how did romney get away with paying no income tax?

Discussion in 'Politics' started by Free Thinker, Aug 8, 2012.

  1. "From my initial understanding (and I am no tax professional, but have 10 years experience in private equity and am familiar with how the senior professionals manage their finances), there’s a possibility that Romney paid very little (i.e. less than 10%) income taxes during the 2002 to 2009 period in many of those years. It is quite possible that some of those years could have approached zero. There’s a lot of different ways to make that happen, through standard structuring/gifting, offshore planning, charitable contributions, and favorable recent tax laws for carried interest and capital gains. I think you should try and pivot the discussion around “were these income taxes that Romney paid” and not “did Romney pay taxes.”
    Just a thought from looking at the nuances behind Romney’s replies to Reid — he appears to be very careful not to say “income taxes even when the initial claim by Reid was specifically around income taxes.”

    Here I responded (edited to remove iPhone abbreviations)…

    Well even his ‘base’, as it were, shld be 15%, right? Wouldn’t almost all the income be structured as capital gains?To which MB replied …

    Yes, but you’re missing the piece on the timeline where Romney cut a retirement deal with his partners to buy out his shares in the Bain Capital management company. Where it could be zero is if Romney had previously contributed his shares of the Bain Capital management company that he controlled 100% of into his IRA over the years.
    The corporate structure of most private equity firms is such that there is a management company (holding company) above a set of LLCs or limited partnerships which are the actual funds investing the capital and collecting the fees/distributing the profits. Romney was both a general partner in the funds and the sole shareholder of the management company.

    The management company shares are generally considered to have relatively nominal value (i.e. you can conceivably put them into an IRA) as there generally isn’t a lot of (or any) income/revenue associated with them — however, since the management company owns the brand name and controls the funds and all hiring/firing/compensation decisions (within Bain Capital), if Romney’s partners wanted to continue using the name “Bain Capital” and take over control of the private equity firm and funds in the future, they would have to buy back Romney’s shares over a period of several years for hundred+ of millions of dollars. This is not uncommon in private equity firms undergoing an ownership transition. Since these shares (could) have been contributed to an IRA over the years, the Romney’s income 2002 to 2009 would largely be from his partners at Bain buying back shares that he’s already contributed to his IRA, and just like any trading you do in your IRA, the sale of these shares would be tax free until after he turns 65 (and/or withdraws from said IRA) and he’d pay zero income taxes on that. So, if he had transferred 50% of his Bain management co. shares to an IRA, if he was being paid $20M per year to have those shares bought back, his tax rate would be a blended 7.5%. If the management company shares were held overseas or had overseas blocker entities, it is conceivable it could be even lower than that. Also, he could use his taxable shares as charitable gifts and his non-taxable IRA shares as tax free income.

    This is pure speculation — but I think you if you and your team worked a little harder talking to estate planning lawyers and trust experts who work with senior private equity partners and professionals (good luck getting them on the record, but it is really much more nuanced for private equity than your everyday run of the mill wealthy individual), you could sketch out a number of hypothetical situations and I think add more credibility to Reid’s position.

    It’s entirely possible Romney paid zero income taxes, and possibly nominal capital gains taxes (i.e. less than 15 percent). In fact, since he wasn’t being paid income but presumably was liquidating his stake in Bain Capital, in the perspective of the IRS, he wasn’t earning any income — just selling assets (Bain management company back to his other partners)."
  2. Lucrum


    Maybe it was the same way Geithner and Rangel cheated on their taxes.
  3. Then he should relinquish his quest for the Presidency.
  4. wildchild


    Romney Taxes

    Paid in 2011 $3,226,623
    Paid in 2010 $3,009,766

    Total last 2 years $6,236,389


    Paid in 2011 $4,020,572
    Paid in 2010 $2,983,974

    Total Charity in Last Two Years $7,004,546

    Total Tax and Charity Last Two Years $13,240,935

    How much did you pay Non Thinker?

    When Obama says "you didnt build that" actually Romney did build it. At least $6,236,389 of it in the last two years. You should thank Romney for the share of the roads he built.
  6. Ricter


    Actually, it looks like informed speculation.
  7. wildchild


    Romney Taxes

    Paid in 2011 $3,226,623
    Paid in 2010 $3,009,766

    Total last 2 years $6,236,389
  8. Romney should just say : " I made a lot of money and my tax returns, like others in my position, are very complex. No public purpose would be served by releasing them. They have been throroughly vetted by the IRS and I have paid all sums owing to the government. "

    Then everytime someone mentions them, call it an attempt to distract attention form the failed Obama economy and to engage in class envy hate the successful demagoguery.
  9. wjk


    You left out a couple. Here are the two you mentioned and a couple more:

    "Treasury Secretary Tim Geithner did not pay the taxes he owed; Charles Rangel (D-NY) who as chairman of Ways and Means wrote tax laws, has run afoul of tax authorities for years' worth of malfeasance; and the latest: Democratic Senator Claire McCaskill of Missouri -- a stalwart supporter of Barack Obama and one of the richest members of Congress. Lest we forget, Tom Daschle, Obama's putative first choice for HHS Secretary had to drop out when it was disclosed that he also failed to pay taxes he owed. These are all members of the 1% Club."
  10. he should come clean. he is already precieved as dishonest and with lower favorability ratings than obama.
    he is caught in a lie. when you are caught first rule is stop digging deeper.
    #10     Aug 8, 2012