Romney tax returns: What鈥檚 missing in his report?
It鈥檚 no coincidence that Mitt Romney chose a Friday afternoon to release more information about the income taxes he pays. In Washington, that鈥檚 known as 鈥渘ews dump day,鈥� the time when most people are moving into weekend mode and whatever bad news an elected official has to report 鈥� usually it鈥檚 the White House 鈥� is largely ignored.
Unless, that is, there鈥檚 been months of controversy and buildup in a presidential election year and the issue in question gets to the essence of a candidate鈥檚 image (if not character).
That鈥檚 certainly the case with Mr. Romney鈥檚 personal wealth, the 鈥�47 percent鈥� of the electorate he seemed to write off in a private meeting with campaign donors, and what鈥檚 already known about the tax-sheltered offshore investment accounts that would make him (as Forbes Magazine calculates) 鈥渢he wealthiest White House occupant ever.鈥�
So it is that the report by Romney鈥檚 tax preparer (PriceWaterhouseCoopers) and the friend who manages Mr. and Mrs. Romney鈥檚 three trusts remains very much in the news.
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As pundits, political partisans, and amateur CPA鈥檚 pore over the numbers, what鈥檚 missing from Romney鈥檚 report seems most provocative. The full returns for 2010 and 2011 have been released, but only a statement on the overall federal tax rate paid for the previous 20 years.
What鈥檚 missing, tax experts say, are the details of Romney鈥檚 retirement account from the Bain Capital investment firm he started and ran for years. Much has been made of Romney鈥檚 investments in offshore accounts in Bermuda and the Cayman Islands. Isn鈥檛 that a way of avoiding taxes, critics ask?
No, says the Romney campaign in a 鈥渇requently asked questions鈥� site about the 2011 return released Friday:
鈥淭he investments by the blind trusts in funds established in the Cayman Islands or other jurisdictions are taxed in the very same way they would be if the shares were held in the US rather than through a Cayman fund.聽No taxes are evaded or reduced.聽These funds are all registered with the IRS and report all income to investors and the IRS, just like domestic funds.聽Whether in Bermuda or Boston or elsewhere, there is no difference in how they are taxed.鈥�
Well, maybe.
鈥淭he taxes you evade by putting your money in the Caymans aren鈥檛 your own聽personal聽income taxes, but your offshore investment fund鈥檚聽corporate聽income taxes,鈥� writes Timothy Noah in The New Republic. 鈥淚n other words, the聽Romneys聽aren鈥檛 evading income taxes by putting their money in the Caymans. The聽fund they put their money into聽is evading taxes by parking itself in the Cayman Islands. As a result, that fund (and therefore the Romneys) get to keep more of the profits. Why evade taxes when you can get somebody to do it for you?鈥�
In any case, Stanford University law school professor and tax law expert Joseph Bankman told the Associated Press, "It's the Bain years we'd really need to know to have a full assessment of his tax strategies." Releasing details for 2010 and 2011, Mr. Bankman said, "only raised these questions, but they can't provide real answers."
Responses to Romney鈥檚 tax news were predictably partisan.
Sen. John McCain (who required far more tax information when he was considering Romney to be his running mate in 2008), called it 鈥渁n incredibly detailed look at his finances.鈥�
鈥淣ow that the most recent tax return has been released, it鈥檚 time to get back to discussing the issues that voters care about,鈥� Sen. McCain declared.
Democrats aren鈥檛 about to let the subject go.
Stephanie Cutter, deputy campaign manager for President Obama, said the release of Romney's 2011 tax returns "confirms what we already knew 鈥� that people like Mitt Romney pay a lower tax rate than many middle-class families because of a set of complex loopholes and tax shelters only available to those at the top. Yet, Mitt Romney still wants to give multimillionaires an additional $250,000 tax cut at the expense of middle-class taxpayers who will see their taxes go up."
Many critics noted the politics behind the Romneys not declaring as much in charitable donations as they might legitimately have in order to be able to say that they paid at least 13 percent in income taxes in each of the last 10 years. Some cynics even noted that Romney could amend his 2011 tax return after the election, seeking a refund for the tax deduction.
Will Romney鈥檚 latest tax information put the issue behind him?
The Romney campaign certainly hopes so. But Republican strategist and commentator Alex Castellanos (who worked on Romney鈥檚 2008 presidential campaign) doesn鈥檛 think it will.
鈥淭his will drag Mitt's taxes back into the debate,鈥� he told Politico. 鈥淎nd there's not many days left. I just can't imagine why they would do this. There are 40 days left and you have now made more of them about Mitt's taxes.鈥�
