**UPDATED**
THE BAIN DOCUMENT dump of confidential papers by Gawker earlier today is keeping finance and econ geeks, as well as political writers, busy reading or analyzing or both.
Here’s one analysis that’s interesting. It comes from Victor Fleischer who is a law professor at the University of Colorado Law School and has taught at the law schools of UCLA, Georgetown, Illinois, Columbia, and NYU. The excerpt below comes from his analysis titled Romney’s Management Fee Conversion:
Fund VII. Gawker today posted some Bain documents today showing that Bain, like many other PE firms, had engaged in this practice of converting management fees into capital gain. Unlike carried interest, which is unseemly but perfectly legal, Bain’s management fee conversions are not legal. If challenged in court, Bain would lose. The Bain partners, in my opinion, misreported their income if they reported these converted fees as capital gain instead of ordinary income.
[...] To be clear, there is some economic risk, and presumably this is how Bain’s tax counsel justified its reporting. The economic risk is that the priority profit must come from future profits, presumably from the investment to which the converted fee is allocated. On the other hand, the managers get to choose which investment in the portfolio they want to skim, and they are in a good position to know which investments are safest. Because the fees come off the top, they are not subject to real investment risk, but only the limited risk that even their best investments will decline in value, every single quarter, for the rest of the life of the fund. Even in 2009, an iffy year for Fund VII, the priority profit share increased in value by $3.8 million.
(UPDATE: Here’s another example. Bain Capital Fund X LP reported that it converted $338 million as of the end of 2009. At a 20% tax rate differential, that $67 million in taxes unpaid. Plus deferral.)
Bottom line: Mitt Romney has not paid all the taxes required under law.
UPDATE: More agreement from other tax experts that Mitt Romney may indeed owe more taxes.
h/t Naked Capitalism
Mitt Romney, and others like him, have spent a lifetime hiding money and avoiding taxes. What you posted is surely only the beginning of more to come; and there is more, whether in these documents or others. There is more because these people are white collar criminals who have been nourished by the taxpayers of this country. Their money was made through the torture and murder of this country’s middle class. Romney and his cohorts are Gordon Gecko hideously come to life. They spend their days trying to figure out how to screw just about everyone and make it look legal. Now some of the American people stand ready to elect a white collar criminal who admits he will make their lives even more miserable than it already is. If my father, a hard working, middle class union man, were still alive, he would look around at the rampant white collar criminality in this country today , and probably kill himself. I sometimes wonder why I care at all. A large swath of the voting public will go into the voting booth on election day and vote for a group of men who represent the death of this country. They will enslave their children to a life of serfdom, unless they leave the sinking ship. Edward R. Murrow’s haunting quote has come to pass, ” An electorate of sheep, begets a government of wolves. “
Spot on, fangio.
It’s all a muted point. White collar crime is a serious issue, corporations coming up with these schemes is a serious issue. Tax dodging; whether technically legal or outright illegal is a serious issue. But come November after the election; no matter who wins, the uproar, outrage will die down and this behavior will continue. For nobody has ‘clean hands’ when it comes to stuff like this.
People can pick and choose who to focus their outrage at to achieve their goals, but it doesn’t change anything. Heck, if reports this morning are true concerning how Gawker is set up (money going to Hungary, then sent to the Caymen Islands. etc. etc.) What’s the difference? It like listening to a shoplifter being shocked by the behavior of a pick-pocket.
Bottom line, Mitt da Twit LIED. How about some IRS folks start crawling up his bunghole?
Bottom line: Mitt Romney has not paid all the taxes required under law.
Complete and utter (or perhaps I should say udder) bovine fecal matter.
I have been at least desk-audited by the IRS every year since 1992 and my best year I made 1/10 of what Romney of what Romney makes every year.
For the amount of taxes at stake, not to mention the publicity it would generate, the IRS would have been all over this even if there was anything remotely to challenge.
I’m not in your tax bracket, but your comment Makes total sense to me, Casual. I wouldn’t believe the IRS would let something like that slip through their slimy little fingers. My first husband, who owned is own business was audited also, and although he did well, he was nowhere close to what Romney earns.
This is just another attempt to slander Romney. The liberal media is expert at character assassination and pray upon the ignorance and sometimes stupidity of the general public.
Prey, not pray.
Well all Mittens has to do is release some COMPLETE tax records and he will just shut us all up huh?
I hope he doesn’t release them.