Tag Archives: capital gains

Money can buy tax laws that give you more money to bank in the Caymans

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“The reason Romney pays a rate of only 14 percent on $13 million of income in 2011 — a lower rate than many in the middle class — is because he exploits a loophole that allows private equity managers to treat their income as capital gains, taxed at only 15 percent. And that loophole exists solely because private equity and hedge fund managers have so much political clout — as a result of their huge fortunes and the money they’ve donated to political candidates — that neither party will remove it.”

— Mitt Romney: A warrior for the wealthy? – CSMonitor.com (via robot-heart-politics)

Hilariously, Romney explained that the lower tax rate on capital gains is fair and a well-earned reward or incentive because lower tax rates on the wealthy “put people to work.” Except the Capital Gains Elite haven’t been using the savings to create jobs in America, not for a long time — instead they’ve been hording their U.S. tax savings in other countries like Switzerland or the Cayman Islands, haven’t they? Just look at Romney’s two tax returns.

And Mitt thinks the wealthy should have even more tax breaks?

The old days of “sharing the wealth” vs. today’s “Bain Capitalized” America

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There’s nothing patriotic or hard-working or very admirable about the men of the private equity generation. Unless you admire hypocritical sociopaths.

“In the old days, making money required sharing the wealth: with assembly-line workers, with middle management, with schools and communities, with investors. Even the Gilded Age robber barons, despite their unapologetic efforts to keep workers from getting any rights at all, built America in spite of themselves, erecting railroads and oil wells and telegraph wires. And from the time the monopolists were reined in with antitrust laws through the days when men like Mitt Romney’s dad exited center stage in our economy, the American social contract was pretty consistent: The rich got to stay rich, often filthy rich, but they paid taxes and a living wage and everyone else rose at least a little bit along with them. [...] The new owners of American industry are the polar opposites of the Milton Hersheys and Andrew Carnegies who built this country, commercial titans who longed to leave visible legacies of their accomplishments, erecting hospitals and schools and libraries, sometimes leaving behind thriving towns that bore their names.

“[...] Which brings us to another aspect of Romney’s business career that has largely been hidden from voters: His personal fortune would not have been possible without the direct assistance of the U.S. government. The taxpayer-funded subsidies that Romney has received go well beyond the humdrum, backdoor, welfare-sucking that all supposedly self-made free marketeers inevitably indulge in. Not that Romney hasn’t done just fine at milking the government when it suits his purposes, the most obvious instance being the incredible $1.5 billion in aid he siphoned out of the U.S. Treasury as head of the 2002 Winter Olympics in Salt Lake – a sum greater than all federal spending for the previous seven U.S. Olympic games combined. Romney, the supposed fiscal conservative, blew through an average of $625,000 in taxpayer money per athlete – an astounding increase of 5,582 percent over the $11,000 average at the 1984 games in Los Angeles. In 1993, right as he was preparing to run for the Senate, Romney also engineered a government deal worth at least $10 million for Bain’s consulting firm, when it was teetering on the edge of bankruptcy. (See “The Federal Bailout That Saved Romney”)

Yep, the American taxpayer bailed out Mr. “Let Detroit Go Bankrupt,” the guy who burned down numerous companies and walked away from the rubble with a wad of cash and no apologies. The King of Bain went to the American taxpayer to save his own company, which happen to be the same taxpayers who he’s hiding his personal fortune from today. More from Taibbi:

“But the way Romney most directly owes his success to the government is through the structure of the tax code. The entire business of leveraged buyouts wouldn’t be possible without a provision in the federal code that allows companies like Bain to deduct the interest on the debt they use to acquire and loot their targets. This is the same universally beloved tax deduction you can use to write off your mortgage interest payments, so tampering with it is considered political suicide – it’s been called the “third rail of tax reform.” So the Romney who routinely rails against the national debt as some kind of child-killing “mortgage” is the same man who spent decades exploiting a tax deduction specifically designed for mortgage holders in order to bilk every dollar he could out of U.S. businesses before burning them to the ground.

“[...] Adding to the hypocrisy, the money that Romney personally pocketed on Bain’s takeover deals was usually taxed not as income, but either as capital gains or as “carried interest,” both of which are capped at a maximum rate of 15 percent. In addition, reporters have uncovered plenty of evidence that Romney takes full advantage of offshore tax havens: He has an interest in at least 12 Bain funds, worth a total of $30 million, that are based in the Cayman Islands; he has reportedly used a squirrelly tax shelter known as a “blocker corporation” that cheats taxpayers out of some $100 million a year; and his wife, Ann, had a Swiss bank account worth $3 million. As a private equity pirate, Romney pays less than half the tax rate of most American executives – less, even, than teachers, firefighters, cops and nurses. Asked about the fact that he paid a tax rate of only 13.9 percent on income of $21.7 million in 2010, Romney responded testily that the massive windfall he enjoys from exploiting the tax code is “entirely legal and fair.”"

— Greed and Debt: The True Story of Mitt Romney and Bain Capital | Matt Taibbi | Rolling Stone

The Greed is God mentality has driven the income inequality in our country to never before seen levels over just a few decades, and it has bilked the federal treasury out of enormous amounts of money. And most of the money that no longer goes to you or me (in the form of a slightly higher paycheck or lower taxes) and that doesn’t go to the U.S. treasury (to help with our nation’s deficit) is currently being hidden in foreign tax shelters by the world’s wealthiest elites — people who have no country, people whose only allegiance is to their bank accounts.

And now one of these people wants to be president. It’s ludicrous.

Mitt Romney’s Bain Capital is under investigation for tax strategies

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The New York Times reports, The New York attorney general is investigating whether some of the nation’s biggest private equity firms have abused a tax strategy in order to slice hundreds of millions of dollars from their tax bills, according to executives with direct knowledge of the inquiry.

The attorney general, Eric T. Schneiderman, has in recent weeks subpoenaed more than a dozen firms seeking documents that would reveal whether they converted certain management fees collected from their investors into fund investments, which are taxed at a far lower rate than ordinary income.

Among the firms to receive subpoenas are Kohlberg Kravis Roberts & Company, TPG Capital, Sun Capital Partners, Apollo Global Management, Silver Lake Partners and Bain Capital, which was founded by Mitt Romney, the Republican nominee for president. Representatives for the firms declined to comment on the inquiry.

[...] The tax strategy — which is viewed as perfectly legal by some tax experts, aggressive by others and potentially illegal by some — came to light last month when hundreds of pages of Bain’s internal financial documents were made available online. The financial statements show that at least $1 billion in accumulated fees that otherwise would have been taxed as ordinary income for Bain executives had been converted into investments producing capital gains, which are subject to a federal tax of 15 percent, versus a top rate of 35 percent for ordinary income. That means the Bain partners saved more than $200 million in federal income taxes and more than $20 million in Medicare taxes.

The subpoenas, which executives said were issued in July, predated the leak of the Bain documents by several weeks and do not appear to be connected with them. Mr. Schneiderman, who is also co-chairman of a mortgage fraud task force appointed by Mr. Obama, has made cracking down on large-scale tax evasion a priority of his first term.

As a retired partner, Mr. Romney continues to receive profits from Bain Capital and has had investments in some of the funds that documents show used the tax strategy.

Great! I’m glad someone is looking into this tax evasion bullshit that’s been going on for decades by the one percenters. Here’s an observation from Matt Taibbi’s excellent — and timely — article on Romney and Bain:

Romney the businessman built his career on two things that Romney the candidate decries: massive debt and dumb federal giveaways. “I don’t know what Romney would be doing but for debt and its tax-advantaged position in the tax code,” says a prominent Wall Street lawyer, “but he wouldn’t be fabulously wealthy.” [...] Essentially, Romney got rich in a business that couldn’t exist without a perverse tax break, and he got to keep double his earnings because of another loophole – a pair of bureaucratic accidents that have not only teamed up to threaten us with a Mitt Romney presidency but that make future Romneys far more likely.

“There is nothing in Leviticus that says you may not regulate derivatives.”

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“You don’t build a movement with short-term tactics. You build a movement by understanding and change the way people think. The day everyone says in America, ‘You know what? There’s no missing page of Genesis that says there are separate tax rates for capital gains. There is nothing in Leviticus that says you may not regulate derivatives. This is not stuff that has to be. This is just a bunch of people who decided our public policy should be to redistribute all of the wealth in our society to a very small number of our people. It’s public policy. It’s not ancient. It’s not God, and we have the power to change it.’ That’s what will enable us to break through the log jams to re-regulate the Dodd-Frank process. That’s what will break through.” – New York’s state attorney general Eric Schneiderman, reminding progressives at the Take Back the American Dream conference in Washington, D.C. that the right’s efforts to fight financial regulation is far from divinely inspired.

The Republican Party’s favorite fairy tale: investors and job creators need more tax cuts

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It’s way past time to put that Republican fairy tale called ”Investors and Job Creators Need Lower Taxes” to bed:

Why Mitt Romney’s Tax Returns Undermine The GOP’s Investment Tax Argument

According to Republican gospel, taxes on investment must always be low, or else investors will simply sit on their money, refusing to do the very thing that could earn them more money. However, as David Abromowitz laid out in Bloobmerg View today, Mitt Romney’s tax returns undermine this argument.

After all, Romney made his fortune via investments made by Bain Capital, the private equity firm that he ran. And Bain’s investments between 1984 and 1999 “occurred when capital-gains rates were much higher than they are today. Yet Bain consistently attracted massive amounts of private capital, and thrived”…

[...] As billionaire investor Warren Buffett put it, “I have worked with investors for 60 years and I have yet to see anyone — not even when capital-gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain.” It’s worth remembering that it was conservative icon Ronald Reagan who completely equalized the tax treatment of investment and wage income, rejecting the argument that a lower capital gains rate was necessary to incentivize investment.

As Pat Garofalo noted earlier:

[Would the wealthy really] squirrel away their money under the mattress if the capital gains rate goes back to the level at which it was under Clinton? In fact, business investment was stronger under President Clinton that it was under President Bush. The overwhelming majority of capital gains go to the richest households. Keeping that rate so far below the rates applied to normal income is simply a giveaway to the wealthy that doesn’t boost the economy.

And what’s Mitt Romney, the GOP’s preordained presidential candidate, have to offer? Nothing if you’re not in the top one percent. For the rest of us, it’s the same old bottom to top income redistribution scheme — only more so:

How Romney would tax us (via: azspot)

While Romney would make these two groups — the poorest 125 million Americans — pay higher taxes, the top 60 percent all would get tax cuts. The top tenth of one percent would save, on average, $464,000 a year, the Tax Policy Center’s analysis says.

His plan gives one third of his tax cuts to the top tenth of one percent of taxpayers. By comparison, Bush gave this group only one eighth of his cuts.

Romney would also eliminate estate and gift taxes, a policy that I believe would damage the spirit of striving that has served us so well until now, replacing it with a new era of dynastic wealth.

Continue…

Can you imagine? Romney and the GOP might as well just say, “Let them eat austerity.” What an outrage.

Mitt Romney: welfare queen

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“Mitt Romney is a welfare queen. [...] without the tax-breaks given to interest payment, the private equity business model would never have been born. Those tax-breaks are nothing but a taxpayer subsidy, paid for by everybody else picking up the slack for Mitt Romney and his crony corporate raiders.” – Mitt Romney, ‘welfare queen’ (via theamericanbear)

Source: lolmitts

Capital gains and earned income: tax it all according to the same rate schedule

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“Treat all income the same. Tax it all according to the same rate schedule. A dollar is a dollar, whether you got it from your labor or your inheritance or your hedge-fund fees or your stock sales. It isn’t the only thing we could do to improve the tax code, but it would be the most transformative, and it expresses a principle that few would be able to argue against. [..] I’d like to see Mitt Romney—and any Republican, for that matter—be forced to answer this question: Why should investment income be taxed at a lower rate than income people work for?” – Beyond the Buffett Rule (via ryking)

Tell me why this weird, awkward, robotic multi-millionaire, singing “America the Beautiful” Bill-Murray-lounge-style in the video below, should pay a lower tax rate than average working and middle class Americans? And if you’re a GOP base voter whose knee-jerk reaction is to defend the idea that millionaires should pay less tax, but you’re not — and, unless you win the lottery, will never be — a millionaire yourself, please describe the methods by which the Republican Party brain-washed you. It’s really important we understand what happened, for the survival of future generations.

…

It will never stop unless we make it stop:

Romney’s New Loophole For The Rich - The former Bain executive has pledged to eliminate capital gains taxes for households with income under $200,000. Roberton Williams explains how this would work in reality:

Nearly 80 percent of households already pay no tax on gains and dividends—either because they have no investment income or because they’re in the 15-percent tax bracket or below. This cut—about $40 billion in 2015—can only help the remaining 20 percent. Not surprisingly, the bulk of benefits go to high-income households. And, because the threshold would apply only to non-gains and non-dividend income, households in the top 1 percent would get nearly a tenth of the tax savings.

Wealth inequality is a threat to Capitalism: Obama is right, Romney is wrong

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The GOP and Mitt Romney are rabidly defending his wealth, and the wealth of the one percenters. President Obama (and, incidentally, the Occupy Wall Street protesters) are trying to educate the nation on the reality of our wealth inequality. It comes down to TAX LAWS which favor the wealthy and place the burden of our nation’s treasury on the shoulders of the working and middle class. Less money in the treasury, by the way, then places additional burdens on the poor, working, and middle classes because there will be austerity: cuts to government programs and services.

State of the Union 2012: Barack Obama is right — wealth inequality is a threat to capitalism: Jonathan Kay

Income inequality in the United States now stands at its highest rate since the Great Depression. At Occupy protests and in activist circles, this fact usually is cast as a social justice issue, which is why too many conservatives snidely dismiss it. In fact, free market capitalists are the ones who should be most concerned about inequality. A mass market consumer economy cannot function when earners cluster at the poles: Poor people buy very little, and wealthy people spend only a small fraction of their income on retail goods and services. The income of America’s middle class — the people who fuel the retail economy — has been stagnant, in real terms, for three decades.

[...] Why are Republicans and their supporters so out of touch with economic reality? The conventional explanation is class mobility: Americans, including poor Americans, refuse to soak the rich because they believe they’ll be rich one day, too. And there likely is some truth to this, despite the fact that economic mobility is now lower in the United States than it is in Canada and many European nations.

But I’d say an even better explanation is: Americans’ pure, undiluted ignorance about how unequal their society has become.

In recent years, a Harvard business professor named Michael Norton has been surveying Americans about wealth distribution in America, comparing their perceptions with fact. The reality in the United States is that the richest fifth of the population controls about 85% of the country’s wealth (while the poorest fifth controls about 0%). But when Norton’s survey respondents were asked to state the share of wealth that they believed was controlled by the richest fifth of Americans, the number they came up with was closer to 60%. Even more tellingly, when Norton asked survey respondents what would be the ideal percentage of wealth that should be controlled by the richest fifth, the average figure reported was only 35% — a full fifty points below the 85% reality.

“The closer countries to what our respondents wanted [America to look like] are countries that are amusingly dissimilar to us, such as countries like Sweden,” Norton told an interviewer. “And I should say, the other thing that we found is not just that people think things should be fairer in some sense than they are, but that there’s wide agreement about that. So if we look at very rich people and very poor people, or if we look at Republicans and Democrats, all of these groups think that wealth should be more equally distributed when we asked them these questions than it actually is.”

leftish: JON STEWART:  It might be nice if Romney thought his TAX RATE was WRONG!

Related: 

Romney’s income is 12 times higher than Obama’s, yet Romney paid half of Obama’s tax rate

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The numbers on the ‘Politics of Envy’ –

  • Obama: income – $1.8 million, tax paid $454,000 (25 percent)
  • Romney: income – $21.7 million, tax paid $3 million (13.8 percent)

According to 2010 tax returns (PDF) released by the White House, the president paid $454,000 in federal taxes on $1.8 million earned — or about 25 percent of his gross income. Over the same time period, Romney paid about $3 million in federal taxes on gross income of $21.7 million, a rate of about 13.8 percent. Estimates released by the campaign showed that Romney expected to pay $3.2 million in taxes for 2011 on $20.9 million income, an effective 15.4 percent rate. – Romney earned 12 times more than Obama, had nearly half the tax rate

Politics of envy though.


image: BobCesca

Mitt Romney’s message to the poor and middle class

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Here’s what Mitt thinks:

image: christianbaled

“Again, the point here is not that Romney did something wrong by paying the low rates current tax law lavishes on people like him. It is, instead, that in an election campaign that will be in part about issues of inequality, the likely GOP candidate is a living, breathing, coupon-clipping example of how favorable our system is to the very rich; and he also happens to be advocating policies that would greatly benefit people like him, while hurting the poor and the middle class.

PS: Yes, my tax rate is a lot higher than Romney’s. And I support policies that would raise it further.”

— Paul Krugman on Romney’s Taxes 

via: randomactsofchaos

Related: 

Six fast facts on Romney’s low, low taxes and big, big income

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Think Progress: 6 Facts About Mitt Romney’s Taxes/ Lack Thereof

  1. Romney paid a lower tax rate than many middle-class Americans, at 13.9 percent.
  2. Romney makes more in a day than the average American makes in a year, and becomes a 1 percenter every week.
  3. Romney likely paid $0 in payroll taxes.
  4. Romney has accounts in countries notorious for tax dodging, like Switzerland, Luxembourg, and the Cayman Islands.
  5. Romney and Gingrich’s tax plans would slash Romney’s taxes in half.
  6. Romney needs four lawyers, including the former IRS commissioner to defend his tax plan.

via: think-progress

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Note: #5 — Newt’s taxes would be slashed also.

Romney’s tax return release: too little, too late?

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Josh Marshall thinks the reality of Mitt’s tax rate and income, combined with being forced into releasing his returns, are very bad news for his campaign:

“My quick take on this is that there’s a lot here that’s fairly damaging for Romney in political terms, largely for the reasons I set forth earlier in this post. Beyond that there’s a lesson about the consequences of losing control of events. For a man running for president in 2012 it’s damaging stuff. But now everything in these documents comes with a preface that reads “We really wanted to keep this secret. But that didn’t work out.”

 

Mitt’s tax returns and the politics of envy (we’re all envious about his effective tax rate)

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Pages and pages are devoted to foreign entities in which Romney is invested. Many are located in places like Luxembourg, Ireland and the Cayman Islands, all famous tax havens. None shows much income. “These entities are not evading one dime of taxes.” — Brad Malt, Romney’s trustee

“I will not apologize for success.” The Huffington Post

Bowing to increasing political pressure to provide more detail about his vast wealth, the former private equity executive released tax returns indicating he and his wife, Ann, paid an effective tax rate of 13.9 percent in 2010. They expect to pay a 15.4 percent rate when they file their returns for 2011.

Wow, his taxes will GO UP from 13.9 percent to 15.4 percent? No wonder Mitt wants even more tax cuts for the wealthy / himself. If he paid 13.9 percent in 2010, I wonder what effective tax rate he paid in prior years…

Romney’s tax rate is below that of most wage-earning Americans because most of his income, as outlined in more than 500 pages of tax documents, flows from capital gains on investments.

Under the U.S. tax code, capital gains are taxed at 15 percent, compared with a top tax rate of 35 percent for wage earners.

Wage earners are disposable plebeians. That’s why we pay a higher effective tax rate on our incomes.

[...] Romney’s campaign officials stressed that his tax rate is based mostly on income from investments that are held in a blind trust. Romney’s holdings include an undisclosed amount in funds based in the Grand Cayman Islands and other overseas entities.

Romney advisers stressed that the holdings in the Caymans – along with those in a Swiss bank account that was closed in 2010 after an investment adviser decided it could be politically embarrassing to Romney – were reported on tax returns and were not vehicles to avoid taxes.

Sure. Of course that has to be SAID. We’ll never know, one way or the other. Can you imagine how many “Romneybot, Inc.” accountants, campaign managers, and public relations personnel worked 24/7 to give us the return that was released today?

They also stressed that Romney, whose holdings are in three blind trusts, makes no decisions as to how his money is invested.

Hahaha, you see? Mitt doesn’t know how his $250 million is managed or in which foreign accounts in the Caymans and Switzerland it’s hidden! He just spends it! Trust him.

What’s a Blind trust? It’s a trust in which the fiduciaries, namely the trustees or those who have been given power of attorney, have full discretion over the assets, and the trust beneficiaries have no knowledge of the holdings of the trust and no right to intervene in their handling. Blind trusts are generally used when a settlor (sometimes called a trustor or donor) wishes to keep the beneficiary unaware of the specific assets in the trust, such as to avoid conflict of interest between the beneficiary and the investments. Politicians or others in sensitive positions often place their personal assets (including investment income) into blind trusts, to avoid public scrutiny and accusations of conflicts of interest when they direct government funds to the private sector. — Wikipedia

Billionaire investor Warren Buffett, who is calling for raising taxes on high-income Americans, said he blames Congress, not Romney, for the governor’s tax rate. “It’s the wrong policy to have,” Buffett told Bloomberg Television’s Betty Liu in an interview yesterday. “He’s not going to pay more than the law requires, and I don’t fault him for that in the least. But I do fault a law that allows him and me earning enormous sums to pay overall federal taxes at a rate that’s about half what the average person in my office pays.” —  Warren Buffett speaking about capital gains tax rates vs. earned income tax rates

Related: 

Reagan’s Tax Reform Act: the only time there was fair taxation between capital gains and earned income

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Source: ThinkProgess / NYTimes

Today’s Republican Party would never go for this type of ‘income redistribution’ socialism! It lasted only two years though: 1988 – 1990. What’s that tell you?

The Book of Romney: the many ways Mitt increases his income and lowers his taxes

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How does the Mormon Church play into Romney’s income and taxes?

In Bain deals, Romney gave stock to Mormon church

A stock donation to the Mormon Church during the 1990s – when Romney was in charge at Bain Capital – shows how the donor might have booked significant tax savings.

In the transaction, the church received 93,668 shares of Wesley Jessen VisionCare Inc, a contact lens company.

The church sold the shares for $22.325 each, after an underwriting commission, according to a Wesley Jessen prospectus dated August 19, 1997. The shares had appreciated more than 50-fold since being acquired by Bain Capital Funds two years earlier at a cost of 43.4 cents a share, according to data in a Wesley Jessen prospectus filed with the SEC on February 13, 1997.

If Romney or another Bain partner or employee had cashed in the shares, they would have been taxed on the $21.89 per share gain, or $2.05 million.

Instead, the donor of the shares to the Mormon church avoided tax on the substantial capital gain and would have been able to count some or all of the $2.09 million of stock given to the church as a tax-deductible charitable contribution.

And how does Romney’s proposed ‘tax plan’ play into Romney’s income and taxes?

Romney’s tax plan would cut his own taxes by nearly half, new analysis finds

The revelation that Mitt Romney pays a tax rate of around 15 percent opens the door to another question: How much would his own taxes fall under the tax plan he would pass if elected president?

Here’s the answer, according to a new analysis by Citizens for Tax Justice that was provided to me this morning. Under his plan, Romney in 2013 would see his taxes cut by nearly half of what they would be if you use current law as a baseline.

Another way to put this: If Romney, whose wealth is estimated at as much as $250 million, is elected president and gets his way on tax policy, he would pay barely more than half as much in taxes than he would if Obama is reelected and gets his way — and the Bush tax cuts on the wealthy expire and an additional Medicare tax as part of the Affordable Care Act kicks in.

Mitt Romney 2012: Life begins at incorporation.