QUESTION: The outsourcing of American jobs overseas has taken a toll on our economy. What plans do you have to put back and keep jobs here in the United States?Romney:…which will allow me as president to be able to put in place, if necessary, tariffs where I believe that they are taking unfair advantage of our manufacturers.
Kevin Drum has an opinion on election tactics:
Come on, folks. Reid didn’t say I’ll bet Romney didn’t pay any taxes. He didn’t say he talked to someone familiar with high earners who told him Maybe Romney won’t release his returns because he didn’t pay any taxes. He made a flat statement of fact. He said he has an “extremely credible source,” which in this context means someone with direct knowledge of Romney’s taxes who decided to pick up the phone and dish about it to Harry Reid. Does anyone really believe this? Really? Then, as if that weren’t enough, Reid made his little bluff even less plausible by deciding that Romney didn’t just avoid all taxes for one year, he avoided them for ten years. Yeah, baby, that’s the ticket! Put these two things together with the fact that Reid hasn’t even tried to make his fairy tale sound believable (it’s just some guy he talked to) and this is not a story that a five-year-old would credit. It’s just Reid making stuff up in order to put pressure on Romney, and I think we all know it.
Can I prove this? Of course not. Given the epistemological limits of proof, I can’t prove Barack Obama was born in the United States either. Nevertheless, I feel safe saying that anyone who claims to have an “extremely credible source” that Obama was born elsewhere is either crazy or lying. The same is true for Reid, and Reid isn’t crazy. It’s simply vanishingly unlikely that he’s telling the truth, and no one — not liberal or conservative — would spend even ten seconds on a story so patently far-fetched if it were anybody but Reid and the background were anything but the frenzy of a presidential campaign.
Politically, of course, Reid’s ploy has worked like a charm. Romney’s taxes are back in the news and Romney’s ham-handed handling of the whole affair has kept it there. And that gives everyone a fifth reason to cheer on Reid: the end justifies the means.
Take a deep breath, folks. This is contemptible stuff and it’s not just business as usual. We’ve spent too many years berating the tea partiers for getting on bandwagons like this to get sucked into it ourselves the first time it’s convenient. It’s time to quit cheering on Reid and get off this particular bus.
If my name was Harry Reid I would be reserving one question for Romney’s announcement of his VP pick:
“Governor, how many years of tax forms did you request from Governor/Senator Jindal, Pawlenty, Portman?”
And August 27th is not that far away. Particularly if the idea is to announce the VP pick prior to the Convention itself.
Rock and hard place. Goose and gander. Pot and kettle. Scylla and Carybdis.
As Shakespeare might have said:
“Double, double (standard), and trouble.
Fire burn and cauldron bubble”
I don’t see how Romney can chill this particular pot in time to keep it from burning him.
by Linda Beale
What’s Romney Got to Hide? (Part III)
In the last two posts, I explored a number of fairly simple questions that might be raised about Romney’s activities that would be clarified by seeing multiple returns (hobby versus investment/business losses; business versus passive activity losses; amounts of preferentially taxed income; income reported from Bain Capital and/or from foreign accounts) and some of the “squirrelier” possibilities that tax experts have raised (potential that Romney participated in the IRS voluntary disclosure “amnesty” program for reports on offshore accounts after the initiation of unraveling of Swiss banking secrecy as a result of the UBS scandal, in order to avoid weightier penalties, including potential criminal charges; contributions to IRAs that were undervalued, possibly by claiming zero value for partnership interests; use of aggressive tax sheltering transactions to ‘create’ capital losses to offset substantial capital gains, resulting in the net capital loss carryforward on the 2010 tax return).
Ed Kleinbard, a former partner at Cleary Gottlieb who served as chief of staff for the JCT and is now a law professor at Southern California, has joined with Peter Canellos, a prominent tax practitioner and former chair of the prestigious New York State Bar Association Tax Section, to address these issues regarding the importance of seeing multiple past years of Romney’s tax returns. See Kleinbard & Canellos,Why won’t Romney release more tax returns?, CNN (July 18, 2012). Hat tip Calvin Johnson.
So what do Kleinbard and Canellos add to this debate? Perhaps most importantly, they note the importance of transparency in the vetting of presidential candidates : as they say, “[t]he U.S. presidency is a position of immense magnitude and requires a thorough vetting.” (emphasis added) Accordingly, they point out the advantage to the American public of the disclosure practice initiated by Romney’s father George Romney four decades ago and .
Since George Romney inaugurated the practice more than 40 years ago by releasing 12 years of tax returns in his bid for the Republican Party nomination, presidential nominees have been transparent with voters about their personal finances. For this reason, we have not suffered a significant tax scandal involving a nominee or sitting president since President Richard Nixon’s abuse of the tax code.
Disclosure goes to the heart of the truthfulness with which a nominee engages the American people, and it assures us that he in fact has comported himself before the election with the high moral character we associate with a future president.
What the American people deserve is a complete and honest presentation by Romney of how his wealth was accumulated, where it is now invested, what purpose is served by all the various offshore vehicles in which he has an interest and what his financial relationship with Bain Capital has been since his retirement from the company. These are all factors that go to the heart of his character and values.
Like the rest of us who have discussed this issue, Kleinbard and Canellos note that it is Romney’s abject refusal to follow his father’s example and disclose a decade’s worth of returns that “undermines the assumption” that would otherwise apply “that there cannot be any tax skeletons in his closet.” Our only tool is to “reconstruct his financial record” from what he has released. And that leads us to “red flags that raise serious tax compliance questions with respect to his possible tax minimization strategies in earlier years.” Disclosure, they note, could “replace speculation with truth-telling.”
Kleinbard and Canellos go on to discuss some key issues (some already addressed in prior posts)
- the Swiss bank account: Why would a presidential nominee be betting against the US dollar by speculating in Swiss Francs? The account was closed in 2010, but was its income reported on earlier returns and were the FBAR reports timely filed as required? Did the Romneys participate in the 2009 partial tax amnesty for unreported offshore accounts?
- the $100 million IRA: How could an account restricted to annual contributions of $30,000 grow to $100 million? Does it represent “unprecedented prescience in … Romney’s investment choices” or does it mean that “Romney stuffed far more into his retirement plans each year than the maximum allowed by law by claiming that the stock of the Bain company deals that the reitrement plan acquired had only a nominal value” (relying on a safe harbor rule about taxation of service partner’s receipt of such interests that is, however, inapplicable to contributions of those interests to a retirement plan)?
- the Romney family trusts: “Did Romney report and pay gift tax … or did he claim similarly unreasonable valuations, which likewise would have exposed him to serious penalties if all the facts were known?
- the complexity of Romney’s assets: even multiple years of returns won’t answer all these questions given the “complexity” and “arcane” and “opaque” nature of Romney’s financial affairs, so disclosure about specific issues, such as the $100 million IRA, will be needed
- the low Romney tax rate: a tax rate of 13.9% on $22 million is exceedingly low–lower than the rate paid by ordinary American wage-earners making 40-50 thousand a year. How can we trust Romney to enact wise policy–which the vast majority of tax experts concur is to remove the super-preferential rate on the compensation income of private equity fund managers? “Romney has not explained how, as president, he can bring objectivity to bear on this tax loophole that is estimated as costing all of us billions of dollars every year.”
Will Romney respond to these continuing calls for full disclosure about how his wealth has been built, where it is invested, and just what purpose the various offshore entities serve? If he does not, we can only think the worst.
crossposted with ataxingmatter
Greg Sargent, whose Gatekeeper Job at Kaplan Prep Daily makes him somewhat important in determining the results of elections, cast a pale over my good mood about my dinner bet with Lance Mannion this morning:*
Having trouble getting outraged with Romney campaign sending out only good parts of Det[roit] News endorsement. Seems like par for course.
Romney is still dealing with Newton Leroy, the Gold Bug, and the Spreading Guy. Which means the big money on his side is still somewhat diffuse, what with Sheldon Adelson still considering
wasting more money Stimulus Spending on The Never-Ending Book Tour and Foster “put an aspirin between your knees; I’ve never heard of doggie-style” Freiss still supporting, and supported by, Beelzebub in a Sweater Vest. Not to mention whoever (other than himself) is spending money to keep Mr. My-Son-Might-Be-the-Vice-Presidential-candidate-and-all-I-got-was-this-racist-newsletter in front of the CNN cameras.
Short version of the above: It’s a long time before the election. If the Supposedly Liberal Gatekeepers are already becoming inured to Romney’s, er, Selective Amnesia—what humans would call “lying”—it’s going to be a Very Long Summer and Fall.
Probably from Grace, voluntarily.
*All right, he sent it out last night. But Twitter is potentially asynchronous, and I only read it this morning. Before then, it was alive in another reality, like that bloody, overused, misinterpreted-as-if-it-were-an-economic-model of a cat.
**This appears to be incorrect. It was based on a story that CNBC has now updated. It was “Bain Consulting,” not Bain & Co., that advised the government on re-financing the automobile companies. — klh
Ah! Mystery Solved! Yesterday,in my post, “Crony Capitalism On A Grand Scale“—the title of the post borrowed from an op-ed piece by Romney in yesterday’s Detroit News characterizing the auto bailouts that way—I noted that Romney seems unaware that both companies filed for bankruptcy. Romney says, as apparently he says often when forced at gunpoint to explain his opposition to those bailouts, that he was for the idea of “managed bankruptcy” for both companies, and never actually acknowledges that that is what happened. Much less that these bankruptcies were “managed,” and therefore were able to emerge from bankruptcy as ongoing enterprises rather than as pieces of physical assets, machinery and the like, for a Bain Capital-owned company in the process of being restructured, to scavenge and resell.
This was a mystery to me. Sure, Romney regularly makes up facts to match Tea Party of Club for Growth ideology. But in Michigan,everyone—everyone—knows that GM and Chrysler went through formal bankruptcy proceedings. In court. How, I wondered, did he expect to get away with pretending that these companies didn’t go through managed bankruptcies?
Ah! Mystery solved! In an ABC News report last night by Chris Bury (a genuine news reporter,not a pundit disguised as one, and a long-ago favorite of mine from back when he was reporting for Nightline), illustrates the impact of the bailouts on Michigan’s economy, which is suddenly resurgent. And in the report, which is today’s Yahoo News highlighted ABC NEWS video, explains what Romney means by “managed bankruptcy.”
Turns out, he means, best as I can tell anyway, that private equity firms lend the corporation the money to get through bankruptcy, in exchange for ownership of the company after its emergence from bankruptcy. In the case of GM and Chrysler, many tens of billions of dollars. In an op[ed in the New York Times back then, he described the managed bankruptcy he had in mind as one in which the government would guarantee private loans, but it would not itself provide the financing. Which raises the question of how, exactly, this would have saved the government money, since the companies are repaying the government the loans to the extent possible.
But it also raises the question of Romney’s recommendation that the government play Russian Roulette with the auto industry. Bury’s report points out that Bush Administration officials who put together the initial bailout legislation recognized, as did the Obama administration officials who took over, that the chance was nil that private equity money in such large sums would be forthcoming. And why he conflates ideology with fact, even when the stated fact is baldly nonsensical. “If(automakers) get the bailout … you can kiss the American automotive industry goodbye,” Bury’s report quotes Romney as saying in that New York Times op-ed. Destroying the industry by saving it?
Meanwhile, an editorial in today’s Washington Post* says,in complaining about Obama’s proposal to raise taxes on bailed-out banks in order (the editorial says) to cover the auto bailouts:
TARP was the price the country paid for a public good — financial stability — that the country needed. It’s inconsistent for the president to hail the bailout of one private industry —autos — while playing politics with the bailout of another — banking — that was and is no less necessary to a modern economy. It compounds the inconsistency to demand that the latter pay for the former.
Apparently the [Post]’s editorial board thinks GM and Chrysler caused the housing bubble and sold subprime mortgage-backed securities.
*The sentence has been corrected to say that the editorial is in today’s Washington Post. Originally, the sentence said incorrectly that the editorial is in today’s Wall Street Journal.
by Linda Beale
Obama’s State of the Union vs Romney’s Tax Returns
Obama took the high ground in his state of the union address, where he pointedly noted the importance of applying fair tax rules to ensure that millionaires pay taxes at rates more similar to those paid by secretaries and firefighters. He wants a 30% rate on those with incomes of a million or more.
We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by,” Obama said in his address to a joint session of Congress. “Or we can restore an economy where everyone gets a fair shot, everyone does their fair share and everyone plays by the same set of rules.” STeven Sloan, Obama Says High-Earners Should Pay at least 30% of Income as Tax, Bloomberg.com, Jan 24, 2011.
That would mean that Romney wouldn’t enjoy the exceptionally low rate of tax he had in 2010 after Congress enacted Obama’s suggested reforms. Romney released his tax returns on Tuesday. See this handy link on the New York Times at which the 2010 and 2011 returns and accompanying documents are available, including links showing where Romney earned his $528,871 in speaking fees, etc.. Romney paid only 13.9% on $21.6 million of income, benefitting enormously from the low preferential capital gains rate of 15% that he paid on his returns from his investment of capital. Romney benefitted, too, from investments in the Cayman Islands, a well-known tax haven. And he is still earning “carried interest” from Bain Capital to the tune of multiple millions a year–that’s a share of the profits of a partnership he managed, treated as though it were a return on an investment of capital though it is paid for services. Romney is most definitely one of the 1%–actually in an even more rarefied class cluster of the top 0.006% of multimillionaires with lots of very low taxed income. See Kevin McCoy, Romney tax returns show he’s no average multipmillionaire, USA Today (Jan. 24, 2011) (noting that only 8274 returns out of 140 million filed had income of $10 million or more in 2009); Lori Montgomery et al, Mitt Romney’s Tax Returns shed some light on his investment wealth, Washington Post (Jan. 24, 2012); Nicholas Confessore, Romney’s Tax Returns Show $21.6 Million Income in ’10, New York Times (Jan. 24, 2012).
As the Times story puts it:
What Mr. Romney’s returns illustrated, instead, was the array of perfectly ordinary ways in which the United States tax code confers advantages on the rich, allowing Mr. Romney to amass wealth under rules very different from those faced by most Americans who take home a paycheck.
Obama’s proposals sound reasonable. But I’d extend the basic concepts to the corporate tax. Every corporation that is making book profits of more than some amount ($5 million? $10 million) ought to be held to a similar minimum tax rate on those book profits.
Funny, that is what the original Alternative Minimum Tax (for individuals, and one for corporations) was supposed to achieve–to ensure that everybody paid at least a reasonable rate on their income, even if they could cumulate lots of preferences like mortgage interest deductions, state income taxes, property taxes, and similar deductions. Over time, the AMT has eroded–too many exceptions made, too many taxpayer friendly amendments, and then the Bush tax cut bills that lowered rates so that the AMT rates aren’t really working well as a “broader base but lower rate” tax that ensures that even high-flying income recipients pay a more reasonable tax rate on their income.
Romney’s Tax Proposal
The Tax Policy Center provides its review of which taxpayers will pay more and which ones will pay less under the tax proposal introduced by Mitt Romney. A really short summary goes as follows:
(a) The well to do will pay less in taxes;
(b) The working poor will pay more in taxes; and
(c) Overall tax revenue will be significantly reduced.
But wasn’t that also the case for the Herman Cain tax proposal as well as any other tax proposal from the Republican candidates for President? And the Republicans claim they are for fiscal responsibility!
Posted by ProGrowthLiberal at Econospeak.