her earlier-purchased horses. I think it’s fair game to ask whether the large ‘loan’ from the Romneys to the Ebelings was in fact meant for the purpose of building or improving the Ebelings’ guest house, to make it satisfactory to the Romneys’ taste and comfort levels while they were staying there. A ‘business’ loan – given by the Romneys – with no quid pro quo? Without good supporting evidence, I’m not convinced.
Jay Ebeling, as he will appear at the Olympics

In 2010, Ann, Jay, and Amy found themselves on the wrong end of a lawsuit involving dressage. A San Diego woman sued them all for fraud, claiming that a horse she purchased from them had a severe foot defect that had been concealed. The defendants’ lawyers claimed that the buyer was aware of the defect at the time of purchase because she had had the horse checked out by a veterinarian. On the eve of the jury trial, Ann Romney was dropped as a defendant. (Settlement out of court??)

As it turned out, at the time of the ‘exam’, the horse in question had received anti-inflammatory drugs injected into his coffin joint, where the hoof attaches to the lower leg. The veterinarian, recommended by the Ebelings, did not mention that a toxicology exam had also revealed 4 tranquilizers in the horse’s blood at the time of the exam. The horse, once named Soupy and formerly owned and ridden by Ann, was an animal that Ann no longer relished riding: she found that riding him started to give her frequent back spasms.

As Carolyn Weinberg, Board Member of the American Association of Equine Practitioners, said, tranquilizers can mask problems in horses, affect the horse’s gait, and even obscure subtle lameness. Other experts agree. But when the plaintiff complained by filing a lawsuit, the Ebelings’ response to her was, “it’s your riding,” not the horse, that is the problem. Eventually the horse was forced to become a pastured animal. Jontelle Forbus, a former trainer for the Ebelings, testified that she, too, thought the horse had an irregular step. For the full story about this lawsuit, see this NYTimes piece.

The Romneys with Jay Ebeling

The Romneys: celebrating their dismissal from the $125,000 lawsuit???

Now for the interesting part. On page 193 of the Romneys’ 2010 Filed Tax Return, they claimed the expenses of caring for Rafalca as a deduction! The horse can be identified on the form as Rob Rom Enterprises LLC, and the deduction claimed was $77,731. Apparently, according to the Romneys, “Corporations are people, my friend!” – and horses are Limited Liability Companies that are taxable as
partnerships. (Question: Does this mean that people = horses???)

Here is a link to the IRS requirements for setting up an LLC. But don’t get your hopes up too soon. You and I are not the Romneys: our hobbies probably won’tqualifyHere is a screen shot of the relevant portion of the Romney’s 2010 tax return.

Here is a dailykos article that discusses Rafalca’s new talent (tax deduction) in great detail. Both the article and its many comments are well-worth reading. .

What’s even more interesting is that the Romneys are claiming that Rafalca is only partially owned by them, and that her other owners are the Ebelings and “a close family friend” named Beth Myers. If Rafalca is only partially owned by the Romneys, did the Ebelings and Myers claim Ralfalca as a deduction on their tax returns as well? And if the Romneys own only one-third of Rafalca, does that mean that in 2010 it cost $233,193 to keep her? (Three times $77,731 is $233,193.) How could that be true for the Ebelings, since they already own the ranch – including the pasture and barn – where Rafalca lives?

Does the Romneys’ claim of a deduction for Rafalca mean that if Jay Ebeling trains other riders on Rafalca, and Ebeling makes money from this, that the Romneys also have to claim part of that income on their tax returns? Or do the Romneys get all the deductions, and the Ebelings and Myers have to report all the income?

I also question whether Rafalca has corporate sponsors. She is famous now, and she may well get corporate sponsorship for the Olympic competition – but did she have corporate sponsorship in 2010, the year of the tax return in question? If Rafalca received corporate backing in 2010, and the Romneys sought such backing in that year, would that tend to support their claim that Rafalca was a business enterprise, engaged in for profit? And if they did view her this way, did the Romneys report all such corporate-sponsored donations as income on their return? (You know: a bridle registry!)

On the other hand, would the reverse also be true? That if the Romneys sought no corporate sponsorships for Rafalca in 2010, would that tend to show that they were not primarily interested in using Rafalca as an income-generator, but that she served in their eyes as merely a hobby and form of physical therapy for Ann? After all, even if Rafalca should be the dressage winner in the Olympics next month, what is the real value of a 15-year old mare? (Is she still young enough to produce the best foals? Has she been regularly bred up until the present time? If so, what kind of foals has she produced, and how much have they sold for?) If Rafalca were 4 or 5 years old, I could envision the possibilities of viewing her as a future income generator, but at age fifteen?

By the way, what will be the deductions claimed for Rafalca this year? First class jet airfare to London in the horse cabin? Top-notch lodgings at London’s finest barns?  (If only Groucho and Harpo – Day at the Races – Marx were here to comment on this last question!) Ironically, when questioned just the other day by Bob Schieffer about what tax deductions he would eliminate and what loopholes he would close so as to balance the federal budget, Romney not only refused to mention dressage horses – he refused to specify anything whatsoever. In fact, it is clear from his past statements (and his commitments to Grover Norquist) that Mitt would balance the budget by creating more wars and . . . . granting even larger tax deductions to the horsey set.

The Romneys have steadfastly refused to release their full tax returns, let alone all the supporting documents for them. The information about Rafalca may prove to be embarassing, but I doubt that the corporate media will delve into it; and Americans may soon forget about one more Romney privilege.

Romney lawyer Brad Malt said that he had sold a lot of the Romneys’ investments prior to releasing the 2010 return so that they would not show up there or have to be disclosed. “I decided to remove any possible source of embarrassment . . . . it just wasn’t worth it,” Malt said. One can only wonder what might be disclosed if the full truth were revealed.

One thing that would have been much more embarrassing than claiming a deduction for Rafalca is the fact that the Romneys have long invested in (and presumably made money from) oil investments in Iran – despite the fact that there have been legally-enforcible sanctions against investing in Iran since 1979. (If those investments have now been sold, that may explain Mitt’s recent eagerness to “bomb, bomb, bomb, . . . . bomb, bomb Iran.”)

This leads me to another point. The Romneys and their corporate media friends continue to refer to Rafalca co-owner Beth Myers as “a close family friend”. Calling Beth Myers a close family friend is like calling Karl Rove a mere friend of the Bush family, or suggesting that Benjamin Disraeli was merely a family friend of Queen Victoria. Myers was the founder of the consulting firm called Shawmut Group, one of whose clients is Romney’s PAC, Free and Strong America. Myers worked as a campaign manager in Ronald Reagan’s 1980 presidential campaign in Texas – alongside Karl Rove, for whom she also served as an aide during the Bush administration. She is a longtime Romney advisor who also served as his campaign manager during his 2008 presidential run. Prior to that, she worked for Romney while he was governor of Massachusetts. She is currently in charge of Romney’s vice presidential search team, and indisputedly one of his most trusted political advisors. The two have worked so long and so well together, that she is sometimes referred to as Romney’s “office spouse”. No, Beth Myers is not merely “a close family friend”: she is one of Romney’s top and most highly-paid political operatives, and a very experienced one at that.

Beth Myers

Wouldn’t it be great if we could all deduct the expenses related to our hobbies, and just have other taxpayers make up the difference? The federal tax courts don’t think so: their job is to make sure that everyone pays their fair share, based on the statutes in question. However, when it comes to tax-deductible hobbies, keep in mind: horse breeding and competition is a hobby usually affordable only by the very wealthy. Thus, horse enthusiasts have better-paid lobbyists than you and me.

When taxpayers have losses from horses year after year, and those losses are unrelated to the taxpayer’s other sources of income (ie, the Romneys make tons more money from investments in the Caymans, Bermuda, Luxembourg, Ireland, Switzerland, the stock market, and the bond market, than they do from Rafalca), the presumption is that the horse-related activities are merely a hobby, and the expenses may not be deductible. Even if a profit can be shown during some years, the IRS can still allege that the taxpayer lacked a profit motive. Sometimes, if a profit can be shown during two of seven consecutive years, the profit presumption can be shown. The following case involving dressage horses shows just how difficult it can be to successfully claim a deduction for their expenses. However, that case did not involve the Romneys! 

We have never heard Ann Romney say that she was involved in dressage for the profit: we have often heard her say that she is in it as a method of dealing with her MS – and that she wants to compete. That said, the Romneys presumably have topnotch tax lawyers (and powerful political connections), and will probably be able to stand by their deduction. Disclaimer: There is no allegation in this post that the Romneys’deduction for Rafalca is a form of tax evasion.

If the Romneys are unable to support their claimed deduction, and if they are ordered to pay back taxes, interest (and perhaps even penalties), we may never learn about it: the Romneys are clever geniuses when it comes to secrecy.  Just ask Richard Anderson, a Kaysville, Utah resident who was a Mormon missionary serving with Mitt in France. Anderson, who lived in the same house together with Mitt, was contacted by Romney aides and told never to publicly discuss their time in France. With anyone. When interviewed by The Telegraph in December 2011, Anderson, now 70, actually became tearful (fearful??). See dailykos article, above, for more. Mitt “I’m unemployed, too!” Romney has even lied about his first name:“My real first name is Mitt.” While this post does not suggest that the Romneys have lied or committed thuggery about their tax deduction for Rafalca, it does suggest that, in all things, the rules that apply to you and me simply do not apply to the Romneys.

Claiming for voting purposes that he and Ann actually lived in their son Tagg’s unfinished basement in Belmont, Massachusetts, for a year was apparently not sufficiently politically daring for “He likes to play pranks” Mitt.  Romney has also hired a registered lobbyist to argue to San Diego officials that he should be exempted from having to comply with a view-blocking ordinance – so that he could quadruple the size of his La Jolla mansion and install a $55,000 car elevator for his wife’s Cadillacs. The mansion is one of the three Romney residences (that we know of).  To top off these exploits, and in behalf of one-third of a dressage horse, Mitt can now claim a tax deduction that is twice the amount of the average American’s annual income. How utterly beyond ironic that Mitt Romney is the one who called Obama an “elitist”who was “out of touch” with America.

What does all this say about Romney’s future as a politician? Sadly, and despite his background and education, Mitt “It’s our turn now!” Romney continues to exhibit absolutely no clue about what is going on in America, or how most Americans live their lives. His role in the dressage drama illustrates well his status as America’s #1, tone-deaf, Bubble Boy. 

During his last term of political employment several years ago, as Massachusetts governor, Romney showed that he was equally out of touch with the public. He vetoed 800 pieces of legislation placed before him by his own legislature – and in over 700 cases, his decisions were subsequently overridden.

In his personal and public actions, Romney continues to show that he understands little about either constitutional requirements, how to work effectively with others in a governmental body, or how to “run” the country* – let alone justice, fairness, or equality under the law. (*Even dictators don’t “run” countries well: witness Syria. Under America’s system, the concept of “running the country” by a single leader is
an impossibility – it is “we the people” who are the government.

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