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« Video: Mitt Romney Loves The Federal Reserve | Main | Morning Reading - TARP Truthiness, Romney's Rate, Portugal Bailout 2.0, AIG Chairman Lashes Out At Shareholders, The Man Who Bought North Dakota »
Tuesday
Jan242012

Loophole Romney Finally Releases His Tax Returns, Paid 14% Rate On $21 Million In Income

Long live the hedge fund/private equity tax loophole.  This is an abomination.

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WSJ

WASHINGTON—GOP presidential candidate Mitt Romney paid a 14% effective income tax rate in 2010 after making $3 million in tax-deductible charitable donations and drawing most of his income from investments, according to a summary of Mr. Romney's 2010 tax form provided by his campaign.

Mr. Romney reported $21.7 million in income. He paid $3 million in federal taxes, slightly more than the $2.98 million he made in charitable donations. At least $1.5 million of his charitable donations went to the Mormon Church.

Of Mr. Romney's 2010 income, he noted a capital gain of $12.6 million, taxable interest of $3.3 million, ordinary dividends of $4.9 million and smaller sums of gains and losses on business income, refunds and other income.

His 2010 return also showed that he had a financial account in Switzerland that was closed in 2010 and that he generated income from overseas investments. He also reported financial accounts in Bermuda and the Cayman Islands.

Mr. Romney's campaign plans to release his full tax filings for 2010 and an estimate for his 2011 taxes Tuesday. Late Monday, the campaign provided the Wall Street Journal with a preview of those forms.

In an estimate of his 2011 taxes, the Romney campaign said Mr. Romney would pay $3.23 million in federal tax on $20.9 million in total income. He said he would have itemized deductions of $5.7 million, including $4 million in charitable donations. About $2.6 million of the money that Mr. Romney gave to charity in 2011 went to the Mormon Church.

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Reader Comments (21)

I am not quite sure what prompted the line directly under Romney's picture..
Jan 24, 2012 at 10:03 AM | Unregistered Commenterjb
"Romney advisers stressed that the holdings in the Caymans — along with those in a Swiss bank account that was closed in 2010 after an investment adviser decided it could be politically embarrassing to Romney — were reported on tax returns and were not vehicles to avoid taxes."

Wonder if anyone will ask about what might have been politically embarrassing about the Swiss bank account (thank goodness Mr. Romney had an investment adviser to point that out).
Jan 24, 2012 at 10:12 AM | Unregistered CommenterSomething Polish
The reason people are still siding with him is because they want to be him; Even the working class people that still actually think he cares about them.

Americans want to take money out of someone elses pocket for their benefit.
Americans want the jet setter life.
Americans would sell themselves,their neighbors, spouses, kids, siblings, and parents to have the life they think he's got. They do it often.

Americans are going to down in flames wanting the Romney wealth.

Vote BOTH parties out. All of them in 2012.

If you keep so much as one of them you'll have one virus that will mutate and infect everyone else. It always does.
Jan 24, 2012 at 10:50 AM | Unregistered CommenterLili
I am not quite sure what prompted the line directly under Romney's picture..

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It was sarcasm. At least the first part. The tax loophole needs to be closed. I've seen estimates that closing the loophole would raise a few hundred billion annually for the treasury.
Jan 24, 2012 at 10:56 AM | Registered CommenterDailyBail
Well, then - lead the way!

Inform the IRS that you are volunteering to have your retirement taxed, not at 15%, but at the 35% percent level. INstead of getting 85% of your retirement, bh happy with 65%. And if you had to pay 35% on some of it because you can only put so much of your income into retirement, then 35% out, you should be happy with you wonderful 30%

Give away your own money, do not use law and force of gummint to extract and coerce one's personal property away from them. They earned it, you did not, and you have no right to make such demands to it whatsoever.

The last thing the Treasury needs is more money to blow!
Jan 24, 2012 at 11:33 AM | Unregistered Commenterjb
The last thing the Treasury needs is more money to blow!

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I agree with this statement. But the rest of your comment jumps to conclusions. The hedge fund loophole allows billionaires to pay a much lower tax rate than Americans who make much less. This discussion is not about spending vs. revenues. It's about whether the very wealthy hedge funders and their ilk deserve to pay a lower rate than everyone else.
Jan 24, 2012 at 11:55 AM | Registered CommenterDailyBail
Romney is not discussing hedge funds but, for the sake of the argument, if the profits from those are invested in retirement accounts, the 15% applies. If he puts more into retirement than permitted, then he pays more up front, but 15% on withdrawal.

If your problem is with hedge funds, then the very last solution is another tax. Force the SEC to do its job, which it woefully ignored doing for some years now. Until then, hedge funds are legal. In addition, electing representatives who will stop this unholy alliance betweem gummint, banks, the Fed and Wall Street would benefit all and close loopholes. The gummint and unrestrained spending got us into this mess, not the billionaires. If you confiscated (stole) the total wealth of all American billionaires tomorrow, you would have enough money to keep gummint going for about 4 months.

Big whoops.
Jan 24, 2012 at 12:22 PM | Unregistered Commenterjb
Without getting into the "fairness" argument over Romney's taxes, or legal tax avoidance (and those of his ilk--hedgies, LBO boyz, etc.), the goal should be, as I see it, to raise the required revenue to pay the US bills (and the bills should be dramatically reduced, btw), at the least harm to the taxpayer. If that means a flat tax of 15%, 17%, 20%, 25% or whatever, so be it. But the flat tax applies to ALL taxpayers and for ALL income, and deduction loopholes should/will be eliminated. I don't care if Romney pays 14% or 35% or 50%, so long as that rate applies across the wealth spectrum, and to all forms of income.

Anything else is a corrupt, gamed system, as we can see now by Romney's tax disclosures (See Caymans, Bermuda and Swiss accounts, charitable deductions and carried interest BS).

PS--It's good to be the Mormon church, apparently. Who are these people?
Jan 24, 2012 at 12:47 PM | Unregistered CommenterJosie
Josie -

A flat tax rate should be computed at whatever level is necessary to maintain gummint as was intended by the Founders, and amount which, if you removed the 40% plus of the budget that pays the interest on all the money the politicians have squandered or given away in entitlements, would be far less than 10%. Let the politicians solve the debt by shrinking their spending and budgets, and not saddling us who do the working and living an tax-paying out here.

And if we actually did that, we could abolish both the IRS and the Income Tax in short order, and let those of us who work for a living and think we have a right to what is ours, become even more productive. Why gummint, anyone else, thinks they have an arbitrary right to what is mine, is beyond me. That they claim to do, and can take all I have if I do not recognize their authority to steal percentage of my labor, is beyond me.

But we have been stuck with this semi-mercantilist/semi-democratic/almost fascist nonsense for so long, that I can see little but a complete collapse before folks wake up and get it.

P.S. There is no such thing as "legal tax avoidance." EIther by law you owe tax, or you do not.
Jan 24, 2012 at 1:16 PM | Unregistered Commenterjb
The Good Lord doesn't ask for more than 10%, neither should Caesar.
Jan 24, 2012 at 1:24 PM | Unregistered CommenterLugNut
Sounds exactly like he paid taxes in accordance to the laws, rules and regulations established by the government, where's the beef? The whiners speak of percentages instead of the actual money conscripted from his earnings, he paid a lot of money, actual money. Who thinks of percentages except mealy mouthed pollsters and Democrat politicians to bolster their causes. How much in dollars did Obama pay, how much in dollars did Harry Reid and John Kerry pay? I know what I pay in dollars, the percentage is what the instructions say it is, I just follow their dictates. I'm old but I'm betting whatever I pay in my remaining years has already been spent by the federal government.
Jan 24, 2012 at 1:25 PM | Unregistered CommenterVernon Clayson
JB

I agree with almost everything you say. I believe the fed gov't. is too large and we need to cut spending. I've outlined my ideas for spending cuts many times on this site. But that's not my beef here.

Read these 2 links. It is explained well here:

http://www.businessinsider.com/jim-cramer-goes-on-twitter-tirade-blasting-corruption-and-how-little-taxes-in-hedge-funders-pay-2012-1

http://articles.businessinsider.com/2012-01-21/news/30649999_1_capital-gains-hedge-fund-ordinary-income

Even cramer, a former hedge fund manager, agrees.

Here's a snip from Blodgett's op-ed:

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This loophole, which some think is one reason GOP front-runner Mitt Romney is scared to release his tax returns, is absurd.

To be clear:

There is no theoretical justification for it.

None.

The fact that the loophole exists is merely a function of the enormous power the financial industry has over Washington.

The argument that some hedge-fund moguls and their defenders make for the tax break is that, because they are paid based on the performance of their funds, their compensation somehow represents a "capital gain."

That is just ridiculous.

Anyone paid any form of performance-based bonus could make this argument.

Most hedge-fund and private-equity managers, including venture capitalists, are paid with a combination of a management fee (1%-3% of assets under management) and a performance-based fee (generally 20%-50% of the "gains" on their funds). The managers are generally paid these fees regardless of whether the gains are due to their own performance or simply the market going up. (Most hedge funds are a horrible deal for hedge-fund investors, but since investors are still dumb enough to line up around the block to put their money in, that's their problem).

In both cases, however, the fees the managers receive are compensation for service, not "capital gains."

The justification for lower taxes on capital gains is to encourage people to invest capital for the long term. Capital investments generally help the economy, by funding new companies and projects. The capital that is invested, moreover, has already been "earned" (and, thereby, taxed). So there are reasonable arguments for having lower taxes on long-term capital gains than on ordinary income.

But the management and performance-based fees paid to hedge-fund and private equity managers are NOT capital gains. They're ordinary income. Just because they don't arrive in a monthly paycheck and are based on performance doesn't change that.
Jan 24, 2012 at 2:37 PM | Registered CommenterDailyBail
Sounds exactly like he paid taxes in accordance to the laws, rules and regulations established by the government, where's the beef?

---

Vernon

The beef is that his income is not capital gains. Read the links I provided above. I support a low cap gains tax. Hedge funds and private equity earnings are NOT real capital gains.
Jan 24, 2012 at 2:42 PM | Registered CommenterDailyBail
@ JB. Agree (see my post re: shrink the govt bills), but don't hold your breath waiting for govt to change the tax code to flat tax, closed loopholes, no deductions, etc. Not in this or your kids' lifetimes...

PS--"legal tax avoidance" = tongue-in-cheek. I get it. Not a tax lawyer, but I took tax law in law school. The issue, as DB points out, is not whether the LBO or Hedgie-related income is taxable (i.e., "by law you owe"); it's how does the law (and IRS) treat this taxable income. Capital gains (or so-called carried interest) is a farce...
Jan 24, 2012 at 3:06 PM | Unregistered CommenterJosie
DB -

Point taken, I stand corrected, and now better informed, on the tax status of hedge funds.

Yet, arrrrrrrrrrgh! what he did was still legal. Needs to be fixed.

Thanks again.
Jan 24, 2012 at 4:24 PM | Unregistered Commenterjb
If I have to pay 27% these elite parasites should pay the same or more. They enjoy all the perks and benefits this country has to offer that I can't afford or access, and go to great lengths to make sure they don't have to pay the same percent of what they make that I do. I think all this MSM bullcrap about these people are the job creators is GOP propaganda, nothing more. Tax the hell out of them and maybe they'll actually start creating some jobs instead of taking their money offshore.

I bet Romney's advisors, attorneys, and accountants had to get very creative to show 14%, and I don't believe for a second 14% is truly accurate.
Jan 24, 2012 at 4:41 PM | Unregistered CommenterSagebrush
Why hasn't anyone picked up on the fact that he used a Belmont MA address as his residence when he sold his home in Belmont MA in April of 2009 and moved to California? Could it be because he would rather pay 5.5% in MA than 9.5% in CA? I bet.
Jan 25, 2012 at 1:35 AM | Unregistered Commenterwheresthebeef
Why hasn't anyone picked up on the fact that he used a Belmont MA address as his residence when he sold his home in Belmont MA in April of 2009 and moved to California? Could it be because he would rather pay 5.5% in MA than 9.5% in CA? I bet.
Jan 25, 2012 at 1:36 AM | Unregistered Commenterwheresthebeef
You people just don't get the big picture!

The money Mitt saved on taxes enabled him to start all sorts of new businesses which employ thousands and thousands of people!

Don't be so bitter, its not good for your health!
Jan 25, 2012 at 9:06 AM | Unregistered CommenterOwen Meaney
JB

You're welcome. I enjoyed the discussion.

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Owen

Did you even read the links I provided? This tax loophole is utter nonsense. And this isn't a site filled with envious folk demanding that we soak the rich. We are simply demanding an end to a bullshit loophole that only exists b/c of the immense power of financial interests. Get educated before you spout nonsense.
Jan 25, 2012 at 11:19 PM | Registered CommenterDailyBail

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