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      08-18-2012, 12:38 PM   #1
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Salt Lake City Tribune: Why examine Romney’s taxes?

Why examine Romney’s taxes?
By maria magers roberts

. . .

• On his recent trip abroad, Romney skipped Italy, for good reasons. Bain Capital, with Romney as CEO, made about $1 billion in a leveraged (minimal cash outlay – low-risk) buyout of an Italian company. Bloomberg News reported that Bain funneled its profits through subsidiaries in Luxembourg, a common corporate way to avoid taxes in other European countries. The buyer, Italy’s biggest telephone company, now is valued way below what it paid Bain and other investors for the business. The shock waves of this transaction are still felt in Italy.

• In Romney’s self-directed individual retirement account, he used heavy leveraging and a "blocking company," thereby avoiding the "unrelated business income tax" normally imposed on such gains in IRAs. His IRA’s growth to $100 million is astounding in light of contribution limits of $30,000 annually. On its face, the IRA was likely funded in part with stock shares valued well below market.

• Presidential candidates generally avoid betting the U.S. dollar will lose value by speculating in Swiss francs. Yet such speculation was the stated purpose of Romney’s "blind" trust Swiss bank account, which was closed in early 2010. Was the income reported on earlier tax returns? Did Romney timely file disclosure forms to the Treasury Department?

. . .

• Romney’s apparent disdain for tax obligations is clear from his role in Marriott International’s abusive tax shelter activities. From 1993 to 1998, Romney was head of the audit committee of the Marriott board of directors, with responsibilities that included tax planning. The so-called "Son of Boss" tax shelter helped Marriott sell $81 million of mortgage notes, reporting a $71 million "tax loss." Romney was an insider with perspective on the motivation and lack of substance in the transaction, fully understanding the tax avoidance game. Romney reportedly was the board member most familiar with the transaction.

This shelter, used by Marriott and others, represented one of the largest tax-avoidance schemes in history, costing the U.S. billions in lost tax revenues. In 2008, the U.S. Federal Court of Claims ruled against Marriott, which appealed and lost again. The appeals court sided with the Department of Justice, calling Marriott’s transactions "fictitious," "artificial," "spectral," an "illusion" and a "scheme."

. . .