SanDiegoKen
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I can only vote in America and I will vote for Obama.
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Mitt Romney
- Thread starter BlakeBennet
- Start date
I can only vote in America and I will vote for Obama.
DrabBoiz
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Wow, 1890 it was? Then it was only 88 more years (1978) before they allowed black men to hold the priesthood.
cumrag27
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Romney/Ryan promises for a stronger dollar and the unexpected consequences thereof...
I copied the following article from CNBC:
..
Unexpected Market Ripple From Romney-Ryan
By Lee Brodie | CNBC – 3 hours ago.
Investors have been closely watching the Republican National Convention hoping for signs that Mitt Romney and Paul Ryan could gain traction with the American public.
The stock market has hardly moved over the past three days as pros digest every word of every comment made in Tampa.
In fact, the S&P has been trading in a fairly tight range over the last three weeks, finding support at 1,400 but unable to trade much above the April high of 1,422.38, a level of resistance.
The conventional wisdom is that as the party of business, if the Republicans can pull ahead and win the White House, the S&P will surge.
However, that may not be the case this time around.
Ahead of the broadcast, top hedge fund manager and Fast Money trader Keith McCullough of Hedgeye explained to us that "Paul Ryan's speech had a big impact on global currency markets. It stopped the US dollar (Exchange:.DXY) from going down."
In part, that's because Ryan is known for aggressive budget plans that slash government spending and lower taxes. And in his speech before the RNC on Wednesday, he reiterated his call for government to stop spending money it doesn't have.
"In a clean break from the Obama years, and frankly from the years before this president, we will keep federal spending at 20 percent of G.D.P., or less," he promised. "That is enough."
As patriotic as that may sound, "what's good for America's currency, in the short-term, is bad for the stock market." Very bad.
A strong dollar makes commodities nominated in dollars more expensive for buyers using other currencies. In turn a strong dollar drags down resource related stocks (XLB) as well as energy (XLE).
Ultimately the market sells off.
Looking down the road to November, McCullough also said, "If Romney/Ryan were to (pull ahead) and win the election, the Street would expect that Bernanke is out - and again the USD is up."
The result would be an even stronger US dollar.
That means, unless the current relationship between the S&P and the dollar chages a GOP win could send market tumbling.
McCullough also told us, "Oil and gold would fall hard." Again these are commodities nominated in dollars.
However, long-term he sees a positive. "US consumption growth (ie the 71% of GDP) can actually start to occur sustainably again. In the long term a strong dollar means a strong America," said McCullough.
And McCullough added an important caveat. "Markets are interconnected and dynamic, so anchoring on 1 factor like that is not how I invest."
Just one more reason why these two need to be "outsourced" to another planet or another universe and out of politics!
Sincerely,
Stimpy
I copied the following article from CNBC:
..
Unexpected Market Ripple From Romney-Ryan
By Lee Brodie | CNBC – 3 hours ago.
Investors have been closely watching the Republican National Convention hoping for signs that Mitt Romney and Paul Ryan could gain traction with the American public.
The stock market has hardly moved over the past three days as pros digest every word of every comment made in Tampa.
In fact, the S&P has been trading in a fairly tight range over the last three weeks, finding support at 1,400 but unable to trade much above the April high of 1,422.38, a level of resistance.
The conventional wisdom is that as the party of business, if the Republicans can pull ahead and win the White House, the S&P will surge.
However, that may not be the case this time around.
Ahead of the broadcast, top hedge fund manager and Fast Money trader Keith McCullough of Hedgeye explained to us that "Paul Ryan's speech had a big impact on global currency markets. It stopped the US dollar (Exchange:.DXY) from going down."
In part, that's because Ryan is known for aggressive budget plans that slash government spending and lower taxes. And in his speech before the RNC on Wednesday, he reiterated his call for government to stop spending money it doesn't have.
"In a clean break from the Obama years, and frankly from the years before this president, we will keep federal spending at 20 percent of G.D.P., or less," he promised. "That is enough."
As patriotic as that may sound, "what's good for America's currency, in the short-term, is bad for the stock market." Very bad.
A strong dollar makes commodities nominated in dollars more expensive for buyers using other currencies. In turn a strong dollar drags down resource related stocks (XLB) as well as energy (XLE).
Ultimately the market sells off.
Looking down the road to November, McCullough also said, "If Romney/Ryan were to (pull ahead) and win the election, the Street would expect that Bernanke is out - and again the USD is up."
The result would be an even stronger US dollar.
That means, unless the current relationship between the S&P and the dollar chages a GOP win could send market tumbling.
McCullough also told us, "Oil and gold would fall hard." Again these are commodities nominated in dollars.
However, long-term he sees a positive. "US consumption growth (ie the 71% of GDP) can actually start to occur sustainably again. In the long term a strong dollar means a strong America," said McCullough.
And McCullough added an important caveat. "Markets are interconnected and dynamic, so anchoring on 1 factor like that is not how I invest."
Just one more reason why these two need to be "outsourced" to another planet or another universe and out of politics!
Sincerely,
Stimpy
i wonder if ever there will come a day when a gay woman will be called to serve?
i work hard to convince people that this is not the time to stop the progressive movement.
when the rich paid higher taxes, there was a surplus.
when taxes were cut, two wars were fought, and medicare benefits were increased, there was a deficit.
we survived the worst economic downturn in our lifetimes.
i don't trust republicans to address my issues as i would want them addressed.
joninliverton
BSB Addict
It appears we do not have any republicans on the forum. I wonder why ?
i understand what you are saying. But the fact of the matter is thats they only thing that i really care about. I want this country to admit that it is on a downward spiral to the idiot capital of the world where the only excuse for a dumber country is others cant read, which we are slowly also getting to that point.
I think you need to look at "gay Rights" as just Civil rights. Look back at history...
some of the things we are being told in school are "Womens Civil Rights" or "Freedom of Slavery"
Women could get jobs, vote, own houses, ect.
african americans could become citizens
Im sure back then, when those were big political movements that havent happened yet, people were saying. "No big Deal." "It will Never Happen." "Not in Our Lifetime."
But it did happen and now is a major part of our history. SO WILL THIS! one day there will be written in history books as "GLBT" stood up for what was right and took their lives in their own hands and did something about it!
I was actually raised Mormon.... SHOCKER i know...
BUT, yeah they dont do the multiple wives things anymore.. that was a way to insure that the women who out ratio the men 5:1 back in the early 1800 when it was founded, women in America could not own land, houses, or fend for themselves.. To make sure every women had a home, polygamy was instated as a survival tactic, the second the ratio came down, it was over.
There are still some extreme things they do....
Such as..
when i was a Freshmen in high school. i had a group of friends that i use to go to church with. we caught up and hung out. a few months later, my friend Amanda, tells me this is her last year of school. "wait, why? you are just a (14 yr old) Freshmen." i said. "Because, when i turn 15, my parents arranged for me to marry this guy, hes 26 and on a mission trip, gets back this summer and we are to be married."
UHG!!! SHE WAS SMART TOO!!
Her whole life wasted!! told that she is just a Breading Body and NOTHING MORE. Women with Education are horrible abominations! they literally prefer women who cant think for themselves.
Could you imagine being in a relationship where you have NO so say in anything??
Dont get me wrong.. the 26 yr old was a nice guy. Mormons usually.. USUALLY are.
My mom and Dad got a Divorce when we were still apart of the church... They destroyed my mothers car to pieces..
Lucky for us.. Mormons dont believe in science and the Art of FINGER PRINTS AND DNA they LEFT all over the CAR!!!
joninliverton
BSB Addict
Well if gay rights is the only think you care about then you are indeed very sad. Presidential or parliamentary elections are not about gay rights, they are about getting the right people or person to look after the defence, economy, education and welfare of your country. In the US you are leaving it up to the individual states to decide on gay marriage - that itself is stating that the issue is not worthwhile being a federal issue.
By the way, do you pay taxes ?
Buckeye1
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I can't imagine, having thousands of members, there are no Republicans present. Perhaps we do have some Republicans on the forum, but they have chosen to NOT participate in a debate here since no minds will be changed and they would probably be BASHED to hell for stating their views. The most that the above posters can hope for is that THEIR views may somehow change some Republican's minds.
Buckeye1
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If there are any Republicans out there supporting Romney, their positions would be more likely changed to Obama if the tone of this thread did not seem like a lynch mob.
Ms. Kianna
BSB Addict
Agreed. I don't think anyone, that has an opposing opinion, really listens to attacks. They are more likely to be swayed by an intelligent, informed, and safe exchange of information, where both sides are involved.
When people hear attacking, they usually dig in their heals to protect.........
I'm very grateful and I applaud your passion on the issue of gay rights and equality for all. Your heart is in the right place. Thank you Blake! You just keep giving us more reasons to love you.
Big hugs!
peterh6308
BSB Addict
I'm not saying what party I prefer, but if I was a voting republican I wouldn't under any circumstances vote for Mitt Romney. I don't care that he's a mormon, but I do care about how he feels about every miniority in this country and folks he don't care about every miniority in this country. Lets be honest, no President has really gotten every thing right, but this guy has got way more wrong then right and frankly thats scary. I vote for the candidate who i believe has the peoples best interest at heart.
cumrag27
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Mitt Romney exited Bain Capital with rare tax benefits in retirement...
Quoted from the Washiington Post
Before Mitt Romney retired from Bain Capital, the enormously profitable investment firm he founded, he made sure to lock in his gains, both realized and expected, for years to come.
He did so, in part, the way millions of other Americans do — with the tax benefits of an individual retirement account. But he was able to turbocharge the impact of those advantages and other tax breaks in his severance package from Bain in a way that few but the country’s super-rich can ever hope to do.
As a result, his IRA could be worth as much as $87 million, according to his estimates, and he can continue to earn tax-advantaged income from Bain more than a decade after he formally left the firm.
The Republican presidential nominee has been “scrupulous” about observing the tax code, said Romney campaign spokeswoman Michele Davis. “His income is reported and taxed in full compliance with U.S. law, and he has paid 100 percent of what he has owed.” She added that the financial holdings of Romney and his wife, Ann, are managed by a blind trust the Romneys do not control.
Romney’s former colleagues say his retirement package is a well-justified reward for a chief executive who built Bain from scratch in 1984 into a financial powerhouse that backed business successes such as Staples and the Sports Authority.
The structure and tax treatment of his retirement, including the IRA, was legally sound and appropriate, they say, adding that he has earned less money over his career than some other top privat-equity executives, who earned billions of dollars during the same period.
Details of Romney’s retirement assets are somewhat vague because he has released only one year of full tax returns and declined to provide additional specifics about his personal finances. But interviews with Bain executives and accounting professionals show that he was able to take advantage of tax benefits in innovative ways open only to a narrow slice of extremely affluent people — mostly those who work in private-equity firms and other investment partnerships.
His severance package, for instance, allowed him to continue sharing in the profits of the company as if he were still a partner managing it, according to his 2010 tax return and interviews with present and former Bain executives. And because he benefited from the firm’s investments as if he were an active Bain partner, he paid taxes at a lower rate on these earnings than if they were treated as ordinary retirement income. Romney negotiated the package when he was leaving the firm, Bain executives said, while he set up his IRA long before.
IRAs were established by Congress nearly 40 years ago to help people save for their retirement. Under the law today, individuals may contribute up to $5,000 per year and employers may contribute up to $50,000 a year to an employer-sponsored IRA. The money is invested, and the investments grow tax-free until retirement. There is no limit on how much money an IRA can earn tax-free.
What determines an IRA’s growth is the performance of the investments, and Bain enabled Romney, its other employees and its partners to score big on that front. It was not uncommon for senior Bain executives to accrue IRAs valued at tens of millions of dollars, according to former and present company employees, by buying into Bain investments at very low prices and then reinvesting the returns in other low-priced Bain investments after the initial investments appreciated.
When Romney was chief executive, Bain set up Simplified Employee Pension IRAs, or SEP-IRAs, under which the company contributed up to $30,000 a year to employees’ retirement accounts, according to people familiar with the program. Many of the employees decided to use this contribution to buy stock in the companies that Bain had acquired in the course of its business as a private-equity firm.
Bain executives encouraged such IRA investments. They demonstrated to Bain’s outside clients, who were also investing in the stock of these acquired companies, that Bain employees were putting their money where their mouth was and sharing in the risk with outside investors. The co-investment strategy was good for building relationships with clients. “Employee investing has always been an essential part of the culture of the firm,” said Bain spokesman Alex Stanton.
Like other IRA investors, Romney will pay a 35 percent tax on the funds in his account when he ultimately withdraws them, said Davis, the Romney campaign spokeswoman. Until then, he can use the money in the account to buy and sell stock and other assets, repeatedly re*investing the money inside the IRA, without having to pay tax rates of up to 40 percent for short-term capital gains. That’s a huge benefit, tax experts say.
Romney’s IRA growth could be dramatic, in part, because he, like other Bain employees, was given access to a type of shares in Bain-backed companies that were often private and low-valued when the employees bought in and then were managed by Bain for growth and an eventual sale or public share offering that would maximize shareholder value.
These “A-shares” were priced by Bain at a fraction of another category of stock known as “L-shares,” which functioned like preferred stock, paying dividends and getting priority for payouts. The A-shares, or common shares, were riskier and thus priced lower, so it was possible that a relatively small IRA investment could buy significant amounts of the A-shares in some companies. The use of a dual-share structure is not unusual in the financial industry, and under financial accounting rules the A-shares must reflect a true market value of the underlying assets. Often, the value of these initially cheap A-shares soared, along with the company’s value.
Consider the example of Physio-Control, which was bought by Bain in 1994. The company, a maker of defibrillators, saw its business take off in the following years, with Bain’s initial investment multiplying 21 times. Under the dual-share structure, the rewards were heavily tilted toward the A-shares. The value of an A-share purchased in 1995 multiplied 445 times in just three years, according to a person familiar with the transaction who spoke on the condition of anonymity. In other words, a $10,000 investment in Physio-Control A-shares would in theory have returned $4.45 million.
Not all deals worked out so well. Bain bought US Synthetic, a maker of bits used in oil and gas exploration, in 1998. By the time the company was sold in 2004, the original Bain investment had multiplied a modest 1.2 times. Under the terms of the company’s dual-share structure, A-shares lost all their value.
By leveraging a series of successful A-share investments, taking profits and reinvesting the money into new A-shares, a Bain IRA fund could easily accumulate millions of dollars without any tax penalty. On the disclosure statements Romney files as a candidate for federal office, he reports his financial holdings and values them by assigning a dollar range to each one. By adding these values together, The Washington Post calculated that the holdings in his IRA were worth between $20 million and $102 million in 2011. The total range shifted downward this year, with Romney valuing the holdings in his IRA at between $17 million and $87 million.
Romney has not disclosed all the assets he used to build his IRA.
In explaining the growth of his account, Romney campaign officials do not dispute The Post’s analysis but note that he had been eligible to contribute to IRA accounts since he entered the work force in 1975 and that the years since then have often been times of strong economic growth.
That does not mean the size and growth of such IRAs are not controversial. Michael Graetz, who served in the Treasury Department under President George H.W. Bush, said massive IRAs such as Romney’s do not reflect the intent of the laws that created the accounts as a way to help working Americans reach financial security.
“One need not have $100 million in an IRA in order to accomplish retirement security,” said Graetz, who teaches tax and retirement policy at Columbia Law School. “The law deliberately set limits in order to restrict the revenue losses to the Treasury.”
Another tax expert, Edward Kleinbard of the University of Southern California, who reviewed the prices of some A- and L-shares, said Bain may have undervalued the A-shares, providing a benefit to insiders. Kleinbard, a Democrat and former chief of staff of the Congressional Joint Tax Committee, said the valuation of such shares should reflect real market prices.
But Jack Levin, a tax lawyer who has represented Bain, said the share prices at Bain were worked out “by all the investors at arm’s length based on the company’s prospects and economic condition at the time of the investment.”
He said the increase in the value of Romney’s IRA reflected business smarts, not questionable investment practices.
“There is nothing magical about it,” Levin said. In the years that Romney ran Bain, the company earned more than a 50 percent return on investment on average each year. Even a lower rate of return, 26 percent a year, combined with a regular investment of new funds in the account would give Romney “more than $100 million in his IRA account today,” according to Levin, a lawyer at Kirkland & Ellis.
He noted that there was nothing improper about amassing so much wealth. “There is nothing in the tax law that prohibits an IRA from earning as much as the sponsor’s investment acumen allows him or her to earn,” he said.
Another way in which tax rules have favored Romney’s post-Bain financial situation is through the treatment of his severance package from Bain. Again, he benefited from a tax break in a way that is available to very few. His retirement earnings receive what is called the “carried interest” deduction. That’s an accounting classification that treats certain income from private-equity firms and other partnerships as capital gains and taxes it at a rate of 15 percent, rather than as ordinary income at 35 percent.
Here’s how carried interest works: Most private-equity firms charge their clients fees known as "2 and 20” — 2 percent of an investment fund’s overall assets and 20 percent of any profits. Managers generally declare the 2 percent management fee as ordinary income, meaning they pay ordinary income and payroll taxes on the money. But most private-equity managers say the 20 percent share of profits, the “carry,” is an investment and thus should be taxed at the capital gains rate.
Defenders of carried interest say the lower tax rate provides fund managers with an incentive to take smart risks, because they share in the investment with their clients. Opponents say it is a loophole that ought to be closed.
Romney’s 1999 severance package was structured to take advantage of the carried-interest treatment. It took nearly a year of negotiations to arrange that package after he left Bain in 1999 to run the Salt Lake City Winter Olympics, Bain insiders say, and he did not formally resign as chief executive until he had negotiated the deal.
The result of the negotiations was a deal that allowed Romney to continue sharing in the profits of the company for 10 years in the same way that active managers received compensation. These carried-interest profits would be taxed at a 15 percent rate, less than half the rate that retirees might pay on other income, including payouts from pensions, IRAs and stock options.
Under the terms of the retirement package, as described by Romney and Bain executives, he would benefit from Bain business deals made through Feb. 11, 2009 — 10 years to the day after he left Boston to run the Olympics.
He would receive the 2 percent management fee as well as a share of the carried-interest profits that Bain made from acquiring and later reselling companies. Bain declined to say how large the share was, but a person familiar with the agreement said the share declined over time.
Ten-year retirement agreements such as this are unusual in the corporate world, but financial industry experts say such arrangements make sense for privately held investment partnerships such as Bain. Partnership shares are difficult to divide and, because the company is not publicly traded, it is difficult to offer a retiring founder an immediate payout, experts say.
In Romney’s case, however, the benefits did not stop when the 10 years were up, his disclosure statement and tax return show. As long as any of the Bain investment funds in which Romney invested before 2009 continued to make profits, Romney would continue to share in them. Since these funds often last five to seven years, Romney has continued to profit well beyond the termination of his severance package. Other top executives at Bain have negotiated similar retirement deals, according to a former partner.
Bain executives have said Romney is entitled to continue sharing in the profits, even in retirement, because he built Bain and led it during its most successful period. Romney helped pull together $37 million for the first investment fund, handpicked early partners, personally solicited potential investors, and presided over rigorous debates about firm strategy and acquisition decisions.
Yet some of the retirement benefits no longer flow to Romney individually but to a blind trust he established in the name of his wife, Ann.
In his 2010 tax return, Romney said the Ann Romney blind trust could receive carried-interest profits from a Bain fund based in the Cayman Islands called Bain Capital Partners (AM) X LP. To request the carried-interest tax deduction, which is typically taken by active fund managers, Romney’s attorney filed a tax form telling the IRS that Ann’s trust was “performing services” for the fund.
Tax experts say Romney can legally share in the carried-interest profits and take the deduction if Bain has agreed to the arrangement. Critics of the carried-interest deduction say this example highlights how the tax break can be abused.
“Carried interest was intended to motivate managers going forward,” said Victor Fleischer, an expert in carried interest at the University of Colorado law school. “In cases like the Romneys, it just shows it is really all about fancy tax planning. It’s not motivating managers going forward. Not only is Mitt not providing any future services, Ann never did.”
In recent years, the carried-interest deduction has proved controversial on Capitol Hill. There have been several unsuccessful efforts to eliminate the tax break, which critics say improperly treats profits like capital gains, and tax these earnings as ordinary income at 35 percent.
Some tax experts worry that the arrangements Romney benefits from set a bad precedent for a president. “He looks for every tax angle to a degree that is unbecoming in someone who would be the executive in command of the administrative apparatus that enforces the tax law,” said Lee Sheppard, a tax lawyer and contributing editor for Tax Analysts, a publication for accounting and legal professionals.
Gregory Thomas contributed to this report.
Stimpy
Quoted from the Washiington Post
Before Mitt Romney retired from Bain Capital, the enormously profitable investment firm he founded, he made sure to lock in his gains, both realized and expected, for years to come.
He did so, in part, the way millions of other Americans do — with the tax benefits of an individual retirement account. But he was able to turbocharge the impact of those advantages and other tax breaks in his severance package from Bain in a way that few but the country’s super-rich can ever hope to do.
As a result, his IRA could be worth as much as $87 million, according to his estimates, and he can continue to earn tax-advantaged income from Bain more than a decade after he formally left the firm.
The Republican presidential nominee has been “scrupulous” about observing the tax code, said Romney campaign spokeswoman Michele Davis. “His income is reported and taxed in full compliance with U.S. law, and he has paid 100 percent of what he has owed.” She added that the financial holdings of Romney and his wife, Ann, are managed by a blind trust the Romneys do not control.
Romney’s former colleagues say his retirement package is a well-justified reward for a chief executive who built Bain from scratch in 1984 into a financial powerhouse that backed business successes such as Staples and the Sports Authority.
The structure and tax treatment of his retirement, including the IRA, was legally sound and appropriate, they say, adding that he has earned less money over his career than some other top privat-equity executives, who earned billions of dollars during the same period.
Details of Romney’s retirement assets are somewhat vague because he has released only one year of full tax returns and declined to provide additional specifics about his personal finances. But interviews with Bain executives and accounting professionals show that he was able to take advantage of tax benefits in innovative ways open only to a narrow slice of extremely affluent people — mostly those who work in private-equity firms and other investment partnerships.
His severance package, for instance, allowed him to continue sharing in the profits of the company as if he were still a partner managing it, according to his 2010 tax return and interviews with present and former Bain executives. And because he benefited from the firm’s investments as if he were an active Bain partner, he paid taxes at a lower rate on these earnings than if they were treated as ordinary retirement income. Romney negotiated the package when he was leaving the firm, Bain executives said, while he set up his IRA long before.
IRAs were established by Congress nearly 40 years ago to help people save for their retirement. Under the law today, individuals may contribute up to $5,000 per year and employers may contribute up to $50,000 a year to an employer-sponsored IRA. The money is invested, and the investments grow tax-free until retirement. There is no limit on how much money an IRA can earn tax-free.
What determines an IRA’s growth is the performance of the investments, and Bain enabled Romney, its other employees and its partners to score big on that front. It was not uncommon for senior Bain executives to accrue IRAs valued at tens of millions of dollars, according to former and present company employees, by buying into Bain investments at very low prices and then reinvesting the returns in other low-priced Bain investments after the initial investments appreciated.
When Romney was chief executive, Bain set up Simplified Employee Pension IRAs, or SEP-IRAs, under which the company contributed up to $30,000 a year to employees’ retirement accounts, according to people familiar with the program. Many of the employees decided to use this contribution to buy stock in the companies that Bain had acquired in the course of its business as a private-equity firm.
Bain executives encouraged such IRA investments. They demonstrated to Bain’s outside clients, who were also investing in the stock of these acquired companies, that Bain employees were putting their money where their mouth was and sharing in the risk with outside investors. The co-investment strategy was good for building relationships with clients. “Employee investing has always been an essential part of the culture of the firm,” said Bain spokesman Alex Stanton.
Like other IRA investors, Romney will pay a 35 percent tax on the funds in his account when he ultimately withdraws them, said Davis, the Romney campaign spokeswoman. Until then, he can use the money in the account to buy and sell stock and other assets, repeatedly re*investing the money inside the IRA, without having to pay tax rates of up to 40 percent for short-term capital gains. That’s a huge benefit, tax experts say.
Romney’s IRA growth could be dramatic, in part, because he, like other Bain employees, was given access to a type of shares in Bain-backed companies that were often private and low-valued when the employees bought in and then were managed by Bain for growth and an eventual sale or public share offering that would maximize shareholder value.
These “A-shares” were priced by Bain at a fraction of another category of stock known as “L-shares,” which functioned like preferred stock, paying dividends and getting priority for payouts. The A-shares, or common shares, were riskier and thus priced lower, so it was possible that a relatively small IRA investment could buy significant amounts of the A-shares in some companies. The use of a dual-share structure is not unusual in the financial industry, and under financial accounting rules the A-shares must reflect a true market value of the underlying assets. Often, the value of these initially cheap A-shares soared, along with the company’s value.
Consider the example of Physio-Control, which was bought by Bain in 1994. The company, a maker of defibrillators, saw its business take off in the following years, with Bain’s initial investment multiplying 21 times. Under the dual-share structure, the rewards were heavily tilted toward the A-shares. The value of an A-share purchased in 1995 multiplied 445 times in just three years, according to a person familiar with the transaction who spoke on the condition of anonymity. In other words, a $10,000 investment in Physio-Control A-shares would in theory have returned $4.45 million.
Not all deals worked out so well. Bain bought US Synthetic, a maker of bits used in oil and gas exploration, in 1998. By the time the company was sold in 2004, the original Bain investment had multiplied a modest 1.2 times. Under the terms of the company’s dual-share structure, A-shares lost all their value.
By leveraging a series of successful A-share investments, taking profits and reinvesting the money into new A-shares, a Bain IRA fund could easily accumulate millions of dollars without any tax penalty. On the disclosure statements Romney files as a candidate for federal office, he reports his financial holdings and values them by assigning a dollar range to each one. By adding these values together, The Washington Post calculated that the holdings in his IRA were worth between $20 million and $102 million in 2011. The total range shifted downward this year, with Romney valuing the holdings in his IRA at between $17 million and $87 million.
Romney has not disclosed all the assets he used to build his IRA.
In explaining the growth of his account, Romney campaign officials do not dispute The Post’s analysis but note that he had been eligible to contribute to IRA accounts since he entered the work force in 1975 and that the years since then have often been times of strong economic growth.
That does not mean the size and growth of such IRAs are not controversial. Michael Graetz, who served in the Treasury Department under President George H.W. Bush, said massive IRAs such as Romney’s do not reflect the intent of the laws that created the accounts as a way to help working Americans reach financial security.
“One need not have $100 million in an IRA in order to accomplish retirement security,” said Graetz, who teaches tax and retirement policy at Columbia Law School. “The law deliberately set limits in order to restrict the revenue losses to the Treasury.”
Another tax expert, Edward Kleinbard of the University of Southern California, who reviewed the prices of some A- and L-shares, said Bain may have undervalued the A-shares, providing a benefit to insiders. Kleinbard, a Democrat and former chief of staff of the Congressional Joint Tax Committee, said the valuation of such shares should reflect real market prices.
But Jack Levin, a tax lawyer who has represented Bain, said the share prices at Bain were worked out “by all the investors at arm’s length based on the company’s prospects and economic condition at the time of the investment.”
He said the increase in the value of Romney’s IRA reflected business smarts, not questionable investment practices.
“There is nothing magical about it,” Levin said. In the years that Romney ran Bain, the company earned more than a 50 percent return on investment on average each year. Even a lower rate of return, 26 percent a year, combined with a regular investment of new funds in the account would give Romney “more than $100 million in his IRA account today,” according to Levin, a lawyer at Kirkland & Ellis.
He noted that there was nothing improper about amassing so much wealth. “There is nothing in the tax law that prohibits an IRA from earning as much as the sponsor’s investment acumen allows him or her to earn,” he said.
Another way in which tax rules have favored Romney’s post-Bain financial situation is through the treatment of his severance package from Bain. Again, he benefited from a tax break in a way that is available to very few. His retirement earnings receive what is called the “carried interest” deduction. That’s an accounting classification that treats certain income from private-equity firms and other partnerships as capital gains and taxes it at a rate of 15 percent, rather than as ordinary income at 35 percent.
Here’s how carried interest works: Most private-equity firms charge their clients fees known as "2 and 20” — 2 percent of an investment fund’s overall assets and 20 percent of any profits. Managers generally declare the 2 percent management fee as ordinary income, meaning they pay ordinary income and payroll taxes on the money. But most private-equity managers say the 20 percent share of profits, the “carry,” is an investment and thus should be taxed at the capital gains rate.
Defenders of carried interest say the lower tax rate provides fund managers with an incentive to take smart risks, because they share in the investment with their clients. Opponents say it is a loophole that ought to be closed.
Romney’s 1999 severance package was structured to take advantage of the carried-interest treatment. It took nearly a year of negotiations to arrange that package after he left Bain in 1999 to run the Salt Lake City Winter Olympics, Bain insiders say, and he did not formally resign as chief executive until he had negotiated the deal.
The result of the negotiations was a deal that allowed Romney to continue sharing in the profits of the company for 10 years in the same way that active managers received compensation. These carried-interest profits would be taxed at a 15 percent rate, less than half the rate that retirees might pay on other income, including payouts from pensions, IRAs and stock options.
Under the terms of the retirement package, as described by Romney and Bain executives, he would benefit from Bain business deals made through Feb. 11, 2009 — 10 years to the day after he left Boston to run the Olympics.
He would receive the 2 percent management fee as well as a share of the carried-interest profits that Bain made from acquiring and later reselling companies. Bain declined to say how large the share was, but a person familiar with the agreement said the share declined over time.
Ten-year retirement agreements such as this are unusual in the corporate world, but financial industry experts say such arrangements make sense for privately held investment partnerships such as Bain. Partnership shares are difficult to divide and, because the company is not publicly traded, it is difficult to offer a retiring founder an immediate payout, experts say.
In Romney’s case, however, the benefits did not stop when the 10 years were up, his disclosure statement and tax return show. As long as any of the Bain investment funds in which Romney invested before 2009 continued to make profits, Romney would continue to share in them. Since these funds often last five to seven years, Romney has continued to profit well beyond the termination of his severance package. Other top executives at Bain have negotiated similar retirement deals, according to a former partner.
Bain executives have said Romney is entitled to continue sharing in the profits, even in retirement, because he built Bain and led it during its most successful period. Romney helped pull together $37 million for the first investment fund, handpicked early partners, personally solicited potential investors, and presided over rigorous debates about firm strategy and acquisition decisions.
Yet some of the retirement benefits no longer flow to Romney individually but to a blind trust he established in the name of his wife, Ann.
In his 2010 tax return, Romney said the Ann Romney blind trust could receive carried-interest profits from a Bain fund based in the Cayman Islands called Bain Capital Partners (AM) X LP. To request the carried-interest tax deduction, which is typically taken by active fund managers, Romney’s attorney filed a tax form telling the IRS that Ann’s trust was “performing services” for the fund.
Tax experts say Romney can legally share in the carried-interest profits and take the deduction if Bain has agreed to the arrangement. Critics of the carried-interest deduction say this example highlights how the tax break can be abused.
“Carried interest was intended to motivate managers going forward,” said Victor Fleischer, an expert in carried interest at the University of Colorado law school. “In cases like the Romneys, it just shows it is really all about fancy tax planning. It’s not motivating managers going forward. Not only is Mitt not providing any future services, Ann never did.”
In recent years, the carried-interest deduction has proved controversial on Capitol Hill. There have been several unsuccessful efforts to eliminate the tax break, which critics say improperly treats profits like capital gains, and tax these earnings as ordinary income at 35 percent.
Some tax experts worry that the arrangements Romney benefits from set a bad precedent for a president. “He looks for every tax angle to a degree that is unbecoming in someone who would be the executive in command of the administrative apparatus that enforces the tax law,” said Lee Sheppard, a tax lawyer and contributing editor for Tax Analysts, a publication for accounting and legal professionals.
Gregory Thomas contributed to this report.
Stimpy
joninliverton
BSB Addict
It appears that whatever he did was legal and above board. He seems rather an astute person when it comes to money matters and if he built a company such as Bain (I've never heard of them) back from the dead then he must have something going for him. There does not seem to be a stone unturned in his financial disclosure which surely must be a good point. It's a pity that the rest of the Mitt package isn't so impressive.
here is a more personal reason for staying the course!
some say you have a right to view porn in your own home, but there is no right to have porn delivered to you!
certainly not across statelines.
http://thehill.com/blogs/hillicon-valley/technology/247027-group-believes-romney-administration-should-prosecute-pay-per-view-porn-
some say you have a right to view porn in your own home, but there is no right to have porn delivered to you!
certainly not across statelines.
http://thehill.com/blogs/hillicon-valley/technology/247027-group-believes-romney-administration-should-prosecute-pay-per-view-porn-
