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July 09, 2012 1:07 PM About that Fishy Romney IRA

By Harold Pollack

I haven’t been much of a fan of the personalized Romney-bashing this campaign season. I avoid the rudely juvenile moniker “Willard.” I thought the whole “Corporations are people” supposed-gaffe was a stupid nothing. I find thinly-veiled attacks on Romney’s LDS heritage to be idiotic and reprehensible. I don’t know enough about Romney’s conduct at Bain to intelligently praise or criticize his managerial performance there.

If you are going to mount a direct personal criticism of a candidate, you should know what you’re talking about. You should say it straight without smarminess or insinuation. And you should put your name to it.

I’ll put my name to one issue. Governor Romney has–in practical, though quite possibly not legal terms–evaded paying his proper taxes. Of course, as a matter of broad policy, he’s taken advantage of loopholes to pay way too little. He and his Bain colleagues are exhibits A, B, and C in the case to tighten the carried interest thing and related provisions. His roughly-14 percent tax rate is galling. Yet the particulars of this suff go further, too.

I’ve presumed all along that whatever he did was legal and standard fare for the uber-wealthy. Now I’m rwondering. He’s been weirdly and unacceptably secretive about these matters. He hasn’t released the full history of his returns. His stance is doubly weird when one considers how strange it is for a major presidential contender to hold complicated offshore bank accounts in Switzerland or the Caymen Islands at all.

Then there’s that fishy IRA, which has a reported rough valuation of between 20 million and 100 million dollars. Given the $30,000 (or lower) annual contribution limits for an IRA, It strains credulity to believe that properly-valued securities of the legally-permitted value would swell by a factor of 1,000, as such securities apparently did.

It seems patently obvious that whatever securities Romney and his Bain colleagues initially contributed were under-valued for strategic tax purposes. The convoluted details of Bain’s divided classes of IRA securities hardly assuage my concerns. That wasn’t ethical or right. I’m not so sure it was legal, either.

[Cross-posted at The Reality-based Community]

Harold Pollack is the Helen Ross Professor at the School of Social Service Administration at the University of Chicago.

Comments

  • jjm on July 09, 2012 3:42 PM:

    I disagree completely with your opposition to what you are calling 'personalized' attacks on Romney, from his work at Bain to his 'corporations are people, my friend' remark: regarding the latter, he has not disavowed it and clearly fully believes it. (And these corporations are much 'wiser' people than 'the common people,' if his donors are to be believed.)

    Bain strategy has been documented to show how it rigged all deals to benefit the executives at Bain no matter what happened to the companies they 'advised.' Not even BAIN shareholders themselves were secure, but the executives (i.e, Romney and other execs) made certain they got paid.

    So Bain does tell as story that goes to his narrow view of what is in the 'best interests' of those he is involved with as a businessman and a potential leader: those at the top get it all, the rest (not just the fired workers, the stockholders of failed companies, but also the lenders who held the unsustainable loans Bain talked them into.)

    As for his juvenile nastiness, his pretending to be a police officer to intimidate women, and his LDS bishopric: how different is bringing this up from the horrendous spotlight shone on every moment of Barack Obama's life??

    Romney, like all very wealthy people, give off a vibe of "You can't say that about ME."

    But about that black guy -- anything goes.

  • skeptonomist on July 09, 2012 6:07 PM:

    If the money in Romney's IRA (and those of other Bainers) was a result of extremely high-yield investments, and if Romney and/or other Republicans succeed in doing away with capital-gains taxes, he may have lost a lot of money. When the money is withdrawn from an IRA, taxes have to be paid at ordinary income-tax rates rather than capital-gains rates. The law on this may or may not be changed, since most IRA's are for little people and not those who would benefit most from repeal of capital-gains taxes.

  • cwolf on July 09, 2012 9:02 PM:

    That wasnít ethical or right. Iím not so sure it was legal, either.

    Well, I am sure it is illegal because Romney said all his finances are legal and Romney is a multiple, serial, mass, compulsive, liar.

  • Whispers on July 15, 2012 12:04 AM:

    @sketponomist

    If the money's in a Roth IRA, it represents money that's already gone through income taxes. Once he reaches the age of 60, he can withdraw all of the money in a Roth IRA at any schedule he wants to use. And he won't have to pay any income tax on it at all.