Here is another one in what is clearly a coordinated attack. There are no comments yet on this, so those who are inclined should get over there.
Gov. O’Malley: Romney ‘bet against America’ with offshore holdings – The Hill’s Video thehill.com/video/campaign… – So would I with Obama as pres
— U.S. Citizen Abroad (@USCitizenAbroad) July 9, 2012
Romney must make it clear that the reason he is investing abroad is that the United States is no longer a safe place to invest: The last two economic downturns have proven that: (1) the subprime mortgage crisis in 2008 leading to the Great Recession; (2) the bursting of the dot.com bubble in earlier. The continual bad policies of the Federal Reserve, Congress and the Presidents, has led to too much leverage, the devaluation of the US dollar, and the growth of foreign markets. He can squarely pin the blame the necessity of diversifying offshore on the mismanagement of the Federal government with which, as governor of Massachusetts he’s never had a role, and the extraordinary burdens that the Federal government places on business. He’s not voting against America–he’s being smart with his money. I have a short position vis-a-vis the United States and the dollar. The last time I voted for investing in the United States, I lost a lot of money.
If Mitt Romney thought that it would be safer to keep some of his money abroad, I commend him for trying to protect his assets. I believe that his first responsibility is with himself and his family, not with his country. (From what I’ve read, Petros also based his decision to renounce US citizenship on this concept.) However, this could be a problem for Romney because many Americans have a blind sense of patriotism and buy the idea that it is wrong to “bet against America”, especially for someone trying to become president.
Talked to a family member recently about this sort of thing (Romney’s tax returns and so on). He’s been active in Republican politics in the US for years and has worked for some heavy hitters in the West. His take on it? This kind of attack is not going to matter. It’s good for a day’s worth of headlines but not much else. That Romney is rich is not something that the American electorate is going to get too worked up about and as long as he’s paid his taxes and is compliant a lot of Americans just accept that he did the rational thing and minimized his tax exposure (something that every American tries to do).
@Victoria, I don’t understand how Romney has minimized his tax exposure by moving some of his assets offshore, filing requirements such as they are. He does greatly increase his penalty hazard. He does provide a certain kind of safety for his portfolio by diversifying his investments in different countries, something some financial advisors recommend, such as the folks at the Daily Reckoning. But he still has to pay tax, and if it is foreign unearned income, it is often more than if he invested in the US.
@Petros, you are surely right but the unfortunate impression that the American people have is that this is why he’s doing it (couldn’t admit, after all. that the US might not be the very best and safest place place to keep one’s cash 🙂
@Petros
Romney uses foreign blockers to avoid the problem of tax within his IRA on UBTI. Folk always think IRAs are completely tax free until withdrawal, but they sometimes aren’t. The US tax code has ways to chisel cash out of them well before withdrawal (surprise!). MLPs are one. UBTI is another. And if an IRA has to pay UBTI tax as income accrues within the IRA, there’s no allowance on withdrawals, meaning the IRA is effectively taxed twice. Clearly not desirable. The solution is to move it offshore and use foreign blockers to get you back to merely single taxation, the same as everyone else. Pretty standard for folk in this situation, and not really unseemly. Of course, neither the MSM nor the chattering classes will see it that way.
@Watcher…
Foreign Blockers are seen in the same light as financial engineering. Legal, maybe, but something only the rich and elite get to do, so I do think it has some risk for him. If I were a partisan I would try to tie legal tax avoidance strategies to Financial manipulation / engineering or fraud like what is going on with LIBOR scandal in the minds of a simple electorate. I assume you are paying attention to that one. Trust is being lost in all things financial as you begin to realize the entire so called free market is a rigged game!
BTW, here is another story from LAX times and McClatchy.
*Romney “…supports a tax policy that would encourage
companies to ship American jobs overseas,” http://thegazette.com/2012/07/10/republican-officials-say-stimulus-money-has-gone-overseas/
This sounds interesting, what are the details on this?
@Just Me, foreign blockers are something that only the rich (elite?) do, but they don’t do it for fun. It’s forced by US tax laws, which as we know from HEART and Ex-PATRIOT run differently when you reach certain asset levels.
The US media and congress have now successfully conflated “offshore” and “illegal”. All a simple matter of spinning the facts. Only the perception matters. The reality is unimportant. In a mud-throwing contest what counts is how much sticks to you, not how much you throw.
And here is a link to a very good article by Mark Steyn of the National Review. I threw in a comment – if anyone else want to throw a few words his way this might be a good chance to get ourselves another ally:
http://www.nationalreview.com/corner/306587/re-re-goodbye-and-good-luck-mark-steyn
@Watcher…
Actually I take a slightly different view on tax statutes. Tax complexity is created by Congress on behest of the lobby efforts of the various special interest who want this provision or that to allow them to legally avoid this or that previous provision. Each new exemption, provision or statute builds on others previously passed, (with little understanding of the impacts) and in the end, the complexity is really something that they benefit from, even as they complain about the effort.
Bottom line, no matter how simple our tax system would be, should we wipe the slate clean tomorrow, legislation on behalf of some lobbyist for a special interest with tons of dollars would start muddling it up again to create new layers of complexity that only they could benefit from. It is a cancer that we can not kill. The Complainers or tax engineers have created this monster for themselves, and frankly the end result of lower effective tax rates works pretty well if you can afford the expertise to engineer it. ROI on lobbying is money well spent. You and I should be investing in Lobbyists 🙂
I do agree whole heartedly with your last statement
@Victoria
Thanks for that link. I will definitely place a comment as soon as I get my account set up.
mvh
@Just Me, tax complexity is a symptom. The problem of course is that congress is venal and easily bought by lobbyists. If, as you suggest, Romney or his ilk — indirectly or otherwise — paid congress for this special treatment, why shouldn’t he use it? Suppose you’d paid for a first class airline ticket. Wouldn’t you insist on actually travelling first class? 🙂
@Watcher…
Yes, but….Complexity is both a symptom and a disease. The problem is you can not separate the two and it almost the proverbial chicken and egg argument.
It is certainly legal to use the provisions that our complexity creates. I think you would note in comments I have posted on line have even defended the right to use them as not illegal, but problem is the optics of it anymore in our world of declining trust in our institutions, both governmental and financial.
Everything is engineered anymore for some selfish advantage, be it Libor, CDOs, or Tax loopholes. I am painting with a broad brush here, I know, but I do think it is symptomatic of a Bigger issue, and that is related to the growing lack of trust towards the very rich and the elites to do the right thing. It is the difference between what you ‘can’ do, and what you ‘should’ do, or so it seems to me. However, it is the capitalist way, where self interest and finding the “rent” advantage is how you advance yourself at the expense of another. I get it. It is both good and ugly at the same time.
Have you been following the controversy about Romney’s tax returns?
The 2 main lines of thinking are:
1) He used lots of loopholes which allowed him to pay even less taxes than the 14% or so that he paid for 2010.
2) He entered OVDI in 2009 because of his UBS Swiss bank account. Not sure how likely this one is. This one would disqualify him for the race. Wouldn’t the IRS have a responsibility to report that if it was the case?
http://www.mediaite.com/tv/msnbc-guest-mitt-romney-could-end-up-withdrawing-from-gop-race-before-convention/