"How did a campaign as well run as Mitt Romney's so badly botch the issue of his tax returns?" asks Ruth Marcus at The Washington Post. It was inevitable that he would have to release at least this year's tax return. And "by choosing to pull off the Band-Aid with excruciating slowness" — first saying he wouldn't make his tax documents public, then saying he might, then admitting that his effective tax rate is about 15 percent, a lower rate than families earning $50,000 a year — Romney has "guaranteed maximum attention to the tax issue." But the biggest damage could still be ahead, when he actually releases his tax returns in April. Here, four ways Romney's tax records could cripple his run for the White House:
1. Romney could have big money in dodgy offshore tax havens
"Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune," but one of the most damaging could be that he has millions parked in a "notorious Caribbean tax haven," the Cayman Islands, according to ABC News. The Romney camp insists that Mitt pays taxes the same way no matter where his investments are housed. But ABC reports that the sort of "secretive offshore funds in the Caymans" that Romney has invested in through his old firm, Bain Capital, cost the feds an estimated $100 billion per year. "Maybe there's a nuanced interpretation here that leaves Romney completely faultless in every way," says Dan Amira at New York, "but, unfortunately for Romney, most Americans don't have a nuanced understanding of offshore taxation schemes."
2. He likely benefits from an "unconscionable" tax loophole
Romney's tax returns could shine an unwelcome spotlight on a giant "carried interest" loophole, says Dan Primack at Fortune. In "Romney's private equity portfolio are dozens of funds" managed by Bain, and "it is entirely possible that Romney didn't personally invest a dime into any of those funds." But whenever these funds complete a successful investment, Romney likely gets paid "carried interest," essentially a share of the profits, which is then taxed at just 15 percent. If that's the case, "Romney could be receiving a massive IRS reward for risk-taking, without having actually taken any risk." This carried interest boondoggle is an "unconscionable" sop to super-wealthy private equity managers, says John Cassidy at The New Yorker. And in defending the loophole and pushing "even more tax cuts skewed to the rich," Romney is becoming the face of the 1 percent. Come April, "we shall see how the American public reacts to this face."
3. America will see how much Romney's own tax plan would benefit him
Romney's annual income is somewhere between $6 million and $40 million, and once we have exact tax figures from his return, we can estimate how much Romney's own taxes would fall if he's elected and gets his way on tax policy, says Greg Sargent at The Washington Post. According to Citizens for Tax Justice, "Romney's plan would give him a tax cut of more than 40 percent" compared to Obama's favored tax policies. So essentially, says Matt Miller at The Washington Post, "Romney believes the best-off Americans should be completely exempt from participating in the wrenching burden other Americans will need to help shoulder (via taxes and spending cuts) to get the country's fiscal house in order."
4. The ghost of Romney's father is hovering over him
Romney and his accountants can scramble to make this year's tax return look good, but Mitt will face strong pressure to release past years' returns, too — and it's too late to change those, says Reid Epstein at Politico. Obama, for example, disclosed six years' worth of tax returns in March 2008, and has continued releasing them every year since. "Making it worse — the person who set the precedent of releasing returns that every major presidential candidate has since followed was Romney's own father, who put out 12 years' worth a year before his own 1968 run." George Romney also "exemplified a lost species of American business leader," who "felt some sense of restraint when it came to compensation," says The Washington Post's Matt Miller. Mitt Romney's tax returns will offer "a window into his public values," and its a good bet Mitt's won't compare favorably with his father's.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- Secret Service stretched mission to protect employee, report finds
- Syrian women know how to defeat ISIS
- 10 things you need to know today: October 22, 2014
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- The one thing the New Atheists get right about religion
- How to make corn dogs
- 43 TV shows to watch in 2014
- 3 horrific inaccuracies in Homeland's depiction of Islamabad
- The simple trick to making better decisions in every aspect of life
- For the GOP, gay marriage could be the most important issue in 2016
Subscribe to the Week