We know a fair amount about Mitt Romney’s tenure at his private-equity firm, Bain Capital, where he was a successful vulture capitalist, breaking up companies and laying off American workers. By all appearances, Romney had considerable success orchestrating leveraged buyouts, seeking taxpayer subsidies, flipping companies quickly for large profits, and making money for investors “even when companies slid into bankruptcy.”
What we didn’t know is that Romney is still making an enormous amount of money from the firm he left more than a decade ago. The New York Times has a fascinating report on this today.
Almost 13 years ago, Mitt Romney left Bain Capital, the successful private equity firm he had helped start, and moved to Utah to rescue the Salt Lake City Olympic Games and begin a second career in public life.
Yet when it came to his considerable personal wealth, Mr. Romney never really left Bain.
In what would be the final deal of his private equity career, he negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.
The arrangement allowed Mr. Romney to pursue his career in public life while enjoying much of the financial upside of being a Bain partner as the company grew into a global investing behemoth.
Perhaps those jokes Romney told about being “unemployed” weren’t such a good idea. We are, after all, talking about a guy who inherited great wealth, then got even wealthier laying off thousands of Americans, and then continued to get even wealthier still thanks to seven-figure checks from his former firm.
Wait, it gets worse. Romney apparently continues to receive these millions and pays a lower tax rate than the middle class pays on their income thanks to “a tax provision favorable to hedge fund and private equity managers” — a break Romney intends to keep if elected.
A law professor who studies financial firms told the Times, “These are options that are not available to the ordinary taxpayer. You continue to take your carried interest — a return on labor, not capital invested — and you’re paying 15 percent on it instead of high marginal income rates.”
Taken together, Romney is still profiting handsomely from the layoffs he orchestrated over a decade ago, and he’s paying less in taxes that working families thanks to a special tax break he intends to keep. This probably won’t do much to bolster Romney’s “man of the people” credentials.
Feed the Political AnimalDonate
Washington Monthly depends on donations from readers like you.