Saturday, January 21, 2012

What will Mitt Romney’s Taxes Prove?

No doubt there will be “oohs” and “awws” when Mitt Romney releases his tax returns.  He makes a helluva lot more money than the overwhelming majority of Americans.  But beyond that trivia, what will a thorough review of Mitt Romney’s tax returns reveal?  Well, thinking of my own returns here is what I think that you will find out:

1.  The quality of his Certified Public Accountant (CPA).  I haven’t done my own taxes in fifteen years.  Though I don’t have the magnitude of Mitt Romney’s problems or the volume of his cash – quite frankly owning my own business makes taxes far too complex for the average Joe like me.  I depend on the CPA who does my taxes to be honest and to advise me if anything I do looks even the least bit shady.  My tax returns reflect my CPA’s professionalism, knowledge of current tax law, and what she requested from me. 

2.  How generous (or stingy) he is.  When Joe Biden released his tax returns to the Nation during his run for Vice President I found out that on a much (much) smaller income my wife and I gave four to five times more to charity than Joe and Jill Biden did in each of the previous four years.  I suspect that we will find out that Mitt and Ann Romney are very generous.  History shows us that the people of the political right are infinitely more generous with their own funds than the people of the political left. 

3.  How sophisticated his advisors are.  For the overwhelming majority of my life I have done my own financial planning.  My results were mixed.  A few years ago I started using the services of a Certified Financial Planner (CFP).  So the major difference between my returns of several years ago and my recent returns is that my investment portfolio is more sophisticated.  Reading “Money” magazine wasn’t making me a financial genius but using the services of a CFP might make me look like one.  If my CFP made a case for me to buy shares in an off-shore investment product based in the Caiman Islands to reduce my taxes, I would probably run that by my CPA- but if she said “No problem, no red-flags.”  I would do it.  I suspect that Mitt’s advisors are pretty damn sophisticated.   

What we won’t find out is Mitt Romney’s commitment to the law or his sense of honesty.  Indeed it is completely possible that Mitt Romney won’t be able to articulate more than a general approach to the structure of his estate and his tax and investment strategy.   

My tax strategy is to pay the minimum tax specifically required by law while not sending up any red-flags that would alert the IRS to move against me.  I pay every cent I owe and not a penny more. 

My investment strategy is to maximize returns consistent with low risk and not to generate more taxable income than necessary.  My favorite 1099 comes from my Virginia Tax Free Bond Fund account.  Block #1 “Interest Income” is BLANK while block #8 “Tax-Exempt Interest” has a big number in it – I like that. 

So with all that in mind the ONLY possible reason to demand Mitt Romney’s tax returns is to fuel class warfare.  Shame on you Newt Gingrich. 

15 comments:

  1. Replies
    1. Anthony,

      Thank you - and thanks for the visit.

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  2. Good post but I don't think Newt is to blame. I think the elite media is. Newt was prepared to answer the question and Romney was not. Herman Cain was interviewed on Fox News last night and his assessment was the same as yours. He said that it was only to give the media and the left a nugget of ammunition to attack the Republican candidates on the issue of class envy. I don't understand why the Republican candidates don't stand united on this issue. I liked what Romney had to say when he said "I'm not going to apologize for being successful". However, why is he so reluctant to release his taxes if he has nothing to hide? If certainly gives people the impression that he is trying to hide something. Also, how could Romney have been so unprepared to answer the question? Certainly his advisors should have anticipated the question would be asked. I think if Romney would have been bold and decisive on his answer, it wouldn't be a big deal.

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    1. I agree with your assessment. I think Romney could have handled that better.

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    2. Right,

      I do agree that it is unconscionable to not be ready for the questions that you know will be asked. I think he evolved to the right answer ("I won't apologize for being successful") but he should have had something in his hip pocket. Looks like he is dumping his 2010 taxes tomorrow. I don't think it will mean much. The damage has been done.

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  3. You know I cannot stand Mitt Romney, so the following comment may be a little clouded.

    Three years ago, Barack Obama nominated some fellows to hold cabinet positions in his administration. Some of those fellows turned out to be tax cheats under the scrutiny of the Senate. I'm not implying that Romney is a tax cheat; his reluctance to put forward his information leads me to believe he has something he doesn't want scrutinized.

    I agree completely with Mr. Right. Romney looked like a kid caught with his hand in the candy jar when they asked the question the other night. How could anyone fumble that question, much less a guy in a debate? Poor form, and if not suspicious, then it is suspicion arousing.

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    1. Tenth,

      I'll have to go back and see how they nabbed Giethner. If I remember correctly his problem was that he was employed by a foreign entity and required to sign each year a form acknowledging that he was receiving BOTH the employer and the individual tax contributions in his paycheck (instead of like the rest of us where the employer sends that money to the Federal government). That was to alert him to his responsibility to send that money in - he didn't do it. He also claimed that it was Turbo-Tax's fault.

      Daschle on the other hand was receiving services and wasn't claiming them on his taxes.

      I don't know whether either of those were determined based on a release of tax documents.

      However you are right about his lack of preparation.

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  4. CS- I think I can add something here, that is from personal experience, and common sense :)...
    My brother is wealthy, very wealthy. Not Romney wealthy, but good enough to pay cash for a $900,000 house. Now here's the thing. My brother works himself to death. He's 45. He is bald (The only man in our family to go bald. Going back 70 years.). He has back issues, heart issues, and high blood pressure (Again, the only person in our family to have that problem, dating back 70 years.). He works 90 hours a week, he sees his children 1 week a month, and he gets shit on by people that spent $300,000 on an education that got them a job that pays $30,000 a year, if any job at all. AND IT'S MY BROTHER'S FAULT? I disagree!

    These people (Wealthy), for the most part, work their asses off for what they have. They deserve everything they get. You know what they don't deserve? They don't deserve to walk out of their places of work and get spit on.(F##K YOU OWS CHICAGO) What did my brother ever do to you?

    Who cares how much money they earned? I would be more interested in how they made their money, not to mention what they did with their money. In 2010, my brother donated more money than the OWS berkley students spent on their education over a 4 year period. He earns everything, and gives a ton. For it, he gets spit on. F##k their class warfare.

    Sorry to go off on a tangent CS. No, I don't care how much money Romney is worth. Their are alot more things I'm concerned with.

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    1. Johnny,

      I concur - I think the hard truth is that any of us could make more money if we really wanted to. It would just require longer hours or perhaps additional education or a change of venue or vocation. All the rich people that I have encountered are very smart and they work exceptionally hard.

      They deserve what they have.

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  5. You are correct in that it will just fuel class envy. I'm not sure it's altogether Newt's fault. The media is playing this big time. Plus Mitt, via proxies, aired some underhanded ads about Newt. Tit for Tat.

    Newt is correct however to air these things early. April is too late. Best to know these things now before we get into the general campaign because by then it's old news.

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  6. Hardnox,

    I guess we will know soon. Romney says that his 2010 returns are coming this week and 2011 as soon as they are ready. Then that punk Chris Wallace asked him if he was going to go all the way back to the beginning. He should have told Newt and the media to go screw themselves.

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  7. Romney's taxes will prove, as others have more eloquently stated, that hard work, perseverance pay off. Did Romney benefit from family inheritance as well? Probably. And who would begrudge this? 10 guesses and the first 9 don't count.

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    1. Good morning Mrs. AL,

      Mitt Romney got the leg up that any of us would give our children if we had the means - a good home and a good education. However according to PolitiFact he donated his inheritance to BYU:

      http://www.politifact.com/truth-o-meter/statements/2012/jan/20/mitt-romney/mitt-romney-says-he-didnt-inherit-money-his-parent/

      He has been quoted as saying he didn't get an inheritance - that isn't strictly true - but he didn't use that inheritance as a springboard to wealth (he was already wealthy) - rather he donated it.

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  8. I really do NOT give a hoot about their taxes,only need to know they actually PAID what was due. Unlike the cadre of tax cheats in the current crop.Another thing:WHY in the name of Crom do Mitt,Newt,et al,feel the need to sound like damned democrats? The "advisors" all need to be shit-canned,IMHO.

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    Replies
    1. Clyde,

      Good question - they are having target acquisition trouble. Focus on OBAMA.

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