Tag Archives: Wall Street

Mitt Romney’s tax returns: an InCity Times investigative report

 

Mitt Romney’s trusts invested in Japanese automakers, European alternative energy companies, foreign pharmaceuticals, several French companies, and took a tax write off of $1.4 million for donating to his own charitable foundation. And much of Romney’s funds were invested through Goldman Sachs, the controversial Wall Street firm that received $10 billion in federal TARP money and hundreds of billions of dollars in federal loans. One thing’s for certain – Mitt Romney did not invest as an American economic nationalist. He put his money where got the most bang for his buck, often in overseas bank accounts investments.

By Steven R. Maher

            Mitt Romney had good reasons to hide his tax returns. It provides a fascinating look at a man who would be an American President, but often put his money to work in foreign companies that directly compete with American manufacturers. While the American automobile industry was struggling to survive, Mitt was investing in Toyota and Mitsubishi. While campaigning for the country to free itself from the dependency of foreign oil, Romney, acting through trusts, was buying stock in foreign manufacturers of alternative energy sources. And in something remarkable, Romney gave $1.4 million to his own “charitable” foundation and reported it as a deduction on his tax return.

            Romney’s tax returns, released Tuesday January 24, 2012, show heavy reliance on the Wall Street firm of Goldman Sachs, which received $10 billion in federal TARP money and hundreds of billions of dollars in federal loans. The TARP money and loans, later repaid by Goldman Sachs, took place around the same time Romney invested with the firm.         

Well structured finances

 

            First, a brief explanation about how Romney structured his finances to minimize his tax liabilities and provide for the lowest possible tax on his estate when it passes to his heirs. Not surprisingly, Romney appears to have greatly benefited from sophisticated legal and accounting advice.

            Romney set up three trusts to house his property: the “Ann and Mitt Romney 1995 Family Trust” (the most fascinating of the group); the “W. Mitt Romney Blind Trust”); the “Ann B. Romney Blind Trust”; and the “Tyler Charitable Foundation” a “Nonexempt Charitable Foundation Treated as a Private Foundation.”

            Theoretically a “blind trust” functions much like a super Pac – the owner of the assets, like the Presidential beneficiary of a super Pac, has plausible denial ability for knowledge of the Trustees’ investment decisions, which are supposedly made only by the trustees. Hence the description as a “blind” trust.

            It is unknown if the “Ann and Mitt Romney 1995 Family Trust” is a blind trust. It does not state that on the front of the trust tax return filing. If it was established in 1995, the tax law at that time may not have required it. This trust is the most interesting of the four entities Romney published on his campaign, because many of the foreign investments reviewed in this article were made through that trust.

            We sent two emails to Romney’s press office asking if the “Ann and Mitt Romney 1995 Family Trust” was a blind trust, and if it was, for documentation proving that. No response was received from the Romney campaign.

            Romney defended his investments in the January 26, 2012 Presidential debate by saying that all the purchases were done by a Trustee, that he did not know about them, and that his trusts purchased stocks through mutual funds rather than directly from the companies. But Romney did sign the tax returns, and he at least knew about where his money went at that point. It is hard to believe that Romney, who has campaigned on his abilities at as a CEO, did not know what was being done in his name with his money.

            The sole Trustee of all four Romney entities is R. Bradford Malt of the prestigious Boston law firm Ropes & Gray. All four entities’ tax reports were done by the same accountant, Daniel P. Feheley of the equally prestigious accounting firm Price, Waterhouse & Coopers. All four entities had their cash parked at Goldman Sachs and several purchased stock in the same companies, often selling stock on or within a few days or weeks of each other. Two of the trusts may have been “blind” and one a charitable foundation, but they seemed to make the same investment decisions at the same time.

            Romney funneled his income into these trusts, and through the trusts, back into the private tax return of his wife and himself. Why the trusts?

            All three of Romney’s trusts were “grantor trusts”, which Black’s Law Dictionary describes as follows: “A trust in which the grantor transfers or conveys property in trust for his own benefit alone or for himself or another.” Depending on the nature of the trust, Romney could have done this to transfer his property to his heirs or act as a tax shelter.

His own charity

 

            Romney’s tax return listed his income as follows:

            · Total income listed was $21,646,507. Of this, $3.295,727 was interest income, and $4,923,348 was dividends ($1.5 million from the “Ann and Mitt Romney 1995 Trust” and $3 million from the “Ann D. Romney Blind Trust”).

            · Romney filed two self-employment Schedule Cs. The first was for $113,881 as a member of the Marriott International’s Board of Directors. Not bad for a part time job.

            · The second self-employment form filed was for author and speakers’ fees. Romney had income of $528,871 gross income for “author/speaking fees”. According to published press reports, $370,000 of this was for speaking fees, an amount Romney described as “inconsequential.”

            · Romney paid a total tax of slightly over $3 million on adjusted gross income of $21,646,507, an effective tax rate of 13.9%.

            · Romney received a tax refund of $1.6 million. You or I would probably grab such a refund, but Romney instead applied it to his 2011 taxes.

            Romney’s supporters make much of the fact that he gave more to charity than what he paid in taxes. They ignore the fact that a good part of Romney’s charity began at home. Of the money donated, $1,458,807 was from the “Ann Romney Blind Trust” to the “Tyler Charitable Foundation”, a non-cash transfer of “donated securities”. What Romney’s trustee or representative did was take money out of one Romney trust, put it into another Romney legal entity, take a $1.4 million deduction on his taxes, and maintained legal control of the transferred assets.

            This transaction probably took place only on paper, with the stroke of his accountant’s or trustee’s pen. Some paperwork was probably done to transfer the securities, but no cash left Romney’s control in making this donation.

            In terms of donating $1.4 million to himself, what did Romney know and when did he know it? At the time someone made the decision, or when he filed his tax returns? We asked that question of Romney’s press office twice by email and received no reply.

            If Romney made the biggest – and only donation – to the Tyler foundation, the foundation itself made $647,500 donations to various causes. The two largest donations were $145,000 to the Mormon Church and $100,000 to the George W. Bush presidential library. The Tyler foundation made several smaller donations to the medical institutions that treated his wife for cancer. Romney thought so well of Bush’s presidency that he prioritized his charitable donations to the 43rd President’s library over the medical institutions which saved his wife’s life.

Foreign investments

 

            The mainstream media has concentrated on Romney’s bank accounts in the Republic of Ireland, Switzerland, Luxembourg, and the Grand Cayman Islands. Why did Romney put his money there? Probably because the interest rates were higher and the tax rates lower than your typical American bank. If Romney had been an American economic nationalist, he would have put all his money into the U.S. banking system, where it would have been loaned back to his fellow Americans to buy homes, cars, or expand their private enterprises. But it wouldn’t have been as profitable.

            Romney did invest a lot of money in America. But at a time when the country is struggling with a critical balance of trade deficit, he put considerable portions of his investments into overseas banks and companies.

            The real story is in the trusts through which Romney sheltered his wealth. Among his investments (many of which were done by the Ann and Mitt Romney 1995 Family Trust):

            · Toyota and Mitsubishi. While American car companies were dying, Romney’s trust was putting his money into Japanese carmakers.

            · While saying America needs to develop green energy sources, Romney’s trusts invested in foreign alternate energy providers such as the Dutch wind power company Vestas Wind Systems and the Austrian Verbund AS, which gets 90% of its power from hydro-electricity.

            · Romney’s trusts have invested in numerous foreign pharmaceuticals and medical suppliers: the Dutch CSL Limited, the Dutch pharmaceutical Novo-Doris; and Fresno’s Medical Care, a German manufacturer of medical supplies.

            · Among the foreign high-tech companies Romney’s trusts bought and sold stock in were Turkcel Ietisim, a Turkish cell phone service provider and the British based Sky Broadcasting Group, a tele-communications provider.

            · The Romney trusts invested in numerous foreign banks: The Greek National Bank; the Brazilian banking groups Itau Unibanco and Intesta Sanpaolo; and several other large “emerging market” banking groups.

            · Your average Republican during the Bush era may have wanted to rename French fries “freedom fries” but that didn’t stop Romney’s trustee from investing in several French companies: LVMH Moet, which is a Paris based clothier; Schlumbegrer LTD, a French company that provides oil field services.

            · Romney has said he would crack down on Chinese trading practices, which have cost so many Americans their jobs. His 2010 tax returns show investments in several Chinese companies including the New Oriental Ed & Tech, and the China Life Insurance Company, formerly a state owned enterprise insuring 45% of the Red Chinese public. According to Wikipedia, New Oriental is a system of 40 private schools teaching English, set up originally to train graduate students – presumably so they could come here, attend the best graduate schools in the world, and take their education and technological skills back home from America to create jobs in China.

            · Romney’s accountant adroitly played all the legal strategies available to maximize his client’s gains from his foreign investments. Romney got a tax credit of $129,697 for the payment of foreign taxes. 

No economic nationalist

 

            Most of Romney’s money was invested through Goldman Sachs, a company that received $10 billion in funds from the “Troubled Asset Relief Program” (TARP). The Federal “Primary Dealer Credit Facility” loaned Goldman Sachs $589 billion in 2009, when Goldman Sachs was purchasing Romney some of the same stocks he sold for a profit in 2010.

What does the tax return say about Mitt Romney’s vision and foresight?

Romney must have known in 2009 that he would be running for President in 2012. He could have reasonably foreseen that at some point he would be pressured into releasing his tax returns. Romney would have been well advised in 2009 to Americanize his portfolio. He should have withdrawn his money from foreign banks and ordered his trustees to only invest in American companies. Romney then could have run as an economic nationalist who put the country’s welfare above his own financial well-being. Short term, it would have led to a reduction in income that would not affect Romney’s life style. Long term, it would have generated enormous political capital and averted the many questions raised by his 2010 tax return.

Great Presidents – George Washington, Abraham Lincoln, Franklin Roosevelt, and Ronald Reagan come to mind – tended to be visionaries who could foresee and proactively resolve problems facing the country. Obviously, Romney three years ago didn’t have the foresight to see the problems to be caused by how he handled his great wealth. The conclusion to be drawn from this is left for the reader to make.

15 things every American can do right now

By director Michael Moore

I’ve got 15 things you and I can do right now to fight back and try to fix this very broken system!

Here they are:

FIVE THINGS WE DEMAND THE PRESIDENT AND CONGRESS DO IMMEDIATELY:

1. Declare a moratorium on all home evictions. Not one more family should be thrown out of their home. The banks must adjust their monthly mortgage payments to be in line with what people’s homes are now truly worth — and what they can afford. Also, it must be stated by law: If you lose your job, you cannot be tossed out of your home.

2. Congress must join the civilized world and expand Medicare For All Americans. A single, nonprofit source must run a universal health care system that covers everyone. Medical bills are now the #1 cause of bankruptcies and evictions in this country. Medicare For All will end this misery. The bill to make this happen is called H.R. 3200. You must call AND write your members of Congress and demand its passage, no compromises allowed.

3. Demand publicly-funded elections and a prohibition on elected officials leaving office and becoming lobbyists. Yes, those very members of Congress who solicit and receive millions of dollars from wealthy interests must vote to remove ALL money from our electoral and legislative process. Tell your members of Congress they must support campaign finance bill H.R.1826.

4. Each of the 50 states must create a state-owned public bank like they have in North Dakota. Then congress MUST reinstate all the strict pre-Reagan regulations on all commercial banks, investment firms, insurance companies — and all the other industries that have been savaged by deregulation: Airlines, the food industry, pharmaceutical companies — you name it. If a company’s primary motive to exist is to make a profit, then it needs a set of stringent rules to live by — and the first rule is “Do no harm.” The second rule: The question must always be asked — “Is this for the common good?” (Click here for some info about the state-owned Bank of North Dakota.)

5. Save this fragile planet and declare that all the energy resources above and beneath the ground are owned collectively by all of us. Just like they do it in Sarah Palin’s socialist Alaska. We only have a few decades of oil left. Continue reading 15 things every American can do right now

Trust Obama!

By Rosalie Tirella

Some folks on the left are disappointed in our prez. Not I! He is cool, goodlooking, smart and progressive. How wonderful to turn on the tube and see a guy who speaks well, listens carefully, reacts intelligently, has a sense of humor (a wee bit smug, perhaps) AND is pretty much the community organizer I voted for last November.

President Barack Obama still cares about families, neighborhoods and kids. He wants a health care system that doesn’t break the bank – a system that serves the guy with cancer or the girl who just broke an ankle. Not the insurance companies or the HMOs. And no, there will not be rationing of health care. And like Obama said, if you have health insurance that you are happy with and you like all your docs – then keep them. But chances are you will be paying less money for their good services. Continue reading Trust Obama!