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Romney’s Tax Returns Show How Laws Favor the Wealthy

January 25, 2012 by Leave a Comment

Yet the hundreds of pages of tax documents released by Mr. Romney’s campaign on Tuesday morning did not readily reveal any elaborate financial legerdemain or exotic tax shelters. What Mr. Romney’s returns illustrated, instead, was the array of perfectly ordinary ways in which the United States tax code confers advantages on the rich, allowing Mr. Romney to amass wealth under rules very different from those faced by most Americans who take home a paycheck.

Those differences leapt to the front of the national debate on Tuesday when President Obama — whose family’s income was less than a tenth of Mr. Romney’s in 2010 but whose effective federal rate was double — called for higher taxes on the wealthy in his State of the Union speech.

Mr. Romney’s tax returns were posted on his campaign’s Web site on Tuesday morning after escalating pressure from the other Republican candidates, Democrats and even supporters, some of whom attributed his loss in South Carolina’s Republican primary last weekend to his shifting and tentative responses to questions about his wealth, tax burden and overseas investments.

The 547 pages of documents included 2010 federal income tax returns for the Romneys, the couple’s estimated 2011 return and returns for their charitable foundation and two blind trusts established in their names, as well as a trust established for their children.

The couple paid about $3 million in federal taxes on an adjusted gross income of $21.6 million, the vast majority of it flowing from myriad of stock holdings, mutual funds and other investments, including profits and investment income from Bain Capital, the private equity firm Mr. Romney retired from in 1999.

The couple reported no wage earnings in 2010. But in a conference call with reporters on Tuesday, Mr. Romney’s campaign counsel, Benjamin L. Ginsberg, said that Mr. Romney and his wife collected more than $7 million worth of Bain profits in 2010.

That money — about a quarter of the couple’s income during the last two years — came in the form of so-called carried interest. It would be taxed not as deferred regular income, but at the lower 15 percent rate normally reserved for long-term capital gains, thanks to federal tax rules that have sparked intense debate in recent years.

Mr. Obama and others have argued that carried interest should be taxed at the rates which normally apply to income earned by people providing services, topping out at 35 percent. If Mr. Romney’s carried interest income in the last two years had been taxed at that higher rate, he would have owed about $4.8 million in federal taxes, roughly $2.6 million more than he would typically be assessed under current rules.

And like most of the wealthy, the Romneys paid only a tiny sliver of their income in payroll taxes, which cut heavily into the weekly paychecks of wage earners but is barely a blip on the returns of the rich. While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Mr. Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes.

Mr. Romney’s 2010 returns also suggest he may have paid far less taxes the previous year. The 2010 return shows the family made estimated tax payments for 2009 of $1,369,095. To avoid penalties, estimated tax payments must be at least 110 percent of the taxes owed the prior year. Assuming that is what he paid, his federal tax bill for 2009 would have been $1,244,632, far less than in 2010.

Mr. Romney and other Republican candidates have not only opposed higher taxes on the wealthy, but also favor maintaining or expanding the relatively low rates for capital gains and investment income, breaks that Republicans and others favor as a way to spur investment and reward risk-taking but which critics say have fed the growing wealth gap.

Floyd Norris, Stephanie Strom and Kevin Roose contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 24, 2012

A previous version of this article misstated the number of I.P.O. shares of Goldman Sachs that the Romneys bought in 1999; it was 7,000 shares, not 6,000. The article also misstated the share price and total when the shares were sold in 2010; the Romneys sold them for $161.45 apiece, or $1,130,123.87.

Article source: http://feeds.nytimes.com/click.phdo?i=5d302537c73ce0407901d1671899563e

Filed Under: Business News Tagged With: , ,

Romney’s Tax Returns Show $21.6 Million Income in ’10

January 25, 2012 by Leave a Comment

Yet the hundreds of pages of tax documents released by Mr. Romney’s campaign on Tuesday morning did not readily reveal any elaborate financial legerdemain or exotic tax shelters. What Mr. Romney’s returns illustrated, instead, was the array of perfectly ordinary ways in which the United States tax code confers advantages on the rich, allowing Mr. Romney to amass wealth under rules very different from those faced by most Americans who take home a paycheck.

Those differences leapt to the front of the national debate on Tuesday when President Obama — whose family’s income was less than a tenth of Mr. Romney’s in 2010 but whose effective federal rate was double — called for higher taxes on the wealthy in his State of the Union speech.

Mr. Romney’s tax returns were posted on his campaign’s Web site on Tuesday morning after escalating pressure from the other Republican candidates, Democrats and even supporters, some of whom attributed his loss in South Carolina’s Republican primary last weekend to his shifting and tentative responses to questions about his wealth, tax burden and overseas investments.

The 547 pages of documents included 2010 federal income tax returns for the Romneys, the couple’s estimated 2011 return and returns for their charitable foundation and two blind trusts established in their names, as well as a trust established for their children.

The couple paid about $3 million in federal taxes on an adjusted gross income of $21.6 million, the vast majority of it flowing from a myriad of stock holdings, mutual funds and other investments, including profits and investment income from Bain Capital, the private equity firm Mr. Romney retired from in 1999.

The couple reported no wage earnings in 2010. But in a conference call with reporters on Tuesday, Mr. Romney’s campaign counsel, Benjamin L. Ginsberg, said that Mr. Romney and his wife collected more than $7 million worth of Bain profits in 2010.

That money — about a quarter of the couple’s income during the last two years — came in the form of so-called carried interest. It would be taxed not as deferred regular income, but at the lower 15 percent rate normally reserved for long-term capital gains, thanks to federal tax rules that have sparked intense debate in recent years.

Mr. Obama and others have argued that carried interest should be taxed at the rates which normally apply to income earned by people providing services, topping out at 35 percent. If Mr. Romney’s carried interest income in the last two years had been taxed at that higher rate, he would have owed about $4.8 million in federal taxes, roughly $2.6 million more than he would typically be assessed under current rules.

And like most of the wealthy, the Romneys paid only a tiny sliver of their income in payroll taxes, which cuts heavily into the weekly paychecks of wage earners but is barely a blip on the returns of the rich. While payroll taxes eat up 6 percent of the income of Americans earning the national median income of $50,221, Mr. Romney and his wife paid just one-tenth of 1 percent of their income in payroll taxes.

Mr. Romney’s 2010 returns also suggest he may have paid far less taxes the previous year. The 2010 return shows the family made estimated tax payments for 2009 of $1,369,095. To avoid penalties, estimated tax payments must be at least 110 percent of the taxes owed the prior year. Assuming that is what he paid, his federal tax bill for 2009 would have been $1,244,632, far less than in 2010.

Mr. Romney and other Republican candidates have not only opposed higher taxes on the wealthy, but also favor maintaining or expanding the relatively low rates for capital gains and interest income, breaks that Republicans and others favor as a way to spur investment and reward risk-taking but which critics say have fed the growing wealth gap.

Floyd Norris, Stephanie Strom and Kevin Roose contributed reporting.

This article has been revised to reflect the following correction:

Correction: January 24, 2012

A previous version of this article misstated the number of I.P.O. shares of Goldman Sachs that the Romneys bought in 1999; it was 7,000 shares, not 6,000. The article also misstated the share price and total when the shares were sold in 2010; the Romneys sold them for $161.45 apiece, or $1,130,123.87.

Article source: http://feeds.nytimes.com/click.phdo?i=5d302537c73ce0407901d1671899563e

Filed Under: Business News Tagged With: , ,

The Champions: A Businessman in Congress Helps His District and Himself

August 15, 2011 by Leave a Comment

Just a few steps down the hall, Representative Darrell Issa, the powerful Republican congressman, runs the local district office where his constituents come for help.

The proximity of the two offices reflects Mr. Issa’s dual careers, a meshing of public and private interests rarely seen in government.

Most wealthy members of Congress push their financial activities to the side, with many even placing them in blind trusts to avoid appearances of conflicts of interest. But Mr. Issa (pronounced EYE-suh), one of Washington’s richest lawmakers, may be alone in the hands-on role he has played in overseeing a remarkable array of outside business interests since his election in 2000.

Even as he has built a reputation as a forceful Congressional advocate for business, Mr. Issa has bought up office buildings, split a holding company into separate multibillion-dollar businesses, started an insurance company, traded hundreds of millions of dollars in securities, invested in overseas funds, retained an interest in his auto-alarm company and built up a family foundation.

As his private wealth and public power have grown, so too has the overlap between his private and business lives, with at least some of the congressman’s government actions helping to make a rich man even richer and raising the potential for conflicts.

He has secured millions of dollars in Congressional earmarks for road work and public works projects that promise improved traffic and other benefits to the many commercial properties he owns here north of San Diego. In one case, more than $800,000 in earmarks he arranged will help widen a busy thoroughfare in front of a medical plaza he bought for $10.3 million.

His constituents cheer the prospect of easing traffic. At the same time, the value of the medical complex and other properties has soared, at least in part because of the government-sponsored road work.

But beyond specific actions that appear to have clearly benefited his businesses, Mr. Issa’s interests are so varied that some of the biggest issues making their way through Congress affect him in some way.

After the forced sale of Merrill Lynch in 2008, for instance, he publicly attacked the Treasury Department’s handling of the deal without mentioning that Merrill had handled hundreds of millions of dollars in investments for him and lent him many millions more.

And in an era when the auto industry’s future has been a big theme of public policy, Mr. Issa has been outspoken on regulatory issues affecting car companies, while maintaining deep ties to the industry through the auto electronics company he founded, DEI Holdings.

He has a seat on its board, and his nonprofit family foundation, which seeks to encourage values like “hard work and selfless philanthropy,” has earned millions from stock in DEI, which bears his initials. Mr. Issa’s fortune, in fact, was built on his car alarm company, and to this day it is his deep voice on Viper alarms that warns potential burglars to “please step away from the car.”

In recent months, The New York Times has examined how some lawmakers have championed particular industries, pushing measures to protect and enrich supporters. In Mr. Issa’s case, it is sometimes difficult to separate the business of Congress from the business of Darrell Issa.

Mr. Issa, 57, did not respond to repeated written requests in the last three weeks to discuss his outside interests. In the past, he has said his business background has made him a better lawmaker. In at least one Congressional matter, however, he recused himself after being advised of a potential conflict.

But perhaps his clearest statement on the issue came last year amid Toyota’s recalls of millions of automobiles with dangerous acceleration problems. Then, Mr. Issa brushed aside suggestions that his electronics company’s role as a major supplier of alarms to Toyota made him go easy on the automaker as he led an investigation into the recalls.

“If anything,” the congressman said, “Toyota probably got a harder time by having an automobile supplier sitting up there on the dais saying ‘Hold it, I’m not letting you off the hook now.’ ”

A Powerful Gadfly

As the influential chairman of the House Oversight and Government Reform Committee, Mr. Issa has proven both a reliable friend to business and a constant annoyance to an Obama administration that he sees as anti-business. Even before formally taking over the committee in December, he made headlines by asking 150 businesses and trade groups to identify regulations that they considered overly burdensome, and he has issued numerous subpoenas on his own authority in investigating programs he believes are harmful.

Article source: http://feeds.nytimes.com/click.phdo?i=afef78dceb080879d98ed4f0c571e854

Filed Under: Business News Tagged With: , ,