A new report delves into Romney's offshore accounts, but his evasiveness makes them hard to track
By now, it’s well known that Mitt Romney paid a tax rate well below that of most middle-class American families, and that he has held accounts in countries that are known for being tax shelters, but it’s impossible to learn much more, since Romney has resisted disclosing personal financial information beyond the bare minimum required by law.
Nicholas Shaxson takes a deeper dive into Romney’s murky finances in Vanity Fair today and finds a businessman who is as savvy at dodging taxes as he was about turning around businesses. Romney has always insisted, “I pay all the taxes that are legally required, not a dollar more.” And that seems accurate as it implies that he takes advantage of every possible loophole and shelter to avoid paying a dollar more in taxes that he absolutely has to. That may be fine for a businessman, but most Americans don’t have the wherewithal or resources to aggressively dodge taxes whenever possible. “When you are running for president, you might want to err on the side of overpaying your taxes, and not chase every tax gimmick that comes down the pike,” says Lee Sheppard, a contributing editor at the trade publication Tax Notes.“It kind of looks tacky.”
And if one wanted to check if Romney was even paying the minimum taxes, it’s almost impossible to do because of how little information he’s made available. Ironically, it was his father, George Romney, who set the modern precedent by releasing 12 years of tax returns during his presidential bid, noting that “one year could be a fluke, perhaps done for show.” Indeed, one big question about Romney’s own taxes is what rate he paid in 2008 and 2009, when he likely sustained big investment losses, which can be written off. Romney already pays under 15 percent thanks to a loophole for money managers called the carried interest rate exemption, but if his portfolio was hurt by the financial crisis, there’s a good chance he paid far less.
The paucity of what Romney has revealed and the disclosures’ opaqueness also hides details about offshore tax havens. Bain has at least 138 funds organized in the Cayman Islands, according to Shaxson, and Romney himself has personal interests in at least 12, worth up to $30 million, but they’re hidden behind confidentiality laws, so we can’t know for sure. The Romneys’ retirement accounts have also been earning profit from Cayman-based Bain funds established long after he left the company in 1999, and could continue to earn profits well into the future, which experts say is unusual. Shaxson points to one example, a Bermuda-based entity called Sankaty High Yield Asset Investors Ltd., which is owned by Romney but which he failed to list on several personal financial disclosures. This one company alone could make Romney far wealthier than is apparent from existing documents, but we can’t know because its contents are hidden.
There’s also a question about whether the Romneys have used a so-called blocker company — essentially an offshore shell corporation to dodge taxes on retirement accounts. The Romney campaign has maintained that the fact that some of Romney’s investments are based in the Caymans has no impact on the tax burden the Romneys pay. But the use of a blocker company would indeed affect tax rates. Romney spokesperson Andrea Saul “did not respond to questions on whether his I.R.A. had used blockers or avoided taxes by investing via tax havens.”
This pattern of elusiveness is hardly confined to Romney’s finances, but rather defines his public life. When he left the governor’s mansion, Romney staffers made a concerted effort to eradicate digital data by removing hard drives and deleting emails, despite the state’s public record laws. Romney is also the first major presidential candidate in almost 15 years who has refused to reveal his bundlers, the mega-donors who help fundraise for campaigns. Altogether, it’s made him one of the most secretive presidential candidates in modern history, leading Democrats to argue that he must be hiding something.
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