Wednesday, August 29, 2012

Mitt Romney Won’t Release His Tax Returns Because He Took His Wife’s Horseback Riding As a Medical Deduction? Why Romney’s Taxes Matter

Is the reason that Mitt Romney won’t release his tax returns because he took his wife’s dressage horseback riding as a medical deduction? . . .

. . . That would make sense because it would give “RomneyCare” a whole new meaning in a presidential campaign when everyone is supposed to be paying a lot of attention to the design of the national system we should have in place to pay for the public’s health care.

This is not to belittle the fact that Ann Romney has real health problems. .   she has multiple sclerosis, a serious disease. .   nor should anybody want to demean the significance of anyone else’s significant health issues.  But when so many people in the population faced with considerable health problems struggle to pay for even the minimum treatment they need there are basic questions to ask if and when Ms. Romney has relatively lavish options to attend to her personal health that are way beyond what is available to others, especially when the Romney/Ryan vision for a change to a capped-out voucherized Medicare involves everyone scrimping and saving and cutting back financially (except the insurance companies Romney/Ryan want to take over the program!).

Did the Romneys actually tax deduct Ann Romney dressage horseback riding?  Ms. Romney has “discussed the therapeutic benefits of horseback riding” and in June news reports had her doing so at the “Marion Therapeutic Riding Association in Ocala, Fla.”  (See: June 6, 2012, On horseback, Ann Romney talks about health struggle, by Chris Leyden.)  But the Romneys have released just one of their tax returns and are refusing to release any others so we don’t know and can only guess.  (The Romneys are not releasing more tax returns even after the vice-presidential vetting process was disclosed to have involved the required release to the Romney campaign of several years of tax returns.- Only two of Paul Ryan’s tax returns are being released to the public.  The less wealthy Ryan family paid  20% their adjusted gross income in 2011 and 15.9% in 2010.)

The political comedy troop “Capitol Steps” does a routine with a meaningful punch line where their faux Mitt Romney in their parody asks presidential debate audience members to submit their guess about why he is not releasing his tax returns so he can pick among the guesses for what he thinks might sound like the best explanation.  Consider this National Notice’s submission to that suggestion box collection of guesses!

In the only year for which the Romneys have released a tax return, it is shown that they did deduct $77,000 for one of their dressage horses.  So who knows what happened respecting dressage horse deductions in other years and whether some of them are medical?
Economist and New York Times columnist Paul Krugman has written a number of times about the importance of seeing Romneys tax returns to obtain critically important information.  In January he wrote about how Romney was doing the “Dance of the Seven Veils” maneuvering around the fact that he wasn’t going to release tax returns that would apparently raise issues that are deeper and more more awkward than the fact that Romney, a vastly wealthy man, is telling us that he pays only 13% of his income in taxes:
    . .  the larger question isn’t what Mitt Romney’s tax returns have to say about Mitt Romney; it’s what they have to say about U.S. tax policy. Is there a good reason why the rich should bear a startlingly light tax burden?  
(See: Taxes at the Top, by Paul Krugman, January 19, 2012.)

Krugman pointed out how knowing what Romney’s tax returns would disclose is central to the issues of the campaign:
Elections are, after all, in part about the perceived character of the candidates — and what a man does with his money is surely a major clue to his character.
To the extent that Mr. Romney has a coherent policy agenda, it involves cutting tax rates on the very rich — which are already, as I said, down by about half since his father’s time. Surely a man advocating such policies has a special obligation to level with voters about the extent to which he would personally benefit from the policies he advocates.
(See: Mitt’s Gray Areas, by Paul Krugman, July 8, 2012 783.)

On the question of character, Krugman points out that when Romney’s father, George, ran for president 44 years ago he released twelve years worth of tax returns.  Those returns disclosed that because taxes on the rich were much higher in the `50s and `60s Romney paid much more in taxes (37%) than the 13% his son is now paying and that, as the senior Romney put it, he “seldom took advantage of loopholes to escape his tax obligations.”   What’s more, the senior Romney earned his money contributing value to the economy by running the American Motors automobile company making compact cars.

Exactly what the Romney son, Mitt, has been doing to build up his wealth certainly ought to be explained, and it's not just the question of why he parks his money in the Cayman Islands: We know far too little but according to Mitt Romney’s disclosure documents he has between $20.7 million and $101.6 million earning him tax-free income in his IRA.  Whether, the actual amount is closer to $20.7 million or $101.6 million (wouldn’t you like to know with a lot more specificity?) those multi-millions amount to a virtually impossible accomplishment because the Internal Revenue Code limits what can be contributed to an IRA to amounts that are relatively small by comparison ($2,000 and annual 401(k) retirement contributions at $30,000) and Romney had only about 15 years working at Bain Capital LLC. to make such annual contributions.  By rights, if you do the calculations, it ought not to have built up to even $1 million, let alone being so many multiples greater.  (See: The Secret Behind Romney’s Magical IRA, by William D. Cohan Jul 15, 2012 and Massive Romney IRA Still Sparks Unanswered Questions, by D.M. Levine, 07/17/2012.)

The reason that annual contributions to IRAs are limited by the federal tax code to somewhat moderate amounts is that IRAs are intended as a mechanism to provide a secure retirement for the general populace, not to be an instrument of abuse whereby those who are vastly wealthily can park their wealth to avoid paying taxes.  Mitt Romney must have found a way to circumvent the law’s intentions.

Since Romney isn’t releasing his secrets, what he did to build up what may be the single biggest IRA account in the country can only be guessed at.  It probably involved a degree of artificiality that, were the IRS guarding the chicken coop, the IRS probably ought not to have permitted.  If you read the above linked-to reporting, what is suspected is that Romney utilized his inside knowledge of the structuring of Bain transactions (where companies on Bain’s operating table were sliced and diced into all sorts of different  financial slivers, instruments and interest the average reader probably wouldn’t have patience to try to understand) in order to transfer what were relatively sure bets on truly huge financial pay-offs while valuing them for purposes of his IRA contribution as proportionately infinitesimal.

With Mitt Romney having by whatever trick or device tallied up a personal IRA that is at least in the tens of millions and with the Romneys taking tax deductions on the order of  $77,000 for dressage horses every year it's rather a challenge to believe Ann Romney's recent assurance in her speech at the Republican Convention that she and her husband understand and appreciate the economic challenges she describes as besetting the average American family:
    . . . that price at the pump you just can't believe, the grocery bills that just get bigger; all those things that used to be free, like school sports, are now one more bill to pay. It's all the little things that pile up to become big things. And the big things — the good jobs, the chance at college, that home you want to buy, just get harder. Everything has become harder.
This was part of Ms. Romney’s effort to encourage women (and she tried to be complete in naming all the variations: “moms of this nation — single, married, widowed — . . . mothers. . . wives. . .grandmothers. . big sisters . . . little sisters . .  daughters”) to view Romney as a potentially good provider if he is elected president.  One gathers that Ms. Romney’s point is that, if elected president, the man she “met at a dance many years ago” will spend less time looking for tax loopholes and tax deductions available only to the supremely wealthy and will spend more time considering the situation of the average Joes of the 99%.

Really? One indication on that score is the way the the Romneys interrupted their campaign (reportedly against campaign adviser advice) to rush off to attend the London Olympics (shoehorning in two ill-fated stops in Israel and Poland for cover) where Ms. Romney's horse was competing.  There Mr. Romney (who admittedly has Olympics in his resume) had to bend over backward to pretend that he didn't know anything about the "horse ballet" exploits (as dressage is sometimes called) of his wife's horse Rafalca and managed to undiplomatically offend his British hosts.

I don’t usually refer to the work of the ubiquitous Republican apologist David Brooks who, among other things, writes a regular opinion column for the New York Times: He is usually far too predictable about arguing that whatever position the Republicans have taken about things it is not necessarily entirely unreasonable when looked at a certain way.  He does that pretty much no matter how outrageous the Republicans get, rarely venturing any, even quiet, tut-tutting.  Something got into Mr. Brooks the week of the Republican Convention and he apparently couldn’t resist giving in to his sense of humor (I don’t think I’d previously picked up on the fact he had one) to write about the hilarity of the Republican chore at the convention of portraying the silver-spoon Romney biography as heroically relevant to the common man/woman/voter (a sampling to get you started before you click on to read the entire piece):       
Mitt Romney was born on March 12, 1947, in Ohio, Florida, Michigan, Virginia and several other swing states. He emerged, hair first, believing in America . . . . He was given the name Mitt, after the Roman god of mutual funds. . .

    * * * *

 . . . . He uttered his first words (“I like to fire people”) at age 14 months. . .  purchased his first nursery school at 24 months. The school, highly leveraged, went under, but Romney made 24 million Jujubes on the deal.
(See: The Real Romney, by David Brooks, August 27, 2012.)

Never did I think that I would find Brooks seeming to agree with fellow Times columnist Paul Krugman, but the truth behind the humorous bite of the Brooks piece is remarkably consonant with a more seriously scribed Krugman piece where Krugman says that the out-of-touch wealthy, “safely ensconced in a bubble of deference and flattery” look ridiculous “when they attribute the weakness of a $15 trillion economy to their own hurt feelings” which is causing them to refrain from job making.  (See: Pathos of the Plutocrat, by Paul Krugman, July 19, 2012.)

Wealthy upset is the cause of the nation’s current economic troubles?  What about the economic upset wealth run amok caused, the fact that it was the out-of-control banks, hedge funds and high finance insurance companies that wrecked the economy in the first place?  (See: Friday, August 17, 2012, The New York Times Starts Reporting That New York Government Officials Are Looking At Suing Barclays Bank- Leading to. . . ?).

Am I being the slightest bit unfair?  Just because Mitt Romney is substantially richer, does that  actually make the rest of us poorer?  Yes indeed, that question is answered at greater length here: Friday, December 23, 2011, Why Someone Else Being Wealthier Actually Makes Me Poorer: Debunking a Suspect Claim.  If nothing else, the fact that Romney and the Republicans are making it a priority to cut taxes for the wealthy (who control an ever-increasing percentage of the nations income and wealth) to historic new lows while eliminating social programs that those taxes have traditionally paid for means all the rest of us are hurt.  The Republicans, calling for cuts in social programs, set up a "deficit clock" at the convention hall in Tampa.  What they neglect to say is that the deficit being measured is a result of cutting taxes on the wealthy even in a time of war when sacrifices were called upon from others.