The 3 Reasons Why Romney Won't Release Those Tax Returns

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What is he hiding? Who knows! Let's guess.

AP Photo/Evan Vucci

The new parlor game for political junkies has become Guess the Contents of Mitt Romney's Tax Returns.

Joshua Green of Bloomberg Businessweek is one of the more-recent entrants to the field with his theory, culled from a dinner with private equity execs, that Romney paid no taxes in 2009. Green posits that Romney probably suffered major losses when the stock market took a nosedive in 2008. "And it's possible he suffered a large enough capital loss that, carried forward and coupled with his various offshore tax havens, he wound up paying no U.S. federal taxes at all in 2009," Green writes, equating that scenario to political death.

Other theories abound. Like, Romney won't release his returns because he does not want voters to know about additional offshore bank accounts, or any potential politically sensitive investments

Edward Kleinbard, former chief of staff for the Joint Committee on Taxation, wonders if Romney reported and paid all of the gift taxes associated with his various family trusts.

This game could go on for weeks, and most likely will continue as President Obama and a myriad of Republican pundits and politicians call on Romney to release a greater number of tax returns. So far, the public has only seen the 2010 return and an estimated draft of 2011.

So, in the spirit of the participating in the Internet's hive-like mind, National Journal talked to a handful of tax experts about why Romney refuses to release several years of returns. Some thoughts.

ROMNEY WON'T RELEASE THOSE TAX RETURNS BECAUSE:

1) ... HE'S AFRAID HIS WEALTH WILL APPEAR GARISH.

It's easy to paint Romney as an uber-wealthy business leader because, well, he is really rich. In 2010, he made roughly $21.6 million, $12.5 million of that from capital gains and $4.9 million from dividends. Forget the idea of living off a measly 401(k), this guy can live large off his investments. That fact alone pegs him as member of the uber-rich class; according to the Tax Policy Center, 75 percent of the tax savings from low rates on capital gains and dividends went to the top 1 percent of taxpayers.

Add to this the fact that Romney's 2011 and 2010 returns show that he had a Swiss bank account at one time, as well as an offshore account in the Cayman Islands. The equation makes it clear that Romney does not live like most of us given his extreme wealth--and releasing additional tax returns (especially those not prepared with a presidential campaign in mind) may only make that point in a starker, bolder fashion.

2) ... HE'S AFRAID HIS TIES TO PRIVATE EQUITY WILL BACKFIRE.

Last week, The Boston Globe turned up some SEC documents that list Romney as the chief executive and chairman of Bain Capital through 2002, though the Romney camp maintains that the candidate left the company in 1999. This fuzziness further highlights Romney's deep ties to private equity, which the Obama campaign has tried to portray as an industry responsible for shutting down factories and sending jobs overseas.

Romney's tax returns don't help that case. The trust in Ann Romney's name, for instance, lists all of the capital gains that the trust earned from various investments in S Corporations or partnerships to the tune of $7.6 million. "Most of them come from private equity as opposed to company stock," says Terri Holbrook, who teaches accounting at the University of Texas (Austin) McCombs School of Business and who examined the Romney tax returns.

Any additional tax releases may just add to the sense that Romney is deeply of and from the world of private equity, or least very financially tied to it.

3) ... HE'S JUST A PRIVATE GUY.

If the way people spend money gives any indication as to their personal beliefs, then tax returns are like snapshots of people's priorities. Romney's tax returns, for instance, show the breadth of his charitable giving: $2.9 million just in 2010. But tax returns from previous years could turn up different information. Like, did Romney give money to any organizations in the 1990s that supported political or social beliefs he now decries?

And what about government benefits such as child tax credits, or deductions for college savings? Did he legally (and rightly) take advantage of these government benefits at a time when many House Republicans, with whom Romney has sided on many fiscal matters, decry these type of tax breaks as unnecessary spending in a time of too much debt?

Perhaps the biggest takeaway from this parlor game is this: Questions about Romney's tax returns will never end, even if he releases years and years of them. Any revelation about another offshore account or capital gain or tax deduction will only prompt more questions. His tax returns are too complicated to be encapsulated neatly into sound bites that most people can digest.

It's a political calculus that's going on, weighing criticism for a lack of transparency against what would surely be four months, and many more rounds of questions, about Romney's wealth and his complex accounting methods.

"The range of money we're talking about is outside of the average American's ability to conceive of," says Steve Schmidt, a Republican political operative who oversaw Sen. John McCain's presidential campaign when it considered Romney as a potential vice president. "There are perfectly good reasons for him to dig in."

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Nancy Cook is a correspondent for National Journal.

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