Tuesday, July 10, 2012

Ian M. MacIsaac: Mitt's mysterious money: The growing controversy around Governor Romney's shadowy finances

  Mitt Romney loves his money. He loves it so much he does not want to pay taxes on it, keep it in the United States where it might be monitored by the IRS, or even allow the public to know how much of it he has (estimates hover around $250 million).

  He refused to release his tax returns during the 2008 campaign, and released them this time around only after being politically hammered into doing so by his fellow Republican candidates, namely Rick Santorum.

  And, despite having officially retired from the business world in 1999, Romney still makes a heaping pile: $42.5 million in income in 2010-2011, with taxes of only $6.2 million--below 15 percent taxation, just over half of the overall rate paid by the average American.

  Most of this money Romney earned  came from Bain Capital, despite having retired in 1999. Explains virtuoso investigative reporter Nicholas Shaxson in his excellent article for the upcoming August issue of Vanity Fair, entitled “Where the Money Lives,” Romney avoids paying his effective top 1% income tax rate of 35 percent because his income from Bain is taken as investment income, which is capped at 15 percent.

  On other earnings, Romney simply avoids being taxed at all through the use of shady holding companies. Shaxson reveals the existence of a company linked to Governor Romney located in Bermuda (another Caribbean tax haven) called Sankaty High Yield Asset Investors Ltd.

  The company's official president is R. Bradford Malt, Romney's lawyer who runs Romney's oft-publicized 'blind trust.' But securities details, buried deep in the paperwork, described Sankaty as "wholly owned by W. Mitt Romney."

  Sankaty is obviously important to Romney. Set up in 1997, the shell company still exists, and still provides him with income, almost two million dollars in 2010-2011.

  Romney used another financial loophole to avoid having to sell it upon assumption of the governorship: it was transferred from Mitt's 'blind trust' to his wife Ann's private trust the day before Mitt became the Governor of Massachusetts in 2003.

  Romney did not include Sankaty on his tax return until 2010--perhaps to reveal the warty truth amid pages and pages of filings and avoid the splash of an investigative reporter finding out about it in the middle of the campaign, since his 2010 return was the only one he released to the public during this campaign.

  And Sankaty is not Romney's only connection to Caribbean tax havens, either. Sankaty is just one of the dozens, perhaps hundreds, of mysterious, hard-to-follow sources of Mitt Romney's income; his finances are easily the most secretive and well-hidden of any major political figure since the worst members of the Bush family, or perhaps Lyndon Johnson.

  Romney has hard-to-track interests in Luxembourg, a notable European tax haven. And, as Newt Gingrich said during the campaign, "I don't know of any American president who has had a Swiss bank account."

  Bain Capital has interests and investments in 138 different shell companies and funds in the Caribbean Cayman Islands alone, with Romney holding major interests in at least twelve of those in his own name alone.

  Furthermore, how is Romney collecting so much income from a firm he ostensibly retired from during the Clinton administration? As recently as this June, he reported a previously-undisclosed $2 million in income from Bain.

  It is really a very strange and complicated act for a presidential candidate whose otherwise limited appeal rests, in large part, on his business experience as a CEO. Despite expecting voters to respect and look up to his time at the peak of the Northeastern business world, he refuses to clarify what this time as an executive has earned him.


  Romney, from the beginning of this campaign, has had to walk a tightrope between being seen by likely voters as a successful business executive you can trust on both experience and judgment, and being seen by those same voters as the rich boss in a fancy suit who fired your dad when you were a kid.

  Romney has not done much to combat the growing image of him as a Gilded Age-style robber baron--aided and abetted by Obama campaign ads depicting Romney at Bain Capital as a “serial outsourcer,” in President Obama's words.

  In fact, Romney seems to be working to look the part of an out-of-touch multimillionaire. He spent last week vacationing at his multimillion-dollar home in rural New Hampshire, and astonished the press when took his massive, luxurious boat out onto Lake Winnipesaukee in full view of news cameras.

  Pictures of him looking like an American's cartoon image of a rich man--at the helm of a million-dollar boat, his hair slicked back as perfectly as if he had been in the boardroom, his giant chin jutting out like some sort of Roman bust--ended up in multiple issues of the NYT alone this week.


  As his vacation ended, Romney kept laying it on thick. He headed to the Hamptons, where he held numerous fundraising events Sunday, all among some of the wealthiest people in the country.

  One fundraiser was held at the home of a millionaire former ambassador to Brazil under George W. Bush, another on the same day at The Creeks, the multimillion-dollar beachfront home of Ronald O. Perelman, the billionaire who runs Revlon.

  Romney's Sunday in the Hamptons culminated with a lavish $75,000-a-couple fundraiser at the Hamptons home of billionaire industrialist and Great Satan David Koch, who with his brother Charles runs Koch Industries, a $100 billion-a-year multinational corporation that owns Invista and Georgia-Pacific (distributor of the Brawny, Angel Soft, Quilted Northern, and Dixie brands).

  The Koch brothers have become, in the Age of Obama, perhaps the two largest individual donors to Republican and Tea Party causes. Romney has no choice over the SuperPAC and 501(c)(4) donations of the Koch brothers. But attending a fundraiser at their house is something else, even for the nominee of post-Bush Republican Party.

  All the outside money has been good for Romney's own pocketbook, at least. Romney poured more than $40 million of his own money into his 2008 bid for the White House, only to lose--but has been able to avoid spending his own money at all this time around. And this time, he actually won the nomination

  It remains to be seen, however, if that outside money will be able to win him the general election this November. President Obama has his own post-Citizens United juggernauts, mainly Priorities USA Action (the subject of a great cover story in Sunday's New York Times Magazine).

  Furthermore, the American people over the past thirty or forty years have simply grown accustomed to reelecting their presidents, barring major first-term disasters--sometimes in spite of major first term disasters. Since (and including) the 1972 election forty years ago, Richard Nixon, Ronald Reagan, Bill Clinton, and George W. Bush were all re-elected.

  Only Jimmy Carter and George H.W. Bush were elected to a first term but not a second, and they both faced primary challenges before the general election (Ted Kennedy for Carter in 1980 and Pat Buchanan for Bush in 1992).

  Considering all the ways in which President Obama has been an exceptional president, both historically and politically--considering all the ways, especially in foreign policy, that he has exceeded expectations--he seems more likely to become part of the former group than the latter. We can only hope. President Romney would really be something else.

  About the author: Ian MacIsaac is a staff writer for the Capital City Free Press. He is a history major at Auburn University Montgomery in Montgomery, Alabama and former co-editor of the school newspaper, the AUMnibus.

Copyright © Capital City Free Press

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