Romney Needs to Stop Talking

Posted by BooMan | Jul 17, 2012 | 27 |

The National Review got to ask Mitt Romney a few questions. Here are two of them, and Romney’s answers:

For much of this week, you’ve been asked about your tax returns. What’s the downside to releasing your pre-2010 financial records?

My tax returns that have already been released number into the hundreds of pages. And we will be releasing tax returns for the most current year as soon as those are prepared. They will also number in the hundreds of pages. In the political environment that exists today, the opposition research of the Obama campaign is looking for anything they can use to distract from the failure of the president to reignite our economy. And I’m simply not enthusiastic about giving them hundreds or thousands of more pages to pick through, distort, and lie about.

From a political perspective, a lot of pundits wonder why you haven’t gotten rid of your offshore accounts. Can you explain why you have not done that?

Well, first of all, all of my investments are managed in a blind trust. By virtue of that, the decisions made by the trustee are the decisions that determine where the investments are. Secondly, the so-called offshore account in the Cayman Islands, for instance, is an account established by a U.S. firm to allow foreign investors to invest in U.S. enterprises and not be subject to taxes outside of their own jurisdiction. So in many instances, the investments in something of that nature are brought back into the United States. The world of finance is not as simple as some would have you believe. Sometimes a foreign entity is formed to allow foreign investors to invest in the United States, which may well be the case with the entities that Democrats are describing as foreign accounts.

On the former question, Romney is admitting that he doesn’t want the political fallout that would result if people could see his taxes. He isn’t even faking a privacy argument. Also, he’s back to that All-American Republican aversion to things with lots of pages.

On the latter question, I have to ask if this is proof that Romney is Mexican, because he isn’t supposed to be a “foreign entity” or a “foreign investor.” He’s supposed to be an American. So, how can he put his money in an account that is designed for foreigners who want to make investments in American companies without having to pay any American taxes (or taxes out of their own jurisdiction)?

Is this some kind of Hedge Fund of Funds that caters to foreign tax cheats? I don’t get it. The whole thing sounds more crooked than Hong Kong.

About The Author

BooMan

Martin Longman a contributing editor at the Washington Monthly. He is also the founder of Booman Tribune and Progress Pond. He has a degree in philosophy from Western Michigan University.

27 Comments

Phil Perspective on July 17, 2012 at 2:08 pm

The whole thing sounds more crooked than Hong Kong.

Maybe, because it is. After all, he’s nothing like his father!!
- Marie2 on July 17, 2012 at 2:49 pm
  
  We don’t really know that he’s nothing like his father as his father operated in a different and rationally regulated business climate that reduced opportunities for secret and sleazy deals. Plus his father was never vetted for POTUS. For all I know his tenure at AMC and as Governor of MI may not have been anything to praise and his offer to release twelve years of tax returns was more about putting Nixon on the defensive than exhibiting any embrace of openness and transparency on Romney’s part.
  - BooMan on July 17, 2012 at 3:07 pm
    
    Definitely to put Nixon on defensive, as his income was mixed with Bebe Rebozo and his mafia buddies in Tampa and Miami.
  - Phil Perspective on July 17, 2012 at 5:29 pm
    
    We enough enough about George Romney to know that the son is a disgrace to the family name. But then that seems to go for a lot of sons(Dubya .. Evan Bayh .. Andrew Cuomo) these days.
BooMan on July 17, 2012 at 2:08 pm

Once upon a time we invaded Panama to ~~get Noriega~~ cover up stuff like this.
- Bazooka Joe on July 17, 2012 at 2:34 pm
  
  Lot of disreputable characters out there, from a lot of undemocratic regimes, and the financial industry has never had a problem helping them keep their business on the down low.
  
  Romney’s “foreign investors?” They might well be people who aren’t just looking to skip out on tax bills. Nobody on the outside is qualified to tell. It’s a black hole.
  
  From the Vanity Fair article, it’s publicly disclosed knowledge that Bain got rolling in the 80s with the help of Salvadoran money (ex-pats from the Poma family). Literally anybody could invest in Bain’s offshore vehicles. That’s the point.
  - shan on July 17, 2012 at 3:12 pm
    
    Is this where the Ayatollah’s invest their money?
nalbar on July 17, 2012 at 2:34 pm

He’s dead.

Americans are pretty stupid, but one thing they grasp is why someone keeps money, or invests money, in ‘exotic’ places. To avoid taxes. Fair or not, many people believe as I do, that such people are only Americans when it is convenient to them.

Try it, when out and about ask this question;
“why would someone keep money in the Cayman Islands or Swiss bank accounts?”

Only the 27% will make a excuse. Everyone else will say “to avoid taxes”.

.
- BooMan on July 17, 2012 at 2:38 pm
  
  Here’s the guy who created the accounts:
  
  Bart Mallon, a lawyer at Cole-Frieman & Mallon who sets up offshore companies, said such arrangements appeal to foreign investors. Many foreigners prefer investing through an offshore company because they don’t want to file U.S. tax returns or expose themselves to potential Internal Revenue Service audits, he said.
  
  “Unfortunately, when people hear the term `offshore,’ they automatically think that there’s, you know, that people . . . are trying to get away with something,” Mallon said.
  
  “But it’s not really getting away with something. It’s just working within the tax laws as they’re currently written.”
  
  And then there’s this:
  
  “This is a classic example of how good tax planning avoids taxes until you want to pay taxes on the money,” said Martin Lobel, a Washington lawyer and chairman at Tax Analysts, a provider of information for tax specialists.
  
  Even many Americans with sophisticated tax advisers “can’t take advantage of that kind of loophole,” Lobel said.
  - nalbar on July 17, 2012 at 2:48 pm
    
    Several months ago you said he had the worst political instincts out there.
    
    You have never been more right. His first mistake was thinking he could run with this background. He really thinks it’s normal, and in his crowd, it is.
    
    It’s so epic a failure, it’s in Edwards territory.
    
    .
    - Marie2 on July 17, 2012 at 2:58 pm
      
      Likened Romney to Edwards 2008 as few days ago. Others didn’t get the comparison. Slick, rich, entitled, a single term in public office, and secret stuff that must remain hidden. Lucky for Democrats that Edwards had competition for the nomination.
      - Phil Perspective on July 17, 2012 at 5:27 pm
        
        Romney is still 10x the phony Edwards ever was. I know, tallest midget in the circus and all that.
      - Marie2 on July 17, 2012 at 7:43 pm
        
        Romney may be 10X the vulture capitalist that Edwards is, but I’d say they’re about equal on the “phony” dimension.
Oui on July 17, 2012 at 2:50 pm
.
Just picking up some bits of information, the crux is most likely in the Bain Capital investment profits in addition to participation in 22 Bain related funds until 2009 – see comments by Marie2. For tax evasion purpose for his trust funds, his attorneys must have been very bright – Ropes & Gray Estate Planners.
Romney Still Reaps Huge Profits From Bain’s Vulture Capitalism

(The Nation) – Romney was a robber baron. And he continues to profit–to the tune of $230 million and counting–from the “vulture capitalism” his Republican primary opponents decried. Bain forces cuts in wages, benefits and pensions. It outsources work. And it offshores production–harming American workers and communities and undermining American industries. No amount of wordplay by Romney and his campaign team is going to charge those facts.

Romney’s continued involvement with Bain is not some distant financial arrangement, or some casual connection like Americans might have to corporations via stocks included in their 401K plans. Though Mr. Romney left Bain in early 1999, he remains a direct beneficiary of Bain’s buccaneer pillaging of the US economy. To wit:

Romney continued to collect a share of the corporate buyout and investment profits enjoyed by partners from all Bain deals until 2009.

Because of his ongoing arrangement with Bain, Romney has collected profits from 22 Bain and Bain-related funds. That, as the Times notes, is “more than twice as many over all as Mr. Romney had a share of the year he left.”

Romney’s arrangement with Bain allows him to invest his own money in projects pursued by his former partners. As such, Romney is involved in deals from which he continues to share in a portion of Bain’s profits.

Business Insider: Here’s What I Think Romney Is Hiding By Refusing To Release His Tax Returns

He has made hundreds of millions of dollars in part because he has structured most of his income in ways that enable him to pay the least amount of taxes possible

This “structuring” of income has likely taken full advantage of things like the ludicrous “carried interest” tax exemption that allows private-equity investors to pay capital gains taxes on income that is actually fees [This tax treatment is one of the most outrageous and unfair elements in the entire tax code. There is no logical basis for it, and it benefits only the richest people in the country.]

This “structuring” has also likely taken advantage of offshore accounts, the contribution of hard-to-value securities at low valuations to Romney’s IRA (whereupon they exploded in value), and other sophisticated tools. These tools are, theoretically, available to anyone, but, in practice, are available only to those with tens of thousands of dollars to spend every year on tax-and-estate planning.

This structuring, which (let’s be honest) is done primarily to avoid paying taxes, will look bad to most Americans, who will know instinctively that it’s done to avoid paying taxes and that it’s not something they will ever be able to afford to do–and, therefore, will seem unfair.

NY Times: Buyout Profits Keep Flowing to Romney
- Vanity Fair: Where the Money Lives
"But I will not let myself be reduced to silence."
- Oui on July 17, 2012 at 3:40 pm
  
  .
  
  Sec Filings Insider Trading – Bcip Trust Associates III-B
  
  CRC Health Group, Inc. ITEM 11. Executive Compensation
  
  On February 6, 2006, we were acquired by investments funds managed by Bain Capital (the “Bain Merger”). We refer to Bain Capital Partners as our “Sponsor.” As discussed in more detail below, various aspects of the compensation of our named executive officers was negotiated and determined at the time of the Bain Merger. There is no established public trading market for our common stock. We are a wholly-owned subsidiary of CRC Health Group, Inc. which holds all of our outstanding common stock. CRC Health Group, Inc. is a privately held corporation. Our parent company’s outstanding capital stock consists of Class A common stock and Class L common stock. All references to options herein refer to options to purchase Class A common stock and Class L common stock of our parent company.
  
  The Compensation Committee and Compensation Setting Practice
  
  The compensation committee operates under a written charter adopted by our Board of Directors and has responsibility for discharging the responsibilities of the Board of Directors relating to the compensation of our executive officers and related duties. Compensation decisions are designed to promote our fundamental business objectives and strategy and align the interests of management with the interests of our stakeholders.
  
  The Board of Directors created a compensation committee in January 2007. The current members of the compensation committee are John Connaughton [BC], Steven Barnes [BC] and Barry Karlin.
  
  Bain Capital’s CRC Health rehab venture.
  
  In the handbook of private equity investing techniques, few make more intuitive sense than the “roll-up.” Borrow some money, buy up small players in a fragmented industry, cut costs, find synergies, juice profits, increase multiples, pay down debt, and sell at a profit. Financial operators have done it well in waste management, funeral homes, and advertising. Now Bain Capital (yes, the company that clean-living Mitt Romney used to run) is trying to consolidate an unlikely industry: addiction treatment centers.
  
  In February 2006, Bain purchased an outfit called CRC Health Group for $723 million and proceeded to go on a shopping spree, snapping up nearly 20 new facilities over the next two years. The company took a breather during the financial crisis, but in 2011 resumed its buying binge with the purchase of some smaller treatment centers.
  
  Rehab, it turns out, is a pretty good business. CRC’s flagship facility, Sierra Tucson in Arizona, charges upwards of $30,000 for a 30-day stay. And with Hollywood and the sports world providing a seemingly endless supply of customers (Sierra Tucson has treated Michael Douglas, Ringo Starr, and Tiger Woods, among others), there’s growth potential too. But is the addiction-treatment industry one that benefits from scale? Is rehab roll-up-able?
  
  "But I will not let myself be reduced to silence."
southerndem on July 17, 2012 at 3:10 pm

Maybe McCain needs to stop talking too
Sen. John McCain (R-AZ) defended Mitt Romney from Democratic speculation that he passed on him as a 2008 running mate after reviewing his tax returns, saying Sarah Palin was simply the better choice at the time. McCain called the tax claims “outrageous” and “disgraceful” in an interview with Politico Tuesday. He said he chose Palin “because we thought that Sarah Palin was the better candidate.
- Parallax on July 17, 2012 at 3:34 pm
  
  That’s priceless. Can we quote you, John McCain? Sarah Palin the better candidate? With friends like that . . .
- DaveW on July 17, 2012 at 5:07 pm
  
  Forget Bain, the taxes — Just an ad with McCain saying Palin is a better candidate than Romney will do the trick all by itself.
Palli on July 17, 2012 at 3:26 pm

The IRS does not require him to submit hundreds of papers detailing every conceivable itemized deduction (read lifestyle choices) his tax lawyers can delineate.
All that work by so many tax lawyers and accountants to make sure, in his words from the GOP Presidential debates, he doesn’t pay “a dollar more” than necessary to the nation.
DerFarm on July 17, 2012 at 4:51 pm

There is another reason, other than taxes, to offshore your $$$.

As a hedge against a catastrophic drop in the dollar. Romney is/was a vulture capitalist. Apparently one of the best in the business. Is it any great wonder that he might hedge $25M+ as a hedge against the dollar going south when the RealEstate bubble burst?

Remember, he was all for letting the the market do its will with forclosures and Detroit going bankrupt. Since we don’t know how much he has placed in off shore banks, we don’t know how big a bet he placed against the dollar.
- DaveW on July 17, 2012 at 5:12 pm
  
  Suddenly all becomes clear: What Romney is hiding is simply that he was betting against the American economy and doing everything he could to make that bet pay off. I’ve wondered for so long why the Reps seem compelled to do evil even when there’s no payoff for them. I believe you’ve got it: Vultures have to make sure their prey is dead before they can harvest it. Romney and his fellow Reps are simply doing what they can to make sure that happens.
  - rikyrah on July 17, 2012 at 8:01 pm
    
    had not thought of this. you made me think
RandyH on July 17, 2012 at 4:54 pm

Also, he’s back to that All-American Republican aversion to things with lots of pages.

Here’s an idea for a political ad using the Repub’s favorite trick:

Visually demonstrate that a Real American’s tax return fits in this here Number 10 sized envelope, dropping it on a table.

“This is what a tax return is supposed to look like.”

Then drop a 9 x 13 taped-shut corrugated box with a ream of paper inside onto the same table. Thud!

“This is what Mitt Romney’s tax return looks like. What’s he hiding in there, anyway?”

But who needs to make an ad? Doesn’t Romney realize he’s creating the visual for everyone by mentioning how many pages are in his own tax return?

Keep talking Willard. Keep talking…
rikyrah on July 17, 2012 at 4:58 pm

this is hilarious.
Geov Parrish on July 17, 2012 at 8:01 pm

A couple of things:

Sometimes a foreign entity is formed to allow foreign investors to invest in the United States, which may well be the case with the entities that Democrats are describing as foreign accounts.

[my bold]

Got that? Romney didn’t say the money was coming back into the US. He said it “may well be the case.” Or, more likely, it doesn’t. It may well be the case that it will snow in La Jolla tomorrow, but I wouldn’t bet on it.

He also, by definition, knew he was running for president before he put his assets in a blind trust. So why didn’t he move them back to the US then?

Also, too, that’s if the trust truly is blind. Maybe he put his assets in a blind trust retroactively (like, last month), the way he stopped running Bain retroactively.

Lastly: What have you got against Hong Kong?
- BooMan on July 17, 2012 at 8:37 pm
  
  Hong Kong is a den of iniquity that makes Las Vegas look like Salt Lake City. Blame the British.
oktraveltips on July 20, 2012 at 5:29 am

Thanks anyway.Im not american but i think Obama is still the best president for this moment

Romney Needs to Stop Talking

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