It must take some pretty powerful messaging to enable Gov. Mitt Romney and world-class marathon runner, mountain climber extraordinaire, and part-time dish washer Wisconsin Congressman Paul Ryan to have credible voices as the tippy-top of the republican party. Propping up the GOP ticket demands some pretty powerful propaganda.
If Mitt Romney can be shown to be a chronic flip-flopper and habitual liar, what do we call his running mate, Paul Ryan? Fact-checkers find Ryan more untruthful than Romney. So no one should be surprised that the guys that want larger tax cuts and subsidies for billionaires pay lower tax rates than the majority of workers that have the taxes they owe deducted from each paycheck.
From one of our daily reads, PoliticusUSA reports:
Paul Ryan and his wife inherited between $1-5 million in 2010 and whoopsie daisy, he forgot to disclose it for two years. You’d almost think it was on purpose, well, some people do think that, since Ryan didn’t remember it until he was being vetted by the Romney campaign.But that's not all -- Ryan “forgot” to report $61,000 income on his 2011 tax return. New York Times has more:
In an amended return, Paul Ryan, the vice presidential candidate, told the I.R.S. he and his wife had “inadvertently” failed to report $61,122 in income from 2011. That raised their total income to $323,416 and increased their taxes by $19,917 to $64,674, or 20 percent of adjusted gross income.Mitt Romney estimated his 2011 income in January, but when his 2011 return was released, his income dropped by $9,000,000 from the estimate he released to voters. The Romney camp has not explained where or when the $9 million disappeared.
Paul Ryan paid a higher federal tax rate than Romney. But then, Ryan a private-equity kingpin worth at least $250 million pay a lower tax rate – that's how you get into the 14 percent club and pay a lowball rate of just 14% like Romney. Each of the GOP's candidates carries a tax burden far below those earning substantially less, but enough to be part of the shrinking middle class.
Mitt Romney’s Tax Dodge, by Rolling Stone's Tim Dickinson has a concise must-read explanation of how the ultra-wealthy escape paying their fair share. Using tax loopholes that favor the rich and sheltering assets in the world's most notorious havens for tax cheats, Mitt Romney sanitized his 2010 and 2011 tax returns.
But are this self-proclaimed "budget hawk" and "businessman's" tax dodges legal? Professor of tax law, Victor Fleischer, at the University of Colorado says:
He aggressively exploits every loophole he can find. 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.Here are the areas from Dickinson's article:
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? (Click HERE for more)
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. (Click HERE for more)
Luxembourge 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. (Click HERE for more)
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. (Click HERE for more)
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. (Click HERE for more)
A Big-Loophole: Carried Interest. 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. (Click HERE for more)
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. (Click HERE for more)
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.So someone please tell us why these characters, Romney/Ryan have any integrity and credibility talking about tax policy, fiscal deficits, and austerity for the masses.
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. (Click HERE for more)