5 Shady Financial Tactics Employed By Mitt Romney
After significant pressure, Mitt Romney released two years of his tax returns, which showed, among other things, that he pays a lower tax rate than many middle-class families and has employed a Swiss bank account to hold his investments. Today, Vanity Fair ran an expose on Romney’s investments, providing some new details regarding funds that he keeps in the Cayman Islands, how his retirement fund grew so large, and how he manages to avoid paying his fair share of taxes.
“Romney, like the superhero who whirls and backflips unscathed through a web of laser beams while everyoneelse gets zapped, is certainly a remarkable financial acrobat. But careful analysis of his financial and business affairs also reveals a man who, like some other Wall Street titans, seems comfortable striding into some fuzzy gray zones,” wrote Vanity Fair’s Nicholas Shaxson. Here are five ways Romney is engaging in such financial shenanigans:
1. Romney owns a corporation in Bermuda. Filings describe Sankaty High Yield Asset Investors Ltd. as a “a Bermuda corporation wholly owned by W. Mitt Romney.” The corporation was established by Romney in 1997, but was transferred into a blind trust under Ann Romney’s name the day before Mitt began his tenure as governor of Massachusetts. Bermuda is a famed tax shelter.
2. Romney uses special, tax-free stocks to inflate his retirement account.Romney’s independent retirement account set up during his time at Bain Capital could contain as much as $102 million — a staggering amount given limits on employee contributions. The Vanity Fair piece parses how Romney inflated his IRA so much: When Bain bought and sold companies, it gave employees select, high-risk, high-revenue shares of the business. These shares went straight into Romney’s IRA, so they were untaxed profits. And since they started off low, the shares were seen as being below contribution limits — despite the fact that they promptly grew into a large fortune.
3. Romney’s blind trusts are not-so-blind. Ann and Mitt Romney keep their investments in a “blind trust,” which means that they avoid making investment decisions that may impact their political work. But the Romney’s blind trust, which is run by their personal lawyer, includes investments in a companyowned by their own son.
4. Romney uses a so-called “blocker corporation” to avoid taxes on his IRA.Though Romney says his investments in the Cayman Islands do not help him lower his tax bill, Romney’s IRA appears to have invested in an offshore corporation which then invests in U.S. businesses, to avoid paying the the U.S.’s Unrelated Business Income Tax.
5. Bain Capital helped financial fraudsters dodge taxes. Bain received investments from “the newspaper tycoon, tax evader, and fraudster Robert Maxwell” (who has since died), as well as other financial oligarchs, which helps provide them “with additional ways to skip around tax, disclosure, and regulatory requirements that they might trigger if they invested directly.”