When it comes to disclosing his financial dealings, Mitt Romney is hush-hush. The GOP presidential nominee released only two years of his tax returns, and with good reason: Gawker just released 950 pages of once-confidential documents related to Romney family’s investments, most of which were through Bain Capital, his private equity firm. And if the public reads just a sampling of these leaked documents, chances are they’ll be inclined not to vote for him.
The Bain files tell you what you need to know about the techniques Romney uses to avoid paying taxes on his $250 million in wealth. That includes offshore accounts and fancy tricks to avoid paying taxes to the feds. And for someone who criticizes Obama’s stewardship of the economy, now we know how he’s handling his own money. In fact, he’s hiding it using obscure and sketchy tax-shielding schemes. And Romney looks like the pot calling the kettle black. Here are some of the findings:
Romney’s wealth has been diverted into a number of offshore entities, including a Swiss bank account, a Bermuda shell corporation, and eight accounts in the Cayman Islands. He and Bain have availed themselves of $1.5 billion in AIVs, or alternative investment vehicles, which are holding corporations designed to help partners avoid paying taxes. Bain also made use of equity swaps to dodge U.S. taxes. An equity swap is an agreement to exchange the gains or losses on an asset such as stocks, but without the assets changing ownership.
According to a Bain financial statement, one $3.7 billion fund — of which Romney had an over $1 million stake — was designed to “conduct its operations so that it will not be engaged in a United States trade or business and, therefore, will not be subject to United States federal income or withholding tax on its income from United States sources…. Under the current laws of the Cayman Islands, there are no income, estate, transfer, sales, or other Cayman Islands taxes payable by the Partnership.”
In addition, although Romney claimed he retired from Bain in 1999, the records suggest a less than clean break from the firm. For example, Romney claimed this year that his $1 million interest in Sankaty Credit Opportunities, a partnership based in Delaware, was a part of his retirement package. But according to its financial statement, Sankaty was created in 2002.
Meanwhile, there are other tidbits in these records that will likely make heads turn. For example, one of Bain’s investment funds lent money to the parent company of the National Enquirer. The fund also held loans to the Las Vegas Sands casino, which is owned by leading Republican sugar daddy Sheldon Adelson. Having spent $45 million to pro-Romney and pro-GOP super PACs, Adelson is the single biggest donor in the 2012 presidential campaign. The Sands is currently under investigation by the U.S. Department of Justice for possible corrupt practices, including bribery and money laundering. Further, investing in gambling goes against Romney’s Mormon teachings — he also invested in a tobacco company — and conflicts with his holier-than-thou, pure-as-the-driven-snow conservative image.
In addition, Romney the candidate condemns the Obama stimulus as a failure and “The largest one-time careless expenditure of government money in American history.” Yet, one Bain adviser letter to its investors reported that “An expiration of stimulus would be a significant fiscal drag.”
As the Romney camp attempts to soften the candidate’s image and make him appear as a warm and caring everyman rather than a cold-hearted trickster and robber baron, the Bain Leaks are ill-timed and potentially damaging to his White House aspirations. The revelations will likely mean little to Latino voters, who are a lost cause for the GOP, and nothing to African-Americans, who according to a recent poll are supporting Romney at a rate of 0 percent, if not less.
Rather, Romney must appeal to white independents and moderates, and those poor, blue collar, and middle class white voters who are looking for a president they’d want to have a beer with. These folks don’t make a lot of money, and face severe penalties if they fail to pay their taxes. And they lack the exotic tools that the uber-rich like Mitt Romney use to dodge the IRS.
Follow David A. Love on Twitter at @davidalove