Bain Capital is among several companies under investigation by New York attorney general Eric Schneiderman, who has subpoenaed additional documents to establish the legality of tax avoidance practices, including those at Bain Capital during's tenure. The investigation was announced on Friday.
Leaked financial documents on Bain Capital during the years the Mitt Romney was CEO suggest that "at least $1 billion" in managers fees were listed as capital gains investments, which are taxed at 15% instead of 35%. The result is a Bain Capital tax payment reduction of $200 million.
The deliberate conversion of income from executive pay to capital gains to avoid paying a higher tax rate is illegal.
Romney has been adamant about not releasing any of his tax returns that cover the years he spent at Bain Capital. That defense has sparked criticism from both Democrats and Republicans on what Romney may be trying to conceal from voters as he campaigns against President Obama for the nation's highest office.
"In an era when presidential candidates routinely release their income tax returns, Romney must have known this issue would come up. It seems reasonable to infer that he made a calculated decision that stonewalling on the matter would be preferable to showing the world how he was making and disposing of his money. The phrase 'Cayman Islands' leaps to mind," according to the San Francisco Chronicle.
Romney's offshore bank accounts in the Cayman Islands and Switzerland have heightened questions about the 2012 Republican presidential candidates' character, as well has his motivation for a proposed tax reform plan that would lower his own personal tax rate to less than 1%.
Romney reported income of $21.7 million in 2010 and $20.7 million in 2011. Most of it consisted of investment and capital gains income, which would become tax-free under his own plan to eliminate such taxes.
Rep., Romney's VP running mate, confirms his support for the complete elimination of taxes on investment income and capital gains.
In Ryan's Roadmap for America's Future, which Romney supports, Ryan states that his plan "promotes saving by eliminating taxes on interest, capital gains, and dividends (and) also eliminates the death tax."
The savings Ryan refers to would include taxes not paid by wealthier Americans who earn income from invested money.
In the New York Times, Maureen Dowd summed up Romney's blueprint for American society and economic growth as, "worship of the wealthy as the engine of economic prosperity."
For Romney, that "worship" includes using the U.S. tax code to pay a lower tax rate than other Americans who earn far less money than he does. Whether or not Romney's creative accounting methods are actually illegal are under investigation. But even if it turns out that Bain Capital under Romney rule did not break any laws, the fact that it needed to be investigated tells a lot about what kind of person Romney really is when it comes to tax fairness issues.
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