Romney’s Disclosure Leads To Even More Financial Scrutiny

Carried Interest Doesn’t Carry Water

Carried Interest

“Carried interest” refers the commissions that fund managers receive as compensation for their work. These are similar to bonuses which some people get added to their salary. However, they are treated not as “earned income” but as “long-terms capital gains” by the IRS and taxed at 15% even though the fund manager did have any capital at risk.

In the video to the right, Arianna Huffington (Huffington Post) and Henry Blodget (Reuters) discuss capitalism on the balcony of the Davos library and agreed that “carried interest” is outrageous.

While working at Bain Capital, Mitt Romney presumably benefited greatly from this tax loophole.

Blind Trust and Tax Havens

Romney’s tax return shows income from famous tax havens such as Switzerland and the Cayman Islands. He defends these investments on the grounds he can’t control money in a “blind trust.” However, back when he was running against Sen. Ted Kennedy in 1994 he sang quite a different tune:

“The blind trust is an age-old ruse. You give a blind trust rules. You can say to a blind trust, don’t invest in properties which would be in conflict of interest or where the seller might think they’re going to get an advantage from me.”

While Romney’s return reports the income from these havens, there is no logical reason to invest in them unless it is to avoid paying US taxes. Only by reporting a fuller tax history (like his father Gov. George Romney did when he ran for President) can Mitt Romney lift the cloud of suspicion which hangs over investing in these tax shelters.

Discrepancies from ethics forms

Matea Gold and Tomburger write in the Los Angeles Times:

Some investments listed in Mitt and Ann Romney’s 2010 tax returns – including a now-closed Swiss bank account and other funds located overseas – were not explicitly disclosed in the personal financial statement the GOP presidential hopeful filed in August as part of his White House bid.

The Romney campaign described the discrepancies as “trivial” but acknowledged Thursday afternoon that they are undergoing an internal review of how the investments were reported and will make “some minor technical amendments” to Romney’s financial disclosure that will not alter the overall picture of his finances.

A review by the Los Angeles Times/Tribune Washington Bureau found that at least 23 funds and partnerships listed in the couple’s 2010 tax returns did not show up or were not listed in the same fashion on Romney’s most recent financial disclosure, including 11 based in low-tax foreign countries such as Bermuda, the Cayman Islands and Luxembourg.