So the story-of-the-week seems to be Mitt Romney's off-shore investments. I am deeply confused by the reporting. Either that, or the reporters are.
One possibility is that the tax rate might not be the only politically troublesome revelation in Romney's returns. Over at Reuters, Sam Youngman suggests that his work with Bain Capital might have led Romney to shelter income offshoreThe Sam Youngman piece does indeed sort of suggest this, but it's more than a bit hazy on how.
His vast fortune is invested in dozens of funds linked to Bain Capital LLC, the powerhouse private equity firm he co-founded and led for 15 years. Several Bain funds have offshore connections and take advantage of tax breaks used only by the U.S. financial elite.All of these things are true, but they do not add up to tax evasion, or even tax avoidance. Corporations do not have to pay taxes on income unless they repatriate the money. Individuals, however, do. The quote sort of muddies the distinction--the returns, we're told, could shed light on how "Romney and Bain" use offshore strategies to avoid taxes, but while I'm certainly not an international tax expert, from what I know, that the phrases "could shed light" and "and Bain" are doing a whole lot of work there.
His tax returns could shed light on how Romney and Bain use offshore strategies to avoid taxes, said Daniel Berman, a former U.S. Treasury deputy international tax counsel and now director of tax at Boston University's graduate tax program.
Bain funds in which Romney is invested are scattered from Delaware to the Cayman Islands and Bermuda, Ireland and Hong Kong, according to a Reuters analysis of securities filings.
"Certain interests in foreign investment structures would have to be reported on attachments to his return," Berman said.
"I remember as a young lawyer being surprised to see tax returns of very successful investors showing net losses - because they were recognizing net losses" but not yet factoring in unrealized gains, Berman said.I am sure that Professor Berman is a very smart, knowledgeable man; it is unfortunate that Youngman chose a quote that makes him sound like an idiot. "Some years, even successful people with a lot of assets lose money" should not be a shocking proposition for anyone old enough to graduate from law school--or read Reuters. Would you really be surprised to hear that the owner of a California 7-11 had lost money in 2001, even though the building he'd bought in 1981 had appreciated by 70%?