Counterparties: Romney’s tangled, murky finances
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In January, Mitt Romney released his 2010 and 2011 tax returns. Disclosing his 13.9% effective tax rate for 2010 didn’t make the issue go away. Now, Vanity Fair‘s Nicholas Shaxson has a fascinating deep dive into the arcana and ambiguity of Romney’s tax records: “The assertion that he broke no laws is widely accepted. But it is worth asking if it is actually true. The answer, in fact, isn’t straightforward.”
Shaxson details Romney’s stake in a series of inscrutable offshore corporations, one of which, Sankaty High Yield Asset Investors Ltd, is particularly hard to decipher, partly because it was absent from several Romney financial disclosures before he finally disclosed it in his 2010 tax return.
And the blind trust that the Romney camp cites to deflect questions about potential conflicts of interest? It invested $10 million in a hedge fund co-founded by Tagg Romney. The trustee, Romney’s personal lawyer R Bradford Malt (yes, that’s his actual name), explains his investing philosophy by saying that he “liked Solamere because of its diversified approach and because he knew the founders”. There are also a now-closed Swiss bank account and continued interest in at least a dozen Cayman Islands-based Bain funds. Those funds form a large portion of Romney’s multimillion-dollar IRA. How could the IRA have grown to as much as $102 million if the maximum annual contributions were normally just $2,000? Probably by putting artificially low valuations on the securities the Romneys put into their tax-free retirement accounts in the first instance.
The issue for Romney appears to be about more than just his low effective tax rate or the many other details that were pulled from his disclosures in January. After all, many Americans pay low effective tax rates, but precious few have made such deft use of the tax code or even have the ability to. He’s not just in another tax bracket, he’s playing a different game. – Ben Walsh
On to today’s links:
Bob Diamond quits as head of Barclays over rate-fixing scandal – BBC
“Behold, the British establishment, panicked” – BBC
“If Diamond had showed up in the company gym, someone would have clocked him” – John Carney
Can Barclays be salvaged? – Felix