Tax Break

Mitt Romney’s presidential campaign acknowledged to Reuters and others that his campaign is revising his federal ethics forms. They will now report more than a half-dozen offshore holdings, including income from a multimillion-dollar Swiss bank account, that was not disclosed last year.

The Romney campaign has described the issue as a minor discrepancy, and noted that all taxes owed on the overseas accounts were paid. But given the political football that overseas assets and tax disclosure have become –with the Internal Revenue Service cracking down on those who have assets abroad — that acknowledgment raises important questions.

First, why did the Romneys choose to hold assets overseas, particularly in places that have been targeted in the IRS’s ongoing crackdown? In addition to Switzerland, the Romneys held assets in the Cayman Islands, the Bermudas and Ireland, all countries that have lower tax rates than the U.S. Things can be perfectly legal, yet look terrible for someone with political ambitions, especially a presidential candidate.

An official representative for the Romneys has said that he opened the Swiss bank accounts, whose holdings are valued between $1 million and $5 million, in 2003, on behalf of the Ann Romney Blind Trust to provide international currency diversification for the trust’s holdings, and that he shut it in early 2010. There are, however, other ways to get currency diversification in a portfolio than going to Switzerland.

Second, why would Romney fail to disclose everything in his filings with the ethics office that was in the tax returns? The Los Angeles Times/Tribune Washington Bureau found that at least 23 funds and partnerships listed in the Romneys’ 2010 tax returns did not show up or were not listed in the same way on the financial disclosure, including 11 offshore accounts. 

Disclosing in one place and not the other raises the obvious issue of why. Was it oversight, carelessness or some other reason? And given the scope of Romney’s wealth (around $200 million) and the complications of his tax returns (running hundreds of pages), how did his financial advisers miss such a discrepancy?