Just prior to running for president in 1967, Mitt Romney’s father decided to release 12 years of tax returns, setting a precedent that continues to this day. Giving voters less information, Gov. George Romney said, “could be a fluke, perhaps done for show.”
Mitt Romney’s refusal to disclose more than two years of tax returns goes against both decades of precedent and the wishes of the American people. The two years of returns that he has released reveal a Swiss bank account, investments in companies based overseas, and the extensive use of offshore tax havens and complex loopholes only available to the super-rich.
Here’s what we know:
Romney pays a lower tax rate than middle-class families. Romney paid a tax rate of 13.9% in 2010 and 14.1% in 2011—less than many middle-class Americans. Although Romney makes millions more than firefighters, teachers and cops, many pay a higher percentage of their income in taxes.
Romney has millions of dollars in offshore accounts. Information from Romney’s returns show that he has millions of dollars of personal wealth in investment funds set up in the Cayman Islands, a notorious tax haven in the Caribbean. It also shows that Romney owned a corporation in Bermuda, a fact left off financial declarations that candidates for office must make. Finally, Romney’s 2010 return reveals that he maintained a bank account in Switzerland, a practice that some wealthy Americans use to bet against the U.S. dollar.
Romney used exotic loopholes only available to the super-rich to pay less in taxes. Romney and his tax attorney insist that he has never broken laws, and that he has paid everything he owed in taxes. But Romney used legal loopholes only available to the very wealthy to reduce his tax bill in 2010, including the controversial “carried interest” loophole, which allowed Romney to tax much of his income at the rate reserved for capital gains. President Obama has said this loophole should be closed because it allows very wealthy individuals to pay a much lower percentage of their income than ordinary Americans. Romney saved hundreds of thousands of dollars in 2010 by treating his income in this way.
Romney’s IRA was worth as much as $100 million. While at Bain Capital, Romney was limited by law to annual contributions of at most $30,000. The public has no idea how exactly Romney was able to amass so much wealth in a fund designed to help middle-class Americans retire with financial security.
That’s what we know from the two full years of tax returns that Romney has disclosed. These types of investments, tax loopholes, and foreign blocker corporations all raise basic and still-unanswered questions, including why Romney won’t release more of his returns instead of a bare summary of the last 20 years. This continued refusal has fueled intense speculation about what he could be hiding—here are some of the theories:
Bloomberg Businessweek: Did Romney pay an ultra-low tax rate or even zero taxes in 2009?
[I]t’s possible [Romney] suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009. If true, this would be politically deadly for him.
Slate: Did Romney take part in an IRS amnesty program that would have let him avoid penalties if he had failed to previously report his Swiss bank account?
Romney might well have thought in 2007 and 2008 that there was nothing to fear about a non-disclosed offshore account he’d set up years earlier precisely because it wasn’t disclosed. But then came the [IRS crackdown] and the rush of non-disclosers to apply for the amnesty. Failing to apply for the amnesty and then getting charged by the IRS would have been both financially and politically disastrous. So amnesty it was. But even though the amnesty would eliminate any legal or financial liability for past acts, it would hardly eliminate political liability.
The New York Times: Did Romney’s Bermuda corporation shelter income in previous years?
Recent articles by The Associated Press and Vanity Fair focused on a Bermuda account that Mr. Romney transferred to his wife’s blind trust the day before he was inaugurated as governor of Massachusetts in 2003. The account, created in 1997, had not been properly disclosed to voters until January. Even though it had few assets in 2010, according to the return, it could have sheltered a significant amount of income last year or in previous years.
We know that Mitt Romney is able to easily release his tax returns because he prepared 23 years of returns for John McCain when he wanted to run as his vice presidential candidate, and he prepared at least 20 years for his accountants to provide a bare summary of his finances. Romney is intentionally choosing not to release this information to voters.
As conservative commentator George Will noted, Romney “must have calculated that there are higher costs in releasing [more tax returns]” than there are in coming clean with the American people. But if Romney wants to be President, he owes it to the public to disclose more information about his finances.
Mitt Romney’s refusal to meet the decades-old precedent of transparency set by presidential candidates like his father means that voters don’t know the extent to which he has avoided U.S. taxes and dodged paying his fair share. As long as Romney continues to keep voters in the dark, the public can only speculate about why.