Comments on: Counterparties: Romney’s tangled, murky finances http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: MidwestVoice http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41589 Tue, 10 Jul 2012 22:05:24 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41589 One of the little law changes that many people never noticed was the fact that the IRS can no longer use the discrepancy between your lifestyle and your reported income as the basis for an audit. Used to be if the high-flying were living in million dollar mansions with private planes and expensive cars and yachts yet reported very modest ‘income’, the IRS could (and would) flag them for an audit and dig into their all their accounts, holdings, and so forth.

No longer!

One little policy that was effectively employed to ferret out tax evaders. But they managed to get the rule changed for the IRS and took away one of their best tools which they used against those with criminal income sources (remember who brought down Al Capone!) and against those who were just very wealthy flagrant cheats. I would guess it wasn’t the criminal element who paid off enough politicians to change the law – but then I tend to be a little cynical.

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By: TheTruthSquad http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41299 Fri, 06 Jul 2012 04:19:36 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41299 When Mitt’s father ran for president in 1968, he released 12 years of tax returns. He stated “one year could be a fluke, perhaps done for show.” Mitt has released one year, and that revealed he had declared accounts in Bermuda, The Cayman Islands and Switzerland. All countries that are tax havens and have secrecy laws to protect depositors. Not illegal, but highly suspect. Why not Germany, France or Italy? He may and I repeat may release a later year tax return, but he can’t release a previous year. You see Mitt doesn’t like to pay taxes. When he worked for Bain, they lobbied for the tax break that allows them to pay 15% on carried interest. When they wanted to close the loophole, Bain spent millions again on lobbying. When he was on the board of directors of Marriott, he was Audit Chairman. He reduced their tax rate to 6.8% through offshore tax dodges and sleazy loopholes. Enough of this, the real story starts below.
In 2009 the IRS had a tax amnesty for people that had money in undeclared Swiss bank accounts. The IRS was given a list of 4,500 names, and let the financial world know they were going to go after these people. More than 30,000 people came forward and the government collected 2.7 billion in taxes and penalties. The company that came forward with these names was UBS, the same company that Mitt has his “declared” account with. Some believe up to 10 trillion dollars are stashed in tax havens by Americans. His staff was sweating bullets in January when he released his tax release. Now that there are calls for him to release his previous tax returns, they are back in panic mode. They have no way to explain the mysterious appearing accounts and the sudden surge in assets. If he does release them, look for white out and a copy of Photo Shop at his campaign office.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41295 Fri, 06 Jul 2012 01:59:35 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41295 @y2kurtus, you know I agree that the middle class need to pay more taxes (there aren’t enough of the wealthy to make a difference). But the wealthy also need to pony up a bit more. The 15% maximum rate on unearned income is indefensible.

If you look at the numbers, our children don’t have any chance of footing the bill. We don’t know how that gap will be bridged, but my guess is that Social Security benefits will be slashed (for anybody with retirement savings), Medicare will be means-tested, and the age of eligibility for each will increase. So don’t put too much faith in that 120% and 300% that you’ve been promised. I could sign a contract promising to pay you $100M in ten years. You wouldn’t collect face value on that either.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41289 Fri, 06 Jul 2012 01:16:19 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41289 @TFF “The headline here makes my case perfectly. :) The wealthy are much better at dodging taxes than the middle class.”

I’m middle class and between my sole crushing mortgage, my almost paid off student loan, my 401k, my and my wife’s IRA’s and a maxed out health savings account our tax burden was like 7% of our gross. That’s half of Mitt’s.

Yes we pay FICA… for which we will on average collect 120% of social security tax withheld and 300% of Medicare tax withheld if our lives follow the statistically most likely arc.

When it comes to taxes, the rich get off too easy, the middle class get off easier still, and the poor get off much better than scotch free.

Taxes must rise to balance the budget… I’m on board with that. The idea that the middle class is overtaxed in the US is an urban legend. Self-employed childless renters might have a legitimate gripe… beyond that most of us are getting the good end of an unfair deal with our children most likely to be footing the bill.

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41255 Thu, 05 Jul 2012 18:01:55 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41255 “Wealthy evade taxes because they write the laws that enable avoidance.”

Yes, that is a big part of it. Fix that problem and most of the others go away.

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41252 Thu, 05 Jul 2012 17:33:34 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41252 MrFox, I don’t have a problem with a 100% estate tax either, like TFF, I don’t think it’s feasible. Unless I died without warning, I would just give money to my kids, but I’m hoping by that time they won’t really need it. However, if they do, I probably would have helped them out by that time. In any case, I don’t plan to give them anywhere near 100% of what I have.

And come on, I didn’t go postal.

FifthDecade, you’re spot on, but you didn’t mention how W fostered the cheap and easy credit that, like a massive sugar high, has been followed with a near-global crash that is proving extremely difficult to escape from. And one that Romney will want to extend. And Romney was never a banker, just a buy low, sell high parasite masquerading as a “businessman”.

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By: realist50 http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41247 Thu, 05 Jul 2012 16:50:31 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41247 Regarding Bain IRA’s, the WSJ explained the structure in detail in March (link below). I’ll add that the basic equity structure used (preferred shares assigned most of the value with nominally-priced common stock) is an extremely common private equity structure for reasons beyond taxes.

What is unusual is for anyone to donate that nominally-priced common stock to an IRA, whether the owner is a company executive or a private equity firm employee. There’s a very good reason for this decision, which the WSJ article mentions – the move results in more taxes under current tax law. Quoting the WSJ’s 3/29/12 article:

“In any case, swelling the IRA to the size Mr. Romney’s reached has ‘created a tax problem’ for the former Massachusetts governor, said a Romney campaign official. Tax-law changes since Mr. Romney’s Bain tenure mean that long-term capital gains in regular accounts now are taxed at 15%. But IRA gains are taxed at ordinary-income rates upon withdrawal, which for Mr. Romney, under current law, would be 35%”

Yes, he is getting some benefit from more years of tax-deferral, but the disadvantages of the higher tax rate more than outweigh that benefit. I don’t know how IRA assets are treated upon the death of the account’s owner – the only scenario I can see where Romney has a net tax benefit is if the taxes on IRA distributions are avoided at that point.

http://online.wsj.com/article/SB10001424 052970204062704577223682180407266.html

P.S. – For anyone who is going to bring up the tax treatment of carried interest, this structure is separate and different. As described by the WSJ, the equity in question is being purchased with money co-invested by Bain employees – it’s not carry.

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By: MrRFox http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41241 Thu, 05 Jul 2012 16:13:24 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41241 @TFF, – no doubt that enforcement is a problem. Wealthy evade taxes because they write the laws that enable avoidance. Are either of those problems insurmountable? IDTS

@5thD – Bush II, Gore, any Kennedy, Romney – all born rich. What’s actually to admire about the personal accomplishments of any of them? Some may have character, but all save Romney have already demonstrated that they have problems in that respect, right? (Just a matter of time IMO before Romney joins the rest – the flip-flopper’s not Mr. Man of Principle, is he?)

IMO Clinton got lucky on the budget/economy, and we got unlucky because his lack of personal character led him to Monica et.al., which led all of us to 9/11. The one and only thing the country actually needed Clinton to do was to kill Osama, but his personal failings got in the way of that.

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By: FifthDecade http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41236 Thu, 05 Jul 2012 15:49:36 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41236 @Fox You mention character but fail to point out the fact that George Bush II was a drunk, draft dodging spendthrift who had been in charge of three companies that ended up bankrupt before bankrupting the US (and a lot of the rest of the world in effect) from his increased spending and tax cuts that cut Clinton’s surplus into the largest and growing deficit. And we won’t even mention Nixon…

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By: TFF http://blogs.reuters.com/felix-salmon/2012/07/03/counterparties-romneys-tangled-murky-finances/comment-page-1/#comment-41232 Thu, 05 Jul 2012 14:56:30 +0000 http://blogs.reuters.com/felix-salmon/?p=15738#comment-41232 LOL, MrRFox, I don’t have a huge problem with a 100% estate tax if that is where people want to go. I simply insist that it won’t raise much revenue because people will find one way or another to dodge it (including moving to Singapore, if nothing else works).

The headline here makes my case perfectly. :) The wealthy are much better at dodging taxes than the middle class.

“His IRA is almost certainly a rollover from a SEP where the contribution limits are many times higher than traditional IRA’s.”

Could be…

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