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Sheldon Adelson's Return On Investment

Billionaire Donor Could Turn $100 Million Invested in the 2012 Presidential Race into a $2 Billion Tax Cut If Romney Is Elected
 
 
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Billionaire casino mogul Sheldon Adelson says he plans to spend $100 million this year to get former Massachusetts Gov. Mitt Romney elected president. He has already contributed $36 million to various Republican “super PACs.” That’s a lot of money. But it is far less than the windfall Adelson could reap from Gov. Romney’s tax cuts if he is elected president. Over the course of a four-year presidential administration, Adelson stands to receive a potential tax cut from the Romney tax agenda of more than $2 billion—an exponential return on a $100 million investment.

The magnitude of Adelson’s tax windfall can be estimated from public information about his income and wealth and the profits of his company, Las Vegas Sands Corp. Because public information does not give a complete picture of Adelson’s finances, in particular his annual income, we can estimate only parts of the total tax cut that Romney’s policies would give him. Gov. Romney’s tax plan is also vague in key respects. But based on what we do know, Gov. Romney’s tax policies would:

  • Cut top tax rates, saving Adelson approximately $1.5 million on his annual compensation as chief executive of his casino company.
  • Maintain the special low rates on dividends, potentially saving Adelson nearly $120 million on a single year’s worth of dividends, more than enough to recoup his political donations.
  • Maintain the special low rates on capital gains, allowing Adelson to make back his political donations in capital gains tax cuts just by selling a fraction of his stock.
  • Provide a tax windfall of an estimated $1.2 billion to Adelson’s company, Las Vegas Sands Corp., on untaxed profits from its Asian casinos, as well as a tax exemption for future overseas profits. Adelson’s casinos already enjoy a special foreign tax exemption from the Chinese administrative region of Macau, and Gov. Romney would make those foreign profits exempt from U.S. taxes as well.
  • Eliminate the estate tax, potentially providing a staggering $8.9 billion windfall to Adelson’s heirs.

At the same time, 95 percent of Americans—those making $200,000 or less—would get a tax increase, on average, from the Romney tax plan.

Below we explore the magnitude of the various tax cuts Adelson stands to receive if Gov. Romney is elected president on November 6.

Executive compensation

Gov. Romney proposes not only to maintain all of the tax cuts enacted by President George W. Bush but also to cut the top individual tax rate from its current 35 percent to 28 percent. The richest Americans have not paid a lower rate since the presidency of Herbert Hoover. President Barack Obama proposes to allow the top rate to revert to 39.6 percent, where it was during the Clinton presidency of the 1990s.

These rates apply to “ordinary” income, including the compensation that Adelson receives as chairman and CEO of Las Vegas Sands. In 2011 Sands paid Adelson $13.8 million for his services, including salary, bonus, and other compensation. (A super-wealthy individual like Adelson undoubtedly has far more income that falls in the “ordinary income” category than that, such as interest income, but only his executive compensation is public information.)

If Adelson’s compensation is the same next year and the Republican presidential nominee wins the presidential election, then Adelson would get a tax cut of about $1.5 million on his executive compensation alone. As we will see, that amount is just pocket change compared to the windfall from Gov. Romney’s other tax proposals.

Dividends

Another element of Gov. Romney’s plan is to maintain the 15 percent tax rate on corporate dividends instituted by President Bush in 2003. President Obama proposes to let the Bush tax cuts on dividends expire, so that dividends are taxed as ordinary income as they were before 2003. The Republican presidential candidate would also repeal a small Medicare tax on the income that high-income households receive from investments, including dividends and capital gains, that was enacted in 2009 to help fund health care reform.