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Offshore Tactics Helped Increase Romneys’ Wealth

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posted on Oct, 2 2012 @ 12:58 PM

Mr. Romney, responding to opponents’ barbs about his use of overseas tax havens, has offered a narrow defense, saying only that the investments, many made through the private equity firm he founded, Bain Capital, have yielded him “not one dollar of reduction in taxes.”

A review of thousands of pages of financial documents and interviews with tax lawyers found that in some cases, the offshore arrangements enabled his individual retirement account to avoid taxes on its investments and may well have reduced Mr. Romney’s personal income tax bills.

It certainly seems like he was caught lying here doesn’t it?

But perhaps a more significant impact of Mr. Romney’s offshore investments has been on the profit side of the ledger — in the way Bain’s tax-avoidance strategies have enhanced his income.

Some of the offshore entities enabled Bain-owned companies to sidestep certain taxes, increasing returns for Mr. Romney and other investors. Others helped Bain attract foreign investors and nonprofit institutions by insulating them from taxes, again augmenting Mr. Romney’s bottom line, since he shared in management fees based on the size of each Bain fund
Many of the details of the Romneys’ wealth — estimated at $250 million — remain hidden, partly because Mr. Romney has released only the last two years of his tax returns. Those returns show an effective tax rate of about 14 percent, because most of the earnings came from investments and are taxed at 15 percent, significantly lower than rates on ordinary income.

What Romney is doing is legal but the question I have is right for someone that aspires to be the US president to be using offshore Tax havens that are unavailable to the average citizen unless you have significant holdings. They play by a different set of rules than the rest of us. It’s almost an above the law mentality.

He has said to pay for the tax cuts to the wealthy he would close loopholes in the tax code I am wondering if this will be one of them.



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