Should Romney give more to Uncle Sam?

The presidential candidate's tax avoidance strategy may be immoral, but it's not illegal.

By Jonathan Berr Jul 11, 2012 12:15PM
Image: US government 1040 tax form © Steven Puetzer/PhotographerMitt Romney, the presumptive Republican nominee, is richer than most Americans can ever aspire to be, with a fortune estimated at up to $200 million. Yet the former Massachusetts governor has resisted calls to provide the public with detailed information on what he does with his money. This, Democrats claim, shows he is hiding something.

Earlier this year, Romney released his 2010 tax returns and an estimate for 2011 that, in the words of The New York Times' editorial page, "provides a fuzzy glimpse at a concerted effort to park much of his wealth in overseas tax shelters, suggesting a widespread pattern of tax avoidance unlike that of any previous candidate." Romney could refute these suggestions by releasing multiple years of his returns, which candidates -- including his late father -- have done for decades.

Odds are that past Romney tax returns won't have any smoking guns. It's more likely the campaign is hoping to avoid uncomfortable discussions about income inequality. Sadly, Romney's tax situation is not unique.

The Internal Revenue Service estimates that about $5 trillion in assets are held worldwide in tax havens, which costs Uncle Sam about $100 billion in revenue annually. Romney, like most rich people, takes advantage of scads of loopholes that are not available to most folks. But at least he pays taxes. More than 10,000 American households earning more than $200,000 in 2009 paid no taxes at all. U.S. corporations avoid billions more through loopholes, some with names that sound like Elmore Leonard novels, such as "Double Irish With A Dutch Sandwich."

Though the Times points out that Romney failed to disclose a $3 million Swiss bank account, that is less of a big deal than it sounds. The IRS requirements for revealing foreign bank accounts are so confusing that the agency has given three amnesties since 2009 to enable taxpayers to come into compliance. These efforts have netted the IRS more than $4 billion.

But there is a broader issue here.

Romney and his fellow Republicans have repeatedly argued that raising taxes on "job creators" would harm the economy. The release of multiple years of Romney's tax records would clearly show that is not true. 

For one thing, people generally don't invest solely to create jobs. Employment is a byproduct of the process. Remember, one of the ways that the rich are different is that they can easily afford to pay higher taxes. Many either pay a low tax rate on a large percentage of their income because it comes from dividends or pay no taxes at all because their money is parked in tax havens or tax-free investments, such as municipal bonds. If taxes are cut on the wealthy, more money will flow into their bank accounts. Given that companies learned to do more with less as the economy tanked, it's highly unlikely that a significant amount of money will trickle down much further.

Follow Jonathan Berr on Twitter@jdberr.
66Comments
Jul 12, 2012 1:47AM
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In Romney's defense, he isn't breaking the law, and he probably has a personal financial guy doing all of his paperwork and making sure he takes full advantage of deductions.

In defense of the little people, WE DON'T HAVE LOBBYISTS on our side to garner the same benefits!!!



Jul 12, 2012 6:11AM
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You're hinting he did something wrong or illegal.  That's not right, and that's not fair.  If a Democrat did the same thing would this article even be here?  Shameful...
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NO, because I think he is following the law and doing everything legally. The question should be, do I think the tax code needs to be corrected? The answer is YES! However, I am one that studies the code and will take full advantage of anything that will lower my tax bill legally. I have never put money in a CD because of the tax code. All of my money, with the exception of an emergency fund, goes into qualifying dividend paying stocks. Because of the tax code my income from qualified dividends is taxed at the 15% rate where income from CD's would be taxed at 25%. Also my average dividend rate for 2011 was 5.82% and average CD rates were about 1.5%. Folks it is called financial planning.

 

Why is the news media so interested in Romney paying more tax? Shouldn't they be more interested in Warren Buffett paying all his back taxes? Google "Buffett owes back tax" and you will see why he is such an Obama supporter. Could it be that he supports Obama so The President will call off the IRS?

Jul 16, 2012 8:49AM
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The bigger question is why doesn't our Congress do away with all these loopholes? It would bring in billions of much needed revenue.  But who are the ones that benefit? The wealthy. Who elects our Congress/Presidents? Not us. And that is why the loopholes will remain.
Jul 11, 2012 1:16PM
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Why would anyone pay more taxes than is required under our tax system?  The government made it & if there are loopholes fix them.  I sure wouldn't pay more than necessary & I am not rich but I pay what I'm suppose too.  Change the tax system so it is fairer until then it is what it is.
Jul 12, 2012 3:01AM
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The easiest way to correct these things is income tax reform. It's long overdue and should be high on the agenda. The only reason the Dems are making an issue out of this is because they're being outfunded on the campaign trail. In 2008, BO raised 750 million for his campaign----set a goal of 1 billion this time. He's probably not going to make that and will be outspent by the GOP. God forbid.  If you've been in the market for any length of time, you understand that venture capitalists are risk takers. That is what they do. Remember---51% of the people pay no federal income tax. We, the other 49%, pay it all. Now, that's a real problem. BO doesn't know what fair share is. 
Jul 14, 2012 1:54PM
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Romney pays what he legally owes - and most people agree that we need tax reform, but what people forget is that WEALTHY PEOPLE HAVE MORE INFLUENCE OVER OUR GOVERNMENT, even though there are more poor and middle class people in the USA. As long as the wealthy can BUY loopholes, we won't see tax reform.

Do you really think that Congress, out of it's good-heart, will press for tax reform to help the middle class? I don't - except for Bernie Sanders who always fights for the middle class. We need to get Big Money influence out of government!!!

Jul 12, 2012 6:12AM
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This article and the democrat party moaning and groaning about Romney's money is a red herring. Just ask Nancy Pelosi or John Kerry. They are among the wealthiest members of congress and you don't hear an outcry about their finances. Why, you ask? They are both members of the democrat party and it would be unseemly to attack a member of the party of the little people because they happen to have a vast fortune available to them. The news media and the democrat party are just pointing this out as a service to the nation.(sarcasm)
Jul 14, 2012 2:22PM
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Most wealthy people's income is greatly supplemented from investments, it's not all salaried income like middle class people, so unless we address the big picture, there will never be "fairness" across the board.
Jul 16, 2012 9:26AM
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Lets talk about corporate welfare, shall we?  G.E. in 2010 had a profit of $14.1 BILLION. (5.1 Billion from US operations) Taxes paid? 0.  Tax credit $3.2 Billion.  Lobby money? 2.7 Million. I won't even go into the failed companies that recieved green fund capital.

 

Funny, the left doesn't mention this kind of corporate welfare. BTW, to top it all off,  according to GE's own records and statements, it had 125,000 U.S. manufacturing jobs in 2000 compared to 50,000 in 2010. ...the companies touting themselves as champions of the factory worker (General Electric) or being touted by the president (Master Lock) are dubious poster children for an American manufacturing renaissance. GE has brought back a little work from overseas, and they have hired back a small percentage of the workers they laid off over the past decade at their American factories. But GE has also recently closed more than 20 factories, shifted avionics and radiology businesses to China, and pushed for public policies that will allow them to continue that course. And Obama's choice for the Jobs Council is GE's own Jeffrey Immelt. Nice!

Jul 12, 2012 3:55PM
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Another MSN hack job.  No news to report, only insinuations that Romney is cheating on his taxes and is therefore immoral.  Washington is full of Democrat hacks clamoring that the rich don't pay their fair share while not bothering to pay taxes themselves, starting with little Timmy Geithner.  Check the latest CBO report showing the top quintile paying 67.8% of the taxes.  The rich not paying their fair share is simply a lie to perpetuate class warfare.  Shameful article.
Jul 13, 2012 11:36AM
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I am 65 years old, collecting soc. sec. and working. My wife works also. we have a total pre-tax income of around $40,000. Mr. Romney pays taxes as well and he pays what the government requires, just like most of us do. I do not begrudge him his wealth as a lot of you do. If he, or any other people are to be taxed at a higher rate, this must come from a change in the tax laws. All of the other superfluous rantings about off shore accounts and the like are annoying and serve no useful purpose. I do not hear any ranting about extremely wealthy members of congress(e.g. John Kerry) and their off shore accounts. If someone has a problem with class envy, go out and earn multi-millions.
Jul 12, 2012 9:52AM
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Another liberal news media pro-obama article. MSNBC believes Obama is God!!

Jul 13, 2012 4:10AM
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The steel company ad that BO ran again and again; well, it's like this. That plant was on the bankruptcy block set to go under. Whatever Bain saw in it, they decided to give it a shot. They ran it for 8 years and poured 10's of millions into the place trying to make it go. Finally, they got caught up in the cheap imported steel deal and had to give it up. Those employees got 8 years worth of pay and benefits they'd have never seen if  it wasn't for Bain. Romney is no different than any of us. He takes advantage of the loop holes that he's given just as we would in doing our taxes. What BO is really trying to say is----I can't do that---I don't have the money or the deductions. If he did, he would. Given a choice, a dollar in our pocket or a dollar to Uncle Sam?  
Jul 15, 2012 2:13PM
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The question on my mind are these loopholes.  Who created them?  Can they be applied to everybody are do you have to fit a certain "mold" in order to be able to claim them?  Now if these loopholes that all the 1% are taking advantage of are created/lobbied by the wealthy and can only be used by them then I have a huge problem with that.
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Everyone has the right to reduce their taxes as much as possible as long as it is legal. You have no obligation to pay more than the laws say.

Don't begrudge someone because they have done well in life. Given the same chance in life, most would do the same things. (btw, I am not in the 1%. ;)

Jul 11, 2012 11:52PM
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Cayman accounts aren't mutual funds.  These "banks" invest in a lot of ventures that are completely illegal for a US company to invest in.

So, get out your blood-diamonds, you're congolese oil futures, your trinidad election enforcement sqads, your russian radio active waste trade, etc...

You invest 200 million, you aren't dropping it in a savings account, you're involved.  period.

So, Mitt isn't just hiding from the tax man, hell, everyone does that.  With Offshore accounts that big, you've got a lot more going on.
Jul 13, 2012 8:46PM
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If he is paying what he legally owes, why should he be expected to pay more? I don't understand people's envy of other people's wealth. Some have it , some don't. This is the real world we live in, and that's the way it is.
Jul 14, 2012 12:13PM
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I believe Mr. Romney is probably paying what he legally owes in taxes . However I think in all fairness congress should raise the tax rates for people in his income range to perhaps the level that middle class Americans pay.
Jul 17, 2012 1:05PM
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If Mr. Burr has a mortgage and is taking tax deductions for mortgage interest and property taxes, is that really any different than Mr. Romney taking deductions that are legal through codified tax law.  If you are upset that he is using the tax law to his advantage, contact your elected representatives and have them try to change the law.  As far as I'm concerned, this is a straw man.  By the way, I'm not rich by any stretch of the imagination and I don't expect to inherit any money from wealthy relatives (I don't have any).,  I don't begrudge Mr. Romney any of the legal deductions he has taken advantage of.  I think most U.S. Taxpayers take advantage of the deductions they are authorized.  If you feel you don't pay enough taxes, I'm sure the U.S. Treasury will be more than happy to take any donation you are willing to send them.
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