Why examine Romney’s taxes?

[papasmurfbell]

He is just a lousy politician. He is everywhere on the spectrum and doesn't get that google exists.

[papasmurfbell]

http://current.com/shows/the-young-turks/videos/robert-reich-romney-is-the-avatar-of-his-class

[thundercleetz]

What does everything think about Question 7? I know a lot of people have a very strong opposition to it, but to me it does not seem like a big deal. Am I missing something?

[papasmurfbell]

What does everything think about Question 7? I know a lot of people have a very strong opposition to it, but to me it does not seem like a big deal. Am I missing something?

What question?

[thundercleetz]

What question?

 

It's the voting referendum on gambling expansion in Maryland (adding table games among other things).

[papasmurfbell]

OK got you.

 

For me I don't care. The GA totally screwed the whole gambling thing up and I think it will fail. There are to many locations. There should have been about 3 or 4.

[thundercleetz]

OK got you.

 

For me I don't care. The GA totally screwed the whole gambling thing up and I think it will fail. There are to many locations. There should have been about 3 or 4.

 

I agree it's easy to over-do it. I think the original agreement was there would only be five "casinos" in MD, but now it is going to be seven. But companies will build casinos if they feel they can make money, if they cannot then the casinos will go out of business. Their loss. This is an O'Harrah's being built on Russell Street just South of M&T Bank Stadium. The casino in the National Harbor is supposed to be the huge one at stake here.

 

Me personally, I do not have any adversion to gambling. But a casino without table game seems boring to me.

[papasmurfbell]

The problem is the owners have gotten tax rates lowered because the state put to many in. The MD return is going to be much lower now.

[thundercleetz]

The problem is the owners have gotten tax rates lowered because the state put to many in. The MD return is going to be much lower now.

 

They got the taxes lowered because the taxes were originally way too high at 67%. They just lowered the tax to a number closer to the national average.

[papasmurfbell]

Maybe. I don't know what the national average is.

 

On another note just ran into this.

 

http://www.standard.net/stories/2012/09/28/romneys-tax-avoiding-trust-fund-earned-1000

 

 

 

If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: "I Dig It."

 

 

"People like Mitt Romney make a lot of money, but they pay very little income tax," said Victor Fleischer, a tax law professor at the University of Colorado who has written extensively about private equity and taxes. "Then by dodging the estate and gift tax, they are able to build dynastic wealth. These DoubleClick documents really show that tax planning in action."

 

 

Multimillionaires use such trusts to avoid those taxes in three ways. First, they can assign a low value to assets they donate to the trust. Second, when the trust sells assets at a profit, the donors can pay the relatively low capital gains taxes on behalf of the trust. By doing so, they leave more money in the trust, untouched by the much higher gift tax. Third, by paying those taxes, they can reduce the pile of wealth eventually subject to an estate tax when they die.

 

 

Here’s how they work: the person setting up the trust, like Romney, contributes assets such as an interest in a fund or shares in a company. If he makes that contribution before those assets appreciate - particularly when they are privately held and difficult to value - he can claim the gift tax obligation is low or non-existent since the declared value is low or zero.

If the trust generates any income - such as by selling stock - the eventual tax bill is the responsibility of Romney, not the trust. By paying the capital gains tax, which was 20 percent in the late 1990s and is now 15 percent, he can avoid depleting the funds in the trust - in essence making an additional donation that’s free of gift taxes.

[thundercleetz]

Maybe. I don't know what the national average is.

 

On another note just ran into this.

 

http://www.standard....und-earned-1000

 

Very interesting, thanks for posting!

[dc.]

The biggest problem with the gambling stuff in MD is how much the GA and politicians are getting out of it... and how screwed up it all is. If gambling is legalized, legalize it. If not, then stop farting around it. All the deals and breaks are really hurting us ...

[cravnravn]

Too late for the Gambling stuff in Md, the damage is done with the state dragging their feet this long, Its just too close to go to De & Pa and they lore you with free promotions..Them waiting this long has already ruined one industry in the state.

[papasmurfbell]

They need to do what Christy is doing in NJ. Put in sports book and challenge the Washington on that ass hat law only letting 3 states do it.

[cravnravn]

Why when Delaware has sports book, the only state east of the mississippi that has sports betting..

 

Like I said in the O's thread. my son is holding a ticket at 1000 to 1 that the O's win the world series that he placed in March for 10.00

[thundercleetz]

Too late for the Gambling stuff in Md, the damage is done with the state dragging their feet this long, Its just too close to go to De & Pa and they lore you with free promotions..Them waiting this long has already ruined one industry in the state.

 

I do agree the state has been dragging its feet. However I don't think it's too late. The National Harbor casino presents opportunity to lore people from VA and DC.

[papasmurfbell]

The 3 that can do it are Del, NV, and I think Wyoming. Some how they are grandfathered in. Challeng this rediculous law.

[cravnravn]

I do agree the state has been dragging its feet. However I don't think it's too late. The National Harbor casino presents opportunity to lore people from VA and DC.

 

 

Way too late. your big horsemen van their horses to Del, Pa and WVa for bigger purses..They have been doing it for the past 10 years.

[thundercleetz]

 

 

Way too late. your big horsemen van their horses to Del, Pa and WVa for bigger purses..They have been doing it for the past 10 years.

 

Oh yeah, for the horses you're definitely right. But there is a lot of revenue to be made from table games. Where the revenue goes, now that's another story...

[cravnravn]

 

Oh yeah, for the horses you're definitely right. But there is a lot of revenue to be made from table games. Where the revenue goes, now that's another story...

 

 

Back in the day, pre internet, pre simulcasting of other race tracks, we had the sun and the News American, they would give results from either Pimlico or Laurel, and on the final race of the day they would have a recap of how much was bet, it was called the handle, I dont care what day of the week it was the "handle" was over a million dollars bet, at the time the state was due 5% of that handle..Also, if you hit at the track, there was a 5% State take out of your winnings, and if you were lucky enough to hit for over 599.99, you were presented with a 10-99 to go along with your winnings...Now all that daily money was just from Marylanders going to the track, not just Marylanders but at the time, the folks from Wva, Pa and Del would come to our tracks..

 

The state shunned a gift horse right in the mouth..Theres a pie chart of how much of the slots are divided..I have to see if I can find it, Im sure if the State brought in table games, that pie would increase, not percentage wise but dollar wise.

[oldcrow]

 

 

Back in the day, pre internet, pre simulcasting of other race tracks, we had the sun and the News American, they would give results from either Pimlico or Laurel, and on the final race of the day they would have a recap of how much was bet, it was called the handle, I dont care what day of the week it was the "handle" was over a million dollars bet, at the time the state was due 5% of that handle..Also, if you hit at the track, there was a 5% State take out of your winnings, and if you were lucky enough to hit for over 599.99, you were presented with a 10-99 to go along with your winnings...Now all that daily money was just from Marylanders going to the track, not just Marylanders but at the time, the folks from Wva, Pa and Del would come to our tracks..

 

The state shunned a gift horse right in the mouth..Theres a pie chart of how much of the slots are divided..I have to see if I can find it, Im sure if the State brought in table games, that pie would increase, not percentage wise but dollar wise.

WHY ON THIS GODS GREEN EARTH

is there any need to do paper work for such a small amount of money

why the hell is there red flags thrown when there are transactions at 10K????

that's chump change in todays world

allow me the freedom to win big at the tables and not be harassed by paperwork

[cravnravn]

WHY ON THIS GODS GREEN EARTH

is there any need to do paper work for such a small amount of money

why the hell is there red flags thrown when there are transactions at 10K????

that's chump change in todays world

allow me the freedom to win big at the tables and not be harassed by paperwork

 

 

Casino takeout has to be different, well atleast in Atlantic City it was, I did hit Roulette for 3200 a few years ago, and I didnt fill out any paperwork..But I know at the track, anything over 599.99 the state wants their immediate cut, in Md..Thats why if I like a long shot, I play the minimum bet allowed and play it a couple of times, that way not 1 ticket will show a big win.

[papasmurfbell]

You got to love that Romney told executives to tell their employees that if Obama wins they wil be fired. That seems like a reasonable argument for political persuasion.

[thundercleetz]

You got to love that Romney told executives to tell their employees that if Obama wins they wil be fired. That seems like a reasonable argument for political persuasion.

 

Romney is not very eloquent with words but I think the point he is making is the $2,000 per employee tax that Obamacare will levy on employers could have a major effect on employers being able to retain employees.

[papasmurfbell]

http://www.rollingstone.com/politics/news/mitt-romney-s-tax-dodge-20121012

 

 

How does a private-equity kingpin worth at least $250 million pay a lower tax rate – just 14 percent – than many teachers and firemen? By exploiting tax loopholes that favor the rich and hiding his money in the world's most notorious havens for tax cheats. That's what Mitt Romney has done, according to his 2010 and 2011 tax returns, a trove of secret Bain Capital documents unearthed by Gawker, and exposés by Bloomberg and Vanity Fair. "The bottom line," says Rebecca Wilkins, senior counsel at Citizens for Tax Justice, "is that these are ways to reduce your taxes that are only available to rich people."

Are Romney's tax dodges legal? It's impossible to say for sure, given how little he has disclosed. But tax experts note that there are plenty of red flags, including an investigation by New York prosecutors into tax abuses at Bain Capital that began on Romney's watch. "He aggressively exploits every loophole he can find," says Victor Fleischer, a professor of tax law at the University of Colorado. "He's pushing the limits of tax law beyond what many think is reasonable." Indeed, a look at Romney's finances reveals just how skilled he is at hiding his wealth – and paying a fraction of his fair share in taxes.

SWISS SECRECY

On his 2010 tax return, Romney disclosed that his wife Ann's trust held $3 million in a Swiss bank account at UBS, which had just been busted by the IRS for abetting criminal tax evasion by U.S. citizens. As part of a $780 million settlement, UBS was forced to turn over the names of thousands of its long-secret clients, who were then offered a partial amnesty: disclose their hidden assets, pay penalties and avoid prosecution. Romney – who had omitted the Swiss account on previous financial disclosures – suddenly came clean. Did he reveal his secret account to avoid prosecution for tax evasion? "He's not quite denied that," says Daniel Shaviro, a professor of tax law at NYU. The record of paying an IRS penalty on the Swiss account could explain why Romney has been so determined to keep his 2009 tax return under wraps.

 

 

BERMUDA SHELL GAME

Romney has buried an unknown, and perhaps significant, chunk of his wealth in what SEC filings describe as "a Bermuda corporation wholly owned by W. Mitt Romney" – driving speculation that the candidate is worth far more than he has disclosed publicly. Wealthy Americans frequently launder investments through such offshore shell companies, passing themselves off as foreign investors – a scam that makes them exempt from paying U.S. taxes, even on profits from American deals. Romney created his shell company, Sankaty High Yield Asset Investors, in 1997 and reportedly involved it in many of Bain's biggest deals, including the takeover of Domino's Pizza. Yet he failed to report its existence on any financial disclosures prior to his 2010 tax return, even though it is under his control. "What is this corporation? What does it do? Why was it set up in a tax haven?" asks Wilkins. "There's a reason why it's in Bermuda."

LUXEMBOURG SHELTER

In 2000, when Romney was CEO of Bain, the firm hit the jackpot: A $40 million investment in the Italian yellow pages during the tech boom returned an astonishing $1 billion. Romney himself reportedly ended up with $50 million – a cut larger than Bain's initial investment. To evade taxes on the gains, Romney steered the profits through Bain subsidiaries in Luxembourg, Europe's most notorious tax shelter, where the money would be exempt from foreign taxes. In 2009, as a board member for Marriott, Romney also helped the hotel chain use the same tax tricks to shelter more than $200 million in Luxembourg. Marriott wound up paying less than half the corporate tax rate – just 16.9 percent.

 

 

CAYMAN CASH

Romney has nearly $30 million stashed in at least a dozen Bain funds in the Cayman Islands, where, as one filing boasts, investments are free from "income, estate, transfer, sales, or other Cayman Islands taxes." But because some of those funds are directly invested in U.S. companies, they likely disclose their investors to the IRS, making them unattractive to tax cheats. So Bain also raises capital for its deals by selling shares in "feeder funds" – intermediary entities that invest in Bain's official funds, but don't have to make disclosures to the IRS. "If you want to cheat, they've rolled out the red carpet for you," says Wilkins.

Has Romney paid all his taxes on the shady funds? Only he and the IRS know for sure. But even if Romney never cheated personally, the feeder funds he appears to have invested in cater to tax criminals, making it easier for him and his Bain partners to raise capital and rake in big management fees.

Romney is profiting from one form of tax evasion in the Caymans: equity swaps. Under this racket run by top Wall Street banks, American firms pay out their profits – tax-free – to investment funds based in the Caymans. According to a Senate investigation, the purpose of these complex instruments is "to dodge payment of U.S. taxes on U.S. stock dividends." Romney has more than $1.25 million invested in four funds that profit from equity swaps – including two managed by Goldman Sachs.

RETIREMENT TRICKS

Romney has stockpiled as much as $87 million in his IRA – even though contributions to such retirement accounts are limited to just $30,000 a year. "Congress never intended IRAs to be used to accumulate that kind of wealth," says Wilkins. To get around the limits, Romney appears to have directed his IRA to invest in a special class of Bain stock. By assigning an artificially low value to the shares, Bain ensured that any returns would be wildly inflated – as much as 30 times the initial investment. By buying rigged stock with his limited IRA dollars, Romney got to reap the bonanza tax-free.

Romney also padded his IRA by investing in "blocker funds" that Bain has set up in the Caymans. Such funds attract tax-exempt investors – like college endowments or Romney's IRA – that want to avoid paying the Unrelated Business Income Tax, a 35 percent penalty designed to prevent tax-exempt investors from having an unfair advantage over for-profit businesses in private-equity deals. But by buying shares in offshore blocker funds that then invest in Bain and other takeover artists, investors like Romney bilk the Treasury out of $100 million a year. "It's an absurdly easy escape," says Shaviro.

 

 

 

A BIG LOOPHOLE

For political purposes, Romney claims his investments are held in a blind trust that he doesn't actively manage. (In fact, the trust sees just fine: It's managed by a close friend and is invested heavily in his son Tagg's hedge fund.) But if Romney told the IRS he were merely a passive investor, he wouldn't qualify for his most notorious tax break: the loophole for carried interest.

Here's how it works: Bain partners earn a cut of the profits from the investments they manage – usually 30 percent. This "carried-interest" is not a return on any personal investment they made – it's just another form of compensation, like an ordinary paycheck. Yet under the carried-interest loophole, the earnings are taxed at the capital gains rate of 15 percent, rather than the income-tax rate of 35 percent. (They're also completely exempt from payroll taxes, which support Social Security and Medicare.) "When Romney says, 'I have a low tax rate because most of my income comes from investments,' that's not really true," says Fleischer. "He's receiving carried interest in exchange for past services."

Indeed, more than a decade after he left Bain, Romney is still booking carried interest as though he were actively leading the firm. Ann Romney's blind trust also claims carried interest, for allegedly "performing services" for a Bain fund in the Caymans. In the past two years alone, the loophole has allowed the Romneys to dodge $2.6 million in taxes.

FEE FAKERY

Not content with the carried-interest boondoggle, Bain also uses a scheme known as fee conversion to transform smaller management fees – which are supposed to be taxed as regular earnings – into investment income taxed at only 15 percent. A Bain manager simply "waives" his right to his fee and is instead staked an investment of equal value in the private equity fund. Because the manager can then cherry-pick from the fund's investments, he is virtually guaranteed a rich return – flouting the spirit of the lower tax rate on capital gains, which is designed to reward investors who take risks with their money. "Because they didn't receive the cash, they claim that it's not a taxable event," says Fleischer. "It's not legal." New York's attorney general has launched a criminal investigation into the practice.

Romney denies he took part in such waivers, which may have robbed the Treasury of up to $220 million. But according to Fleischer, Romney's financial records suggest he "benefited personally from fee conversion." He also served as the sole shareholder in the firm that set up the deals, making him legally responsible for determining how Bain structured them.

TAX-FREE TRUST

Romney has shifted enormous wealth – as much as $100 million – into a family trust, a fortune he doesn't include in the $250 million estimate of his net worth. His campaign admits he paid no gift taxes in transferring assets to the trust, even though individual gifts above $13,000 are subject to taxation. A direct gift of $100 million would have incurred a tax hit of at least $29 million, according to Michael Graetz, a former Treasury official under George H.W. Bush.

How did Romney skirt the limits on gifts? Tax experts believe that he made his contributions to the trust in the form of the carried interest he received from his Bain funds. For income-tax purposes, the assets were technically valued at zero, because the gains would not be taxed until the fund's investments were cashed out years later. In reality, though, Romney could have sold his carried interest to a third party for millions – making it absurd for him to pretend that his gift had no market value. Yet even if the move was illegal, Romney has nothing to fear: Tax returns on gifts are almost never audited, and they can't be challenged at all after three years.

Romney also used a scheme called an "intentionally defective grantor trust" to dodge the gift tax. Instead of having the trust pay taxes on its profits, Romney pays the tax bill himself. That keeps more money in the trust – amounting to another massive transfer of wealth that evades the gift tax. Even worse, the trust is exempt from the estate tax – meaning Romney's heirs will eventually pocket some $31 million they would have owed in taxes had he not siphoned off his fortune into the trust, tax-free.

This story is from the October 25th, 2012 issue of Rolling Stone.