9 Things That Show Mitt Romney Is Morally Bankrupt
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The Romney reticence on all matters of personal finance has only fanned the flames of investigation and speculation, yielding a picture of a tangled web of offshore shell companies, a Swiss bank account, and shady tax-filing tricks.
Vanity Fair's Nicholas Shaxon notes that Romney appears to have closed his $3 million Swiss bank account before filing his 2011 tax return, but reports that he still maintains an interest in 12 Bain Capital funds registered in the Cayman Islands, the details of which, Shaxon says, are "hidden behind controversial confidentiality disclaimers." Of particular interest to reporters has been a Bermuda firm owned by Romney known as Sakaty High Yield Asset Investors Ltd., which Shaxon writes, is raising eyebrows:
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.
Then there's the matter of a funky accounting practice known as management fee-waiving, which was all the rage at Bain. Leveraged buyout firms such as Bain collect management fees from the companies they take over (whether or not those companies turn a profit, thanks to the LBO firm's sage advice). Left to their own devices, those fees would be taxed as ordinary income, at the ordinary-income rates paid on wages and salaries. But if wave the magic waiver wand over them, those fees turn into "investments," which are taxed as "carried interest" at the lower capital gains rate. Here's how Nick Confessore, Julie Creswell and David Kocieniewski of the New York Times assess the practice, as used by Bain:
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.
Then there's the matter of Romney's individual retirement account, which he seems to have converted into an individual tax haven. As the Boston Globe's Michael Kralish and Beth Healy told it in an August report:
It is one of the most striking elements of Mitt Romney’s financial fortune. He has used the seemingly bland investment vehicle known as an individual retirement account — established by Congress to help average Americans save a modest amount for retirement — to shield at least $20 million and as much as $100 million from initial taxes.
So much for transparency.
7. Painted his opponent as a fibbing child while building an entire campaign on lies. In the first presidential debate between Romney and Obama, the Republican presidential candidate compared the African-American president to his "boys," who, when they were little, he said, would pile fib upon fib thinking they could fool their dad. It was an audacious tack for the truth-challenged Romney, whose most furious attacks on Obama have been based almost entirely on lies.