Let me be very clear at the outset: forget about the dog on the roof of the car, there is a body in the trunk! You and I will never see Mitt Romney’s tax returns.
Obviously, I am going out on a major limb here and subjecting myself to ridicule and scorn for the non-conditional nature of the title above. I could have simply added “I believe” just after the first word, and saved myself a lot of grief if Governor Romney does release them – since the pressure is clearly building for him to capitulate on his firm refusal to release more than the 2010 and 2011 returns – but he won’t.
He has clearly calculated that the pain he is enduring today, and that he can pivot from in the days to come, is nothing compared to the pain of pulling back the curtain on his tax returns. No matter how severe and debilitating the attacks will be over the next several months, they are but a simple nuisance compared to the potential nightmarish perfect storm that he could face if he opened the books.
Personally, I don’t understand how everyone seems so well behaved and deferential on this matter. “Of course he hasn’t done anything wrong,” the TV-Folks say, “he should just do it already and deal with the few days of bad press.” Here’s the thing, Governor Romney has already telegraphed exactly what the problem is. And it is a big one!
There is a clearly a major problem with his tax return that will be fatal to his candidacy. Here’s what I’ve deduced from the public record thus far, and the Top 3 reasons that I know that he will go all the way to the election with this hanging over his head…
In a political career spanning two decades, where he ran for the US Senate, Governor of Massachusetts, and twice for president of the United States, he has only released one year of returns, and that one was only released in January of this year after major, unrelenting pressure from his Republican rivals. He made it through the 90’s and the last decade in politics without ever showing his finances. And for good reason.
The tax return that he released, year 2010, was considered “safe” to release to the public. And, despite having an awful lot of time to dress it up and smooth out the rough edges for the American public, he sure caught a tremendous amount of flack for the details. Recall the highlights that entertained the public for a couple of months: the $70K plus deduction for an elite dressage horse that was considered “therapy” for his wife’s illness, the Swiss and Cayman Island bank accounts, the shady Bermuda holding companies, not to mention the massive tithing to the Mormon Church.
This final deduction is interesting since giving to a religious organization is generally deductible against gross income, and the IRS generously allows an individual to deduct up to a massive 50% of adjusted gross income. With Romney’s reported income in the tens of millions for the year, and with him giving millions of those dollars to the church, his generosity to his church was matched only by the generosity of the American people to subsidize it.
What if it is revealed that he paid no taxes over the last several years?
The fact is – he could offset any earned income such as speaking fees, book sales, etc. (that may be taxed at a top rate of 35%) as well as the bulk of his investment earnings (which are capped at a much lower 15%) just by fulfilling his godly duties.
Theoretically, if he gave enough to the Mormon Church, he could offset his tax exposure to zero. The IRS allows him to cut a check equal to his tax bill to the Church instead of the government, take the complete deduction from that donation, and owe zero in taxes. For a guy who made millions in investment income, and then was taxed at a 15% rate against that income, he could cut a check to the church instead of the government, take the complete deduction from that donation, and owe zero in taxes.
I know, sounds crazy, but its legal.
Can you imagine the outrage if that is what he did? The public will feel cheated, since the Mormon Church’s main focus is on building the flock and growing its already massive real estate holdings, and not in building roads, maintaining bridges and airports, taking care of our veterans, securing our borders or doing anything that is primarily for the benefit of the American public. He has been adept at hiding his religious beliefs and shutting down any questions concerning his Mormonism. If he is shown to have given a mountain of money to the Mormon Church without giving a dime to the US government, then he will be accused of too much Mormonism, and not enough patriotism. Buh-Bye vets, born-agains and independents.
I believe that there is a very real possibility that Romney actually benefitted from the financial crisis – either by shorting the market or receiving a bailout. Clearly, that is a major problem for a person running to be president.
With his one return out in the public, we know very well that Romney has an appetite for varied and exotic investments. He is not the vanilla, conservative investor that he would have you believe. He made his fortune not by selling a product or service, but by skillfully manipulating securities laws, tax laws and bankruptcy laws. He was quite versed in the ways of foreign accounts and shelter companies, as well as currency trading to profit from the fluctuations of the US dollar. He may have invested in a hedge fund or other investment vehicle that shorted the real estate market, or the broader markets.
It is important to note that many savvy investors saw the financial crash coming a mile away – and they made a killing by betting that markets would fall. Generally speaking, most people don’t have a problem with those types of “contrarian” investors (as they play an important role in providing liquidity and balance to the market), but if Romney is seen as benefitting personally and financially from the overall misery of the crash, this will cement the notion that he is only motivated by increasing his own personal wealth, perhaps at the expense of all others. People will consider him a man with insatiable greed, profiting off of the destruction of our economy.
Worse still, he could have had a financial interest in the many private companies that received part of the TARP funds. From hedge funds to investment partnerships, many non-bank players benefitted from the government’s rush to provide liquidity and cover the losses of market participants. Imagine the charges of hypocrisy (and other nasty consequences) if it is revealed that he was just another Wall Street elite with his hand out, asking for a bailout, when a certain investment of his was going belly-up. Buh-Bye Tea Party.
I believe that Romney may have set up several foreign accounts that were designed to avoid US taxes. You see, the US is the biggest tax haven in the world. Generally speaking, most foreign direct investments are not subject to capital gains taxes. The reason for this is to attract foreign money to our markets and to allow our companies to grow and compete globally.
It’s like a giant “Open for Business” sign for foreigners.
If you have the know-how, as Romney clearly did, you can open a bank account, a brokerage account or incorporate in a foreign country. Then, you can move money around to different companies in different locales until you land it in an account that can invest in the US.
That foreign company or account can then be used to invest in US stock exchanges, bond markets and commodity markets. Any gains would be sent back to that foreign account without US reporting requirements. Short-term gains that might otherwise be taxed at rates up to 35% could be taken out of the country without any taxing.
This is good ol’ fashioned tax cheating.
Romney has alluded to his familiarity with these schemes in several taped statements, where he acknowledges the purpose and obvious benefits to having foreign accounts. Can you imagine the hell that would break loose, it that was revealed?
Also, a foreign account (or company) could be used to invest in other companies or exchanges outside of the US. Since the US considers almost all foreign income by its citizens to be subject to taxation, you can imagine what a lucrative business Swiss banks had helping wealthy Americans hell-bent on cheating the taxman.
Recall that UBS and other Swiss banks were actively pursuing wealthy American clients to bring their money to Switzerland, and then advising and helping them to set up offshore accounts for the purpose of avoiding US taxes on investment gains. But a whistleblower, who is now in prison, revealed the whole scheme to federal prosecutors, and basically shut down the party.
Obviously, tax evasion is a crime, and many wealthy US citizens found themselves in serious hot water when the curtains were pulled back. This was one of the biggest stories in the financial press in 2009. The US government went after UBS and other Swiss banks in a criminal prosecution, and the very highest levels of the US and Swiss governments were involved in the settlement of the case. The IRS offered amnesty to US citizens to come forward and pay the back taxes owed (and some penalties) in exchange for no criminal prosecution.
Many did. Many did not.
Was Mitt Romney one of those that did come forward? Is that what he is hiding? Did he receive amnesty from the US government for certain foreign investment shenanigans or criminality? Or, even more damaging, has he been involved in tax avoidance schemes, and not taken the amnesty, and arrogantly rolled the dice hoping not to be found out. Buh-Bye nomination.
Today, Romney is having “the accountant(s)” prepare his return for 2011. Most of us had to do that by or before April 15th. However, generally, everybody can ask for an automatic 6-month extension of the April 15th filing deadline. This extension is intended to accommodate people with complicated returns, and/or fiscal year accounting schedules that don’t line up perfectly with the calendar. I believe he will use this “preparing the returns” excuse to delay the release of his 2011 tax returns until the last minute, more than likely around the long Labor Day weekend.
No way he waits until October 15th (the extension deadline) with the expected barrage of ridicule a just couple of short weeks before Election Day. But I am pretty sure that his 2011 tax return won’t show anything more difficult than his 2010 return. He will easily handle the guaranteed ridicule of his 2011 returns, as well as he did the ridicule of his 2010 returns.
And, he will play it very safe with his 2011 returns.
I bet that he will not take all of the deductions that he would otherwise take if he were not under this microscope. He’ll claim the high-ground of “doing his part” for America. But after he releases his 2011 returns, there is no way he will release anything else. He has a body in the trunk and it will never see the light of day.
Have you ever tried to hide a certain unpleasant something while applying for a job that you really wanted – hoping and praying that the employer doesn’t call your former boss asking why you left, or dial up your references, or drug test you on the spot (before you can load up on the Goldenseal), or run your credit score, or, worse, your record with the fuzz? That is where Romney is right now.
He is applying for a very important job, and he is hoping and praying that he can change the subject of the tax returns just long enough for the people to move on to another big news story.
The problem is: The Republicans are nothing if not principled in their approach to getting elected. And they have never had any deep love for Mitt Romney. If they feel that Romney is fatally flawed, there will be an open challenge at the Republican convention. If Romney were to release his other returns, the ensuing firestorm will guarantee that he would be voted out on the convention floor.
And he knows it. And that would be more humiliating than losing to President Obama in a general election.
So, against all reason, he will gamble that he can get away with not releasing his returns all the way to the election. And if he is elected president, you can be sure he won’t release anything thereafter, mark my words.
Whenever it was that he played around with his millions and got into whatever he is now trying to hide, the most he faced was an IRS audit, and possible penalties if there was a problem. Now, running for president with a party that definitely does not have his back, politically speaking, he has no wiggle room whatsoever.
An IRS audit is nothing compared to the gigantic microscope that he now finds himself under!
Romney has made this cold calculation and will endure anything to keep his secrets. He would rather make it to the election as a wounded, snarling animal, than be publicly put out of his misery and replaced at the convention.
Mark my words, we will NEVER see Mitt Romney’s tax returns.