Mitt Romney: Money and secrets in abundance
Mitt Romney is a mystery. He magically transformed himself over a period of a few years from a pro-choice, pro-healthcare, pro gun-control, anti-Reagan politician and Governor into someboby who now opposes virtually everything he once stood for. Therefore, shameless flip-flopping is one aspect which we can say defines Mitt Romney. Another aspect is his highly secretive behaviour regarding his personal finances and the emails from his Governor's office. Next we can point to the controversial issues arising from his activities at Bain Capital (partially combined with his secretive behaviour), for example the allegations that his business activities resulted in the outsourcing of Americans jobs to foreign countries.
Because Mitt Romney is not very helpful when it comes to answering these many questions there is still a lot about him to be discovered. The good news is that the media so far is doing an excellent job when it comes to examining his past activities. Far from being "lamestream", various media outlets on the contrary are doing a fine job. In fact, so many interesting and often previously unknown facts have been reported that it is quite difficult to get an overview. That being the case I would like to present my current "top five" media reports about Mitt Romney in an overview of articles that every American voters ought to read.
Here we go:
No. 1: "Where the Money Lives" - Nicholas Shaxson, Vanity Fair, August 2012 issue
Vanity Fair takes us on a journey through Mitt Romney's secretive personal finances.
The author Nicholas Shaxson is the author of the highly praised book "Treasure Islands."
Just before the Iowa caucus last December, Mitt told MSNBC, “I don’t intend to release the tax returns. I don’t,” but finally, on January 24, 2012—after intense goading by fellow Republican candidates Newt Gingrich and Rick Perry—he released his 2010 tax return and an estimate for 2011.
These, plus the mandatory financial disclosures filed with the Office of Government Ethics and released last August, raise many questions. A full 55 pages in his 2010 return are devoted to reporting his transactions with foreign entities. “What Romney does not get,” says Jack Blum, a veteran Washington lawyer and offshore expert, “is that this stuff is weird.”
The media soon noticed Romney’s familiarity with foreign tax havens. A $3 million Swiss bank account appeared in the 2010 returns, then winked out of existence in 2011 after the trustee closed it, as if to remind us of George Romney’s warning that one or two tax returns can provide a misleading picture. Ed Kleinbard, a professor of tax law at the University of Southern California, says the Swiss account “has political but not tax-policy resonance,” since it—like many other Romney investments—constituted a bet against the U.S. dollar, an odd thing for a presidential candidate to do. The Obama campaign provided a helpful world map pointing to the tax havens Bermuda, Luxembourg, and the Cayman Islands, where Romney and his family have assets, each with the tagline “Value: not disclosed in tax returns.”
No. 2: "6 Things Mitt Romney Is Hiding" - Adam Serwer, Andy Kroll, and Stephanie Mencimer, Mother Jones, July 20, 2012
Mitt Romney is not keen to let people know what he has been doing or not been doing.
His Old Emails
Reporters looking for emails and other records from Romney's tenure as Massachusetts governor are out of luck.
In the final months of Romney's four-year stint as governor, as the Boston Globe reported, 11 of his top staffers purchased the hard drives in their government-issued computers, preventing state archivists from accessing any of their emails. In its final days, the Romney administration also replaced computers and scrubbed state government servers of all the administration's emails. As the top attorney for Romney's replacement, Deval Patrick, put it: "The governor's office has found no e-mails from 2002-2006 in our possession."
The Romney administration did turn over to state archivists hundreds of boxes of records, including memos, emails, and other communications among state agencies and cabinet members. However, the boxes containing those records were hand-picked and given over voluntarily by Romney's staff. It stands to reason that any embarrassing or revealing information—say, internal planning or deliberations about Romney's universal health care legislation—did not make it into the Romney administration's record dump.
According to financial-disclosure firms he's filed, Romney's Individual Retirement Account—a tax-advantaged retirement plan—is worth at least $20.7 million and as much as $101.6 million. It grows tax-free. But it's unclear how Romney's IRA grew so large. The annual limit for contributions to an IRA is currently $17,000, which employers can match if they choose. The limit for personal and matching contributions combined was around $30,000 per year when Romney was at Bain, suggesting that the most he could have put into his IRA was around $450,000. But his IRA could be worth 200 times that. (Even if Romney released several years worth of tax returns, it may not explain why his IRA grew so large.)
Some financial and tax experts believe Romney may have used a complicated, highly technical tax dodge called a "blocker corporation" to get such a large amount of money into the IRA. Others have suggested that Romney put in some of his partnership shares in Bain Capital itself and valued them at zero because they represented future income—another obscure tax maneuver unavailable to most Americans. It's impossible to know for sure, because, as with so much else, Romney won't talk about it.
No 3.: "Here's What I Think Romney Is Hiding By Refusing To Release His Tax Returns" - Henry Blodget, Business Insider, July 12, 2012
Nobody likes to pay taxes, especially Mitt Romney.
For what it's worth, my guess is that what Romney is hiding in his tax returns is not something that is clearly illegal or dishonest, but, simply the following reality:
In short, by not releasing his returns, I think Romney is trying to avoid calling more attention to the fact that he is a card-carrying member of the 0.01%, a group of Americans who deserve to be proud of their success but who are also understandably viewed with suspicion and frustration by most other Americans right now, especially when they argue that they're still paying too much in taxes.
- Romney has made hundreds of millions of dollars
- He has paid very little of that (on a percentage basis) in taxes
- He has made hundreds of millions of dollars in part because he has structured most of his income in ways that enable him to pay the least amount of taxes possible
- This "structuring" of income has likely taken full advantage of things like the ludicrous "carried interest" tax exemption that allows private-equity investors to pay capital gains taxes on income that is actually fees [This tax treatment is one of the most outrageous and unfair elements in the entire tax code. There is no logical basis for it, and it benefits only the richest people in the country.]
- This "structuring" has also likely taken advantage of offshore accounts, the contribution of hard-to-value securities at low valuations to Romney's IRA (whereupon they exploded in value), and other sophisticated tools. These tools are, theoretically, available to anyone, but, in practice, are available only to those with tens of thousands of dollars to spend every year on tax-and-estate planning.
- This structuring, which (let's be honest) is done primarily to avoid paying taxes, will look bad to most Americans, who will know instinctively that it's done to avoid paying taxes and that it's not something they will ever be able to afford to do--and, therefore, will seem unfair.
No 4.: "Assets Hint at Larger Romney Wealth" - Stephen Braun, Associated Press, July 4, 2012
I guess that in this world you need to be a black man in order to get into trouble for secretly owning highly suspicious companies in the Bermuda - because Mitt Romney, despite his obviously unethical behaviour, has got into very little trouble so far. What would have happened if President Obama had done the same...?
Romney's 2010 tax returns show him and his wife as sole owners of Sankaty. A 2011 Bermuda legal document lists Malt as Sankaty's president. Michael F. Goss, currently Bain Capital's chief operating officer, is listed as vice president, and Quorum Corporate Ltd., a Bermuda law firm, as secretary. Malt deferred questions about Sankaty to the Romney campaign; Bain Capital and Quorum declined to comment.
The candidate's 2010 tax returns listed at least 20 investment holdings besides Sankaty that had not been previously disclosed on federal reports. At least seven were foreign investments. Bain Capital Inc., the holding that posted the $1.9 million earning, was listed on Romney's state ethics reports in 2001 and 2002, when he ran for governor, but was missing from any annual ethics report until Romney's trust included it last month on his 2012 financial statement.
Sankaty is the only offshore holding in the Romneys' portfolio under their full control. On his 2010 taxes, Romney's blind trust filed an IRS form identifying Sankaty as a "controlled foreign corporation." That filing is required for any U.S. taxpayer who owns more than 50 percent of a foreign company. Romney's 2010 tax returns indicate that he and his wife control all 12,000 shares.
Several U.S. Securities and Exchange documents from the late 1990s and 2000s depicted Romney as Sankaty's owner at the time, but when he ran for Massachusetts governor in 2001 and 2002, Romney did not list the company on annual disclosure forms required by the Massachusetts State Ethics Commission.
The ethics commission would not comment on the omissions. Boston College law professor R. Michael Cassidy, who was a member of the commission at the time, said that if Romney "owned this business before he signed his ethics disclosure, then he was obliged to report it." The state's disclosure rules also allow a $1,000 minimum threshold. A six-year statute of limitations covering Romney's ethics reports has since expired.
Even though Sankaty is no longer used for Bain investments, several tax analysts said its legal offshore status still could be used by Romney to defer some taxes on some of the "carried interest" income related to the Bain deals.
Romney has said he gets no tax break. He told an audience at a Maine town hall appearance in February that "I have not saved one dollar by having an investment somewhere outside this country."
But the lack of disclosure over the years, private equity experts said, makes it impossible to tell.
"Without knowing more about an offshore's history and how it was used," Fleischer said, "you're left in the dark."
No. 5: "Mitt Romney stayed at Bain 3 years longer than he stated" - Christopher Rowland, The Boston Globe, July 12, 2012
Mitt - either you are the boss are you aren't!
"The Boston Globe" got much of the credit for this discovery, but David Corn at "Mother Jones" (also HERE) and Josh Marshall at TPM published similar stories a few days before.
Government documents filed by Mitt Romney and Bain Capital say Romney remained chief executive and chairman of the firm three years beyond the date he said he ceded control, even creating five new investment partnerships during that time.
Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”
Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.
The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.
Contradictions concerning the length of Romney’s tenure at Bain Capital add to the uncertainty and questions about his finances. Bain is the primary source of Romney’s wealth, which is estimated to be more than $25o million. But how his wealth has been invested, especially in a variety of Bain partnerships and other investment vehicles, remains difficult to decipher because of a lack of transparency.
These "top five" media reports are just a small selection from many excellent articles which have been published about Mitt Romney, most of them focus on his rather shady business affairs and secretive personal finances. Many more links can be found in our own recent posts about Mitt Romney (HERE and HERE).
Have a nice Sunday, everybody!
The following story was mentioned in the comments, and then one of our wonderful readers sent me the link. An almost unknown, but very well sourced story and extremely revealing report from 2007:
"Bishop Romney's Sadistic Anti-Abortion Counseling" - Scoop Independent News (New Zealand), Judith Dushku Interview, by Suzan Mazur, June 9, 2007
Mitt Romney takes whatever position he has to take, and gave sadistic spiritual abortion advice as a Mormon bishop.
Judy Dushku: First of all the stake president – Gordon – came by to see X with a friend and said well it looks like you have to do this – terminate the pregnancy. He was perfectly comfortable with X’s decision, since both she and the child were in peril. And Gordon was technically higher in the LDS church hierarchy than Mitt was as bishop.+++
So then Mitt came in to the hospital. X thought Mitt had come to be comforting because that’s what bishops do. They have a pastoral role. But she said that instead he was critical.
He said – What do you think you’re doing?
She said – Well, we have to abort the baby because I have these blood clots.
And he said something to the effect of – Well, why do you get off easy when other women have their babies?
And she said – What are you talking about? This is a life threatening situation.
And he said – Well what about the life of the baby?
And she said – I have four other children and I think it would be really irresponsible to continue the pregnancy.
X said she found herself arguing with Romney about her medical crisis, said he was very unsympathetic, very critical, and said that under the circumstances in no way did he condone her aborting the child. And he left.
She was extremely distraught. Talked it over with her husband. They decided to go ahead with the abortion. After that she left the church.
Suzan Mazur: She’s okay now?
Judy Dushku: Yes.
Suzan Mazur: And you then confronted Romney over the matter.
Judy Dushku: In the early 90s, our feminist newspaper Exponent II, did a theme issue about Mormonism and abortion. X said she’d like to write a piece describing her experience. We agreed to publish her story anonymously because we knew her and knew about the ordeal.
Then in 1994, when Romney was running for the Senate, he came out in favor of choice for women -- which was surprising to me. I was pleased and called, asking to see him. I told him I suspected that we had our differences, but that maybe I could work with him if he’d come to a really good position on women and childbirth.
And he said – Yes, come to my office.
I went to his office and I congratulated him on taking a pro-choice position. And his response was – Well they told me in Salt Lake City I could take this position, and in fact I probably had to in order to win in a liberal state like Massachusetts.
Suzan Mazur: Who’s “THEY”?
Judy Dushku: I asked him the same question. And he said “the Brethren” in Salt Lake City.
And I said, Mitt, it doesn’t make me happy to hear that. What you’re suggesting is that you’re not genuinely pro-choice. It’s a position of convenience.
He said – Oh no, I actually had an aunt who died of a botched abortion. So I have some positive feelings about choice, but basically I know that I have to take that position.