Mitt's Tricky Tax Treatment
from Dan Primack at CNNMoney: http://finance.fortune.cnn.com/2012/01/17/mitt-romneys-tricky-taxes/
____ To begin, Romney's "admission" should have been self-evident to anyone who had taken a look at the candidate's financial disclosures, or realized that he hasn't pulled a significant salary since leaving Bain Capital in 1999.
The vast majority of Romney's income is of the investment variety, which gets charged at the 15% capital gains rate. This includes a large stock portfolio and positions in dozens of private equity, real estate and structured finance partnerships. Totally legal, and appropriate if you believe that the tax code should be used to incentivize business investment (i.e., risk-taking that can benefit the nation's economy).
But then it gets very, very tricky.
Within Romney's private equity portfolio are dozens of funds managed by Bain Capital and Bain Capital affiliates (including Brookside Capital, Bain Capital Ventures and Brookside Partners). Approximately half of them were formed while Romney was still at Bain, while the remainder were formed afterward. Those latter investments were per a retirement agreement Romney signed with Bain in 1999, which has since expired.
But what we don't know is how much money Romney actually invested in any of those funds. In fact, it is entirely possible that Romney didn't personally invest a dime into any of those funds, but still receives capital gains tax treatment. That's right, Romney could be receiving a massive IRS reward for risk-taking without having actually taken any risk.
read more: http://finance.fortune.cnn.com/2012/01/17/mitt-romneys-tricky-taxes/
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