CU professor calls “BS” on Romney’s 13 percent tax rate claim

[TomCADem]

Source: Fox Denver

“What Romney’s saying is technically true, but it’s misleading,” Victor Fleischer told FOX31 Denver. “The reason it’s misleading is because it’s 13 percent of what?

“Of his taxable income, that may be true. But you can have a lot of economic income that isn’t taxable and Romney has shown himself to be quite sophisticated in keeping his taxable income low even as his economic income remains high.

“He’s got interests in a lot of different investment stocks, and he can basically choose when he wants to recognize income from those funds. So he can use capital losses to offset capital gains and keep his taxable income low.”

* * *

“When you have a wide portfolio of investments, you can have a good year, but still not have a lot of taxable income, as long as you sell some losers as well as some winners,” Fleischer explained to FOX31 Denver. “That appears to be what Romney did in 2009, paid tax on whatever income he had, but it doesn’t mean he paid a lot.”

Read more: http://kdvr.com/2012/08/16/romney-on-taxes-ive-paid-at-least-13-percent/

---

I think this may explain why the Obama campaign has dared the Romney campaign to just produce three more years of returns even though five years of return is still far below the norm for a Presidential candidate. Romney may say he paid a 13 percent tax rate, but he is not saying that is his effective tax rate. Also, if he claimed a lot of losses, he might only be paying a tax rate on a nominal amount of reported income, thus rendering his effective tax rate close to zero.

The interesting thing about this story is that it appears on a Fox affiliate station in Colorado.

[dkf]

1. What in the world is this man griping about? The fact that you can use capital losses to offset

Gains? What is dishonest or deceptive about that?

I have a lot of losses (for me) from those years and it was very painful taking those losses during that time. Believe me it did not coincide with an increase in net worth.

What is with our side that we use such ridiculous arguments against Romney? Is there really nothing else there to hit him on?

[kestrel91316]

3. Once again you've got the 1%'s back.

This gig must pay very well.

[calilama]

5. Whats he griping about?

Hes griping about a Party that demands to see 2 photo ID's for a citizen to vote for a clown who doesnt feel the need to even show his tax returns

[AllyCat]

13. Welcome to DU calilama...and you are right on with this one.

You'll find here that dkf often sides with the 1%.

[unblock]

6. if ALL you have is capital losses, that is fine. but realizing losses while carrying gains....

... is a different story. it's not what the capital loss tax offset was meant to do.

and PLANNING for that sort of thing is illegal.



here's the legal way to do it:
you, completely innocently, have a whole lot of investments, some go up some go down.
it's late december and you have $10mm in realized capital gains. you go through your portfolio and dump the losers, even though you still think they're good investments, and you sell enough to realize $10mm in capital losses and you keep the rest.

simple, you pay no taxes, you keep your profitable investments. if you still like those losers, you buy them back after waiting 31 days (30 days violates wash rules).


here's the illegal way to do it:
you, with tax avoidance in mind, buy investments that largely offset each other. go long in one account and short in another, that sort of thing. if anyone asks, you call it a hedge (buy individual stocks in one account, short index futures in another).
now assuming there's any movement in either direction, you'll have plenty of capital losses and gains to play around with to cash in whenever you need some tax avoidance.

of course there are more sophisticated ways to do this, and by sophisticated i mean harder to catch and harder to prove.

did rmoney do this? i have no idea, i'm just clarifying that while taking capital losses is completely legitimate the way most people (you and me) do it, it is subject to abuse and the richer rmoney) and greedier (rmoney) and more tax-expert (rmoney) you are, the more likely you are to abuse this part of the tax code (along with many other parts).

[naaman fletcher]

15. huh?

"here's the illegal way to do it:
you, with tax avoidance in mind, buy investments that largely offset each other. go long in one account and short in another, that sort of thing. if anyone asks, you call it a hedge (buy individual stocks in one account, short index futures in another). "

If they offset each other, then you made no income, so why should you pay taxes?

[unblock]

21. well just for that one paragraph of the explanation, sure, no taxes.

the next line decribes more of the strategy:

"now assuming there's any movement in either direction, you'll have plenty of capital losses and gains to play around with to cash in whenever you need some tax avoidance. "

so the idea is that you have these artificial, offsetting positions, and elsewhere in your portfolio, you also have your real positions. say you cash out of your real positions for a profit but don't want to pay taxes. simple, now you sell your capital losses from the offsetting position but keep your capital gains (you're breaking your hedge in doing this, but you re-establish your hedge with a slightly different instrument or account) thinking that you're realizing enough artificial capital losses to offset your real capital gains.

another tactic is to go long in an ira account and go short the same thing in a taxable account. the gains are tax-deferred, the losses are realized each year.

the irs now recognizes this sort of thing as b.s. and disallows it.

[naaman fletcher]

42. That's a loser argument

"he obeys the law but because he bothers to make sure he obeys it well, that's unfair" is a loser argument for us.

The marignsl tax rate is a winning argument, as is the "carried interest" issue.

This is a loser. Millions and millions of people harvest losses per the advice of their accountants. All of those people will be turned off by this argument.

[unblock]

43. harvesting naturally occuring losses is different from designing artificial losses to harvest.

most of us try to honestly make money with each investment (yes, some people hedge, but with intent to make money on the combination, e.g., i think this set of stocks will do better than the s&p 500).

come december, sure, you look at which losers it might be helpful to dump for tax purposes and you avoid dumping your profitable invesmtents until january to defer those taxes. that's fine.


what i'm talking about is designing a set of offseting investments that from the start is not intended to make money overall, but is intended purely to allow harvesting at different times. it is NOT the case that millions and millions of people to this, and certainly not per the advice of their accountants, because the irs does not permit this.


i recognize that this level of detail reduces the effectiveness of the political argument, but assuming he actually did this, this level of detail is not necessary for the political argument. we could then just say "tax cheat" and leave it at that.

[naaman fletcher]

44. I'd love to see an actual example of this

Why would you intentionally take a loss instead of paying tax on a gain? I don't buy it, and I bet that nobody will be able to produce an example of Romney doing it.

[unblock]

45. i have no proof rmoney did it, but here's the strategy, and yes people have done this:

get some real positions in your portfolio.

go long some volatile stock in one account
go short the same volatile stock in another account

now, some time later, say you made plenty of money on your real portfolio.
your artificial long/short combination obviously nets out to zero, but say the short position was the winner and the long position was the loser.

but you close out your losing long position in order to realize enough losses to offset your real gains from the rest of your portfolio.

for a brief period you have an unhedged short position, but 31 days later you buy bank into the long position to re-establish everything to prepare for doing it again next year.

[naaman fletcher]

46. ok so, let's play with some numbers:

I own the S&P 500 as the basis of my portfolio.


The, I go long 10K of apple stock, and at the same time short 10K of apple stock.

A few weeks later, Apple is down by 1K.

So, in addition to whatever the S&P 500 has done, my apple position nets to zero. But, I harvest the loss (sell the long part). I get the loss, and am exposed to aapl stock on the short side for 30 days. Let's assume aaple stock does nothing during those 30 days... I buy back in and have the net position plus I got the harvested loss?

OK, interesting, thanks. I get it.

[unblock]

47. exactly.

i'm willing to bet that rmoney hasn't actually done anything so overtly disallowed, especially because there are ways to get this effect without the perfect hedge.

for instance, instead of going long/short the EXACT same instrument, you go long exxonmobil and short texaco, or long value line index and short russell 2000 index. the hedge isn't perfect so you're putting real money at risk, but most of the movement will offset so you still get the effect this strategy is looking for.

i don't know how imperfect the hedge needs to be before the irs allows it, that's what tax lawyers are for. in rmoney's case if he's doing this sort of thing, i'm sure he got good advice and did something that at least his lawyers think they can get away with.

in any event, it's slimy as hell, because "investing" with the sole goal of gaming the tax system is tax evasion in common parlance, if not in actual law.

[naaman fletcher]

49. yes of course,

but it's not difficult at all to create portfolios with 90% correlation, yet totally different investments. The IRS would never prove that was intended tax evasion. thanks

[TruthAnalyzed]

50. It doesn't work that way.

Let's say you hedge stock A(artificial), 100 shares each, at $1.00. This is what you would call the 'artificial' position.

Your 'real' position is buying stock R(real), 100 shares, at $1.00

Over the year, stock R goes up to $1.50. Stock A goes up to $1.50 as well.

Your current positions are

Short A = ($50)
Long A = $50
Long R = $50


So, you are suggesting that we close R for $50 profit, and close Short A for $50 loss. Net gain is 0, and we pay no taxes. We also made no money on the trades that we have closed.

Ok... so we are left with $50 in profit that is floating in Long A.

Now, you would suggest that we re-open Short A after 30 days. Let's assume it doesn't move, so we would short 100 shares at $1.50.

Now your positions are

Short A = $0
Long A = $50

You have lost the hedge. You realized the loss already, there is no way to magically re-create the loss by buying back in. So at this point, we have realized $0 net with the two positions we closed earlier, and we currently have $50 net in A. No matter what happens to A, we will keep that $50 net. If we close both positions, we will realize $50 and pay tax on the $50.

You can't create artificial capital losses.

[unblock]

51. i'm not suggesting that the capital gains disappear, only that they're deferred.

you're right that any artificial losses will be offset with artificial gains.

the point is that the artificial losses are realized when you want them for tax avoidance and the artificial gains are deferred for later.


it's also true that my simple example doesn't re-establish a perfect tax hedge for a repeat of this strategy because the long 'a' position is indeed carrying a $50 gain. which isn't a problem next year if 'a' continues to rise (because you'll close out the short position again) but if stock 'a' goes back down the next year to $1, then the short 'a' has a gain and the long 'a' now has $0 profit; there's no loss (or, if stock 'a' dropped even more, there would be a loss but reduced by the $50 gain).

there are more involved ways to extend this further but even just going it the once and re-establishing the hedge and keeping it forever is enough to show the technique.



once again, let me be clear that this is not allowed by the irs; i am not in any way advocating it use. i'm just describing one of many way tax cheats game the system.

[TruthAnalyzed]

52. What difference is it supposed to make?

All I see are downsides. You don't get the profits from your stock, you essentially just transfer them to the matching hedge position, which probably isn't somewhere that you really want to be investing. You defer your taxes, but you also defer getting the potential profits you have earned, so you could still lose them... I don't see any possible upside to trying this.

Also, could you provide a link showing that this would be illegal? I wasn't aware of that, and I don't see why it would be. It just seems like a stupid strategy to transfer your profits to a position you may not actually like.

Let's say you start with $500.

You spend $100 on each stock initially, so you have(I'm know shorts are slightly different, but the dollar amounts are the same this way)

$200 cash
$100 in Short A
$100 in Long A
$100 in Long R

Everything goes to $1.50, and you close Long R and Short A. Long R gives you $150, and Short A gives you $50, so you have

$400 cash
$150 in Long A

The only difference between this situation, and not using the hedge on stock A, is that you haven't actually realized your gains, and now your asset is something that you wouldn't necessarily want it to be in. If you sold Long A, you would be in the exact same position you would have been without either trade in A(assuming no trading fees). What is the supposed benefit?

it's also true that my simple example doesn't re-establish a perfect tax hedge for a repeat of this strategy because the long 'a' position is indeed carrying a $50 gain. which isn't a problem next year if 'a' continues to rise (because you'll close out the short position again) but if stock 'a' goes back down the next year to $1, then the short 'a' has a gain and the long 'a' now has $0 profit; there's no loss (or, if stock 'a' dropped even more, there would be a loss but reduced by the $50 gain).

If A rises again, you would be holding $100 profit in Long A, and $50 loss in Short A. Your net position is still $50. If you close the short position, you have lost money on that trade, so of course you would get a deduction. But again, it doesn't matter, the only thing you are actually doing is transferring profits from your real positions to your artificial positions, which, by definition, aren't going to be as strong as your real positions. You're adding risk for no actual monetary benefit. You're not getting any extra cash out of the deal, and you aren't getting any extra assets out of the deal. You are only getting riskier assets.

You call it a strategy, but there is no upside to using it that you have been able to point out yet.

Notice in our example, you ended up with a floating $50 profit in Long A, and $400 in cash($550 total).

That is exactly where you would be if you didn't open the A positions, and didn't close the R position. So if you think Long A is such a good investment, you could close Long R and open that new position. If you don't think Long A is a good position, you are risking your profits from Long R by holding it.

So please, show me what the benefit is.

[unblock]

53. you close out the short a and then re-establish it for the same amount 31 days later.

whatever you get out of "short a", in your example $50, you put back on 31 days later to re-establish the hedge.

the way you're describing the short a position is confusing, because on the one hand it's $50 while the long a is $150, on the other hand it's still a perfect hedge regardless of the price of a (until you sell it).

here's how i'd describe the cash:

(I) deposit money
$500 cash
= $500 total cash

(II) establish real and artificial positions
($100) cash -- long r
($100) cash -- long a
$100 cash -- short a (you get proceeds from selling stock)
= $400 total cash

(III) everything goes from $1/share to $1.50/share, close real profit and artificial loss
$150 -- close long r
($150) -- close short a (you buy back the stock at a higher price)
= $400 total cash

(IV) after 31 days, re-establish the artificial hedge
$150 cash -- short a (proceeds from selling stock)
= $550 total cash


you physically have realized your gain of $50, but for tax purposes you have offsetting gaines and losses (long r/short a). the re-established hedge has a floating gain of $50 which you can defer until whenever you want.







this is actually all just a variant of selling against the box, which is simpler:

(I) deposit money
$500 cash
= $500 total cash

(II) establish real position in one account
($100) cash -- long r
= $400 total cash

(III) r goes from $1/share to $1.50/share, short r in a DIFFERENT account
($150) -- open short a (proceeds from selling)
= $550 total cash

now you have physically realized your $50 profit but you haven't closed out any positions at all so of course this is not a tax event at all.

well, the point of this thread is the such strategies are disallowed by the irs -- they consider the short to have closed out the long position even though it's in a different account.


my understanding has been that this is disallowed as of 1997 changes in the tax code, see the first exerpted paragraph below. however, the second exerpted paragraph below describes a "loophole", so maybe it's not entirely disallowed after all. in any event, i still wouldn't do it, still wouldn't recommend it, still think it's slimy, and certainly wouldn't base any decisions as to its legality based on my non-lawyerly posts.



http://www.invest-faq.com/articles/trade-short-box.html

The 1997 revisions to the tax code define (or extend) the idea of "constructive sales." A constructive sale is a set of transactions which removes one's risk of loss in a security even if the security wasn't actually disposed of. Shorting against the box as well as certain options and futures transactions are defined as being constructive sales. And any constructive sale is interpreted as being the same as a real sale, which is why this strategy is no longer effective (don't you hate it when the rules change in the middle of the game?).


For those who have read this far, there does appear to be a small loophole in the 1997 revisions that permit shorting against the box to delay a taxable event. If you have a short against the box position and then buy in the short within 30 days of the start of the tax year and leave the long position at risk for at least 60 days before ofsetting it again, the constructive sales rules do not apply. So it appears that you can continue shorting against the box to defer gains, but you have to temporarily cover the short and be exposed for at least 60 days at the beginning of each and every year.

[TruthAnalyzed]

54. ...

whatever you get out of "short a", in your example $50, you put back on 31 days later to re-establish the hedge.

But there is an important difference. You don't get back the benefit being down by $50 on Short A. When you re-establish your position, you are at break-even. There is no tax-benefit associated with that trade anymore, you have already realized it.

(IV) after 31 days, re-establish the artificial hedge
$150 cash -- short a (proceeds from selling stock)
= $550 total cash

Should be $150 cash -- Long A(the only one still open).

So yes, you have $550 in total, exactly the same as if you didn't open either A position. The difference is, instead of having $50 profit in actual cash, you have $50 profit in Long A.

you physically have realized your gain of $50, but for tax purposes you have offsetting gaines and losses (long r/short a). the re-established hedge has a floating gain of $50 which you can defer until whenever you want.

You haven't actually realized your gain, your gain is effectively sitting in the Long A position. Until you close that position, you haven't realized the gain. You are still at $400 cash, with a position worth $150.

Deferring the $50 gain in Long A is no different than leaving it in Long R. Your total scenario is exactly the same, with no realized profits in your cash balance.

Thanks for the link, I'll look at it.

But, still you haven't shown the supposed benefit from doing this.

Without the hedge, you could

A - Keep the position Long R, and either make more money, or lose your profits. $400 cash + $150 position = $550 total.
B - Close the position Long R. $550 cash. Once your stock goes into cash, you have realized your profit. It makes sense to pay taxes when your cash increases, not when your position value increases.

With the hedge, you could

A - Keep the position Long A, and either make more money, or lose your profits. $400 cash + $150 position = $550 total.
B - Close the position Long A. $550 cash. Once your stock goes into cash, you have realized your profit. It makes sense to pay taxes when your cash increases, not when your position value increases.

See? It's exactly the same, except for which stock you have an open position in. I would never suggest this, because you are going to be putting your profits into a stock that you won't necessarily think is a good position, by default. The position you take on the hedge fund depends on what happens with your real fund.

All there is is increased risk, with no increased reward.

[unblock]

55. let's just take this one part:

>"You haven't actually realized your gain, your gain is effectively sitting in the Long A position. Until you close that position, you haven't realized the gain. You are still at $400 cash, with a position worth $150."


no, you have realized the gain. you have $400 in cash plus "long a" worth $150, THEN (IV) you sell "short a" again which gets you $150 cash proceeds for a total of $550 in cash plus offsetting "long a" and "short a" positions.


from a money perspective, you started off with $500, you now have $550, you've realized a $50 gain. you have offsetting long/short positions in "a" that always net to zero.

from a financial perspective, you've realized offsetting $50 gains and losses so no tax impact today, but "long a" has an unrealized gain of $50 (and the "short a" has no unrealized gain or loss).



the advantage overall is being able to realize a gain today while deferring the tax liability indefinitely.

[TruthAnalyzed]

56. That is completely different

You are trying to use the instant cash from a short in a way it can't be used. It's like saying, if you just short a stock, did you make money?

No, your position in that stock is net $0 unless it moves in your favor.

If you want to count the money that way, then you have to consider your short A position as being ($150), because you have to be able to cover it. Shorting stock isn't free money.

See, you're not getting money from a hedge. You are getting money from a short. It's no different than just shorting anything, and has nothing to do with eliminating the profit from your real position.

the advantage overall is being able to realize a gain today while deferring the tax liability indefinitely.

There are a couple of problems with that. First, when you have short positions, you have to keep them covered. You can't just short $1 million worth of stock, withdraw that $1 million, and just 'put off' covering those positions indefinitely. You have to maintain the ability to cover.

So all you are doing is basically taking a credit out of a stock, putting it into your trading account, but unless the stock moves in your favor, you can't really use that money.

[unblock]

57. there are all sorts of ways around all sorts of problems. if you're rich, at least.

first, we've been talking about stock, but it doesn't have to be stock. in rmoney's case, you'd have offsetting derivatives designed to avoid this problem.


neverthlesss, let's say you've got a lot of money tied up in a perfect hedge. however the hedge is created, you've got money invested and margin requirements or whatever, but the hedge is perfect so all we know or care about is that when it's liquidated, you can always get that money back out as there will be no gains or losses.


sounds like perfect collateral for a loan, right?


so you pledge the hedge to a bank who loans you money dirt cheap.

[TruthAnalyzed]

58. My point is

you can't rationally create a loss to offset a gain, in order to avoid taxes. If you do that, you will end up with $0 net in usable capital. It's completely irrational. It doesn't matter if you create losses in stock, funds, derivatives, forex, commodities... a loss is a loss is a loss.

The only way I could see it making sense would be to delay realizing gains because your tax rate will change soon, which is probably why the SEC instigated that 60-day rule on hedging the same stock. Either way, you're not saving money by creating losses.

I fail to see how a hedge could be used as collateral for a loan. A hedge has no inherent value, it wouldn't have value as collateral.

[Major Nikon]

9. You ever hear of "artificial losses"

There's all sorts of ways that corporations and individuals can create artificial losses. Many of the loopholes weren't closed until recently which means many of those schemes were perfectly legal up until a few years ago and I'm sure that some still are.

I'd be willing to bet that once Rmoney's taxes are gone over, you'll find all sorts of these schemes hiding in his closet and it most likely is why he'll never release them.

[dkf]

24. So we want to hit Romney for doing things that were perfectly legal at the time.

Great.

Yeah this is the exactly the kind of campaign I want Dems to run. NOT.

In the real world professionals get in trouble for not doing what they can to minimize taxes for their clients. If you had a CPA who decided to take the standard deduction for you when they should have itemized is that a good thing or a bad thing? Hey if every CPA decided their role in life was to maximize taxes paid to the government maybe we could solve things right there.

[Major Nikon]

25. Legal does not mean it's right

I like to think that's what differentiates Democrats from Republicans. Nixon paid almost no taxes when he was presidunce despite having millions in income.

Besides, just because you got away with something, doesn't mean it was legal. Anyone who is knowledgeable about taxes knows that lots of things are "legal" until the IRS challenges it. There could be some tax avoidance schemes Rmoney got away with simply because the IRS never challenged him. The same methods could be ruled illegal later on and there would just be no way to tell if Rmoney broke the law unless his taxes were subsequently reviewed.

[dkf]

26. Frankly I'm not sure why any exemption is fair and "right".

So by that standard pretty much everyone is "wrong" except for those who take the standard deduction.

I am very much for simplifying the tax code. It ought to be simple enough for the average person to do.

[Major Nikon]

27. Obama doesn't take the standard deduction

Do you see anyone complaining about his itemized deductions?

[CreekDog]

31. I wish you gave Trayvon Martin the benefit of the doubt you give Romney

but I am realistic.

[CreekDog]

30. you haven't seen his taxes, you don't know if they were legal

[Dyedinthewoolliberal]

36. Legal? Ok, I can buy that,

but why won't he show his hand?

[ashling]

41. Yes, Rmoney was just "standing his ground"

perfectly legal ... perfectly sleazy

[LanternWaste]

48. I think you're focusing on the fact that something has to be illegal to be considered in play for el

I think you're focusing on the fact that something has to be illegal to be considered in play for election coverage-- it doesn't. Jeremiah Wright, community organizing and birth certificates come quickly to mind as examples of effective memes based less on politics and more on perception.

[Major Nikon]

61. This is exactly what I was talking about

Mitt Romney Tax Returns May Have Employed Legally Dubious Maneuvers, Tax Experts Say

WASHINGTON -- Tax experts who have begun to examine the Bain Capital documents released Thursday by Gawker are raising questions as to whether presumptive GOP presidential nominee Mitt Romney has paid all the taxes he owed.

At issue are two tax-avoidance techniques employed by Bain Capital, the firm founded by Romney, which have been commonly used in the private equity world but have come under increasing legal scrutiny.

The first scheme involves owning U.S. dividend-paying stocks in an offshore account and pretending, for accounting purposes, not to own the stock. Instead, the taxpayer tells the Internal Revenue Service that he owns a derivative product that is identical in every way to the stock -- except it isn't the stock, so therefore no U.S. taxes are owed. It's called a "total return equity swap," because the buyer still gets the benefit -- the "total return" -- of owning the stock, or equity.

"This use of total return equity swaps, such as to avoid the U.S. dividend withholding tax, was very widespread for more than a decade, and may not be dead yet, although the IRS issued a shot-across-the-bow Notice concerning the practice in 2010," writes Daniel Shaviro, the Wayne Perry Professor of Taxation at New York University School of Law. "But taxpayers who engaged in it to avoid the dividend withholding tax were coming perilously close to committing tax fraud, in cases where the economic equivalence to direct ownership was too great."

The second technique is "not legal," according to Victor Fleischer, a tax expert and professor of law at the University of Colorado. A taxpayer saves substantial amounts of money by pretending that regular income received as a management fee for running a private equity firm is not income, but is instead a capital gain. That drops the tax rate on that income from 35 percent to 15 percent.

http://www.huffingtonpost.com/2012/08/24/mitt-romney-tax-returns_n_1827632.html

[Trajan]

11. I really really really cannot wait ...

Until you fly away and hang out in your own tribe ....

I am shocked you have lasted this long ....

[dkf]

29. I hung out here for so long I started seeing the holes in the lefts arguments.

Believe me it is not something I wanted or expected.

I love Bill Clinton (except for his ahem problems), I love Howard Dean (wow I would go to the wall for him)...but I'm beginning to wonder if President Obama can get us out of this mess and I have doubts. Moreover when I hear solutions from this board I wonder if that is also how the Prez thinks. It is not comforting.

But that doesn't make me a Republican or Romney voter.

Right now I'll still vote for Obama just because it's what I do and who I am. But it's out of loyalty not confidence.

[Kingofalldems]

34. Looks like you damn Democrats with faint praise

[Marr]

14. LMFAO. You can always be counted on to...

...what was it again? 'Defend bankers from scurrilous attacks by leftists"...? Something like that...?

[CreekDog]

18. You don't seem to mind when poor people are criticized, you even join in

but you are more transparent than Romney's taxes. i will grant you that.

[HangOnKids]

22. Right On!

Your post and the 2 above it are for the WIN.

[quaker bill]

20. Hard to say how ridiculous it might be

when you have no facts. Pretty much everyone had some losses over the last 5 years. My loss in home equity equalled most of what would be my salary for two years, but while the loss has real impacts on my potential retirement, it is unrealized in both directions, so I don't get to claim it. The truly wealthy have options the rest of us don't.

[Kingofalldems]

32. Our side?

[Warren Stupidity]

37. "our side" - I'm pretty sure I'm not on your side.

So if for example Romney had income of say 100 million, but by taking advantage of various tax strategies paid taxes on only 10 million, and at a rate of 13%, for an effective rate of 1.3%, you really do not see that as a legitimate issue?

Do you also object to attacks on giant corporations that routinely shield income from taxes, to the extent that is was recently reported that many are paying their CEOs more than they pay in taxes?

[Akoto]

2. I can hear it now. "Technically true? That's the best kind of true!" n/t

[riderinthestorm]

4. 13% of what is the kicker. What is his effective tax rate? Show us the returns Rmoney!

“When you have a wide portfolio of investments, you can have a good year, but still not have a lot of taxable income, as long as you sell some losers as well as some winners,” Fleischer explained to FOX31 Denver. “That appears to be what Romney did in 2009, paid tax on whatever income he had, but it doesn’t mean he paid a lot.”

[BlueStreak]

7. The returns wouldn't show the stuff the professor is talking about. That's the point.

When you shelter income, you may not have to show it on your return at all.

Let's say he reported $20,000,000 of income and paid $2.6M in federal taxes. That would be 13% of the REPORTED income. But if he sheltered another $30,000,000, the honest tax rate would be 5%, assuming he did not eventually pay taxes on the sheltered amount.

Of course, if he gets elected, he and his sidekick can eliminate the capital gains tax altogether, and then he can unshelter hundreds of millions he has hidden from taxes.

[riderinthestorm]

8. Do you think it would be more effective if he showed his IRS cancelled checks?

Could we deduce anything from the amount he paid?

[BlueStreak]

10. The returns would be helpful, but they may not show the sheltered income.

But it is a moot point. That is not the reason Romney is hiding his returns. He isn't embarrassed about paying a low rate. He is proud of that. His returns probably show criminal or fraudulent activity. And that is why we need to see them.

[flor-de-jasmim]

12. And I wonder if 10% of the 13% is his tithe to the Mormon Church... n/t

[DallasNE]

16. We Don't Even Know That Much

Again, Romney avoided using the words "federal income" in front of taxes. He could well be adding other types of taxes such as property, State sales and income, payroll, even foreign taxes and is actually saying that the sum of taxes paid is 13% of (fill in the blanks) income. The assumption is that he is using the most favorable tax amount and the most favorable income amount and saying it is 13%. Misleading is putting it mildly. Somebody needs to ask Romney what specific taxes are included and what specific income is used for these calculations or simply say which lines on the 1040 were used to determine the 13% rate. As it is, we have this self-serving statement on taxes that means nothing. Getting another 3 years of returns to examine could put this all to rest.

It also doesn't refute the charge that he paid no income taxes for 10 years because Romney's statement covers the period after he left Bain while the charge is that he paid no taxes for 10 years while at Bain. Romney is one slippery character.

[SoapBox]

17. The claim is so vague...so wishy-washy...and such bullshit.

What a POS liar he is...and he's paired with another POS liar.

Creeps...crooks...cronies.

RRommunism.

[Tunkamerica]

19. i can only say this 1 million times more....

affiliate stations are not fox news. They have a contract to carry fox programming during certain times. That is it. If they have a news department that's any good it doesn't matter what fox's stance is on a subject. An affiliate (except for the 10-15 stations actually owned by newscorp) does not answer to rupert murdoch.

[YOHABLO]

23. Hello Hello 13% Like Wow Man !

Oh well 13% ought to shut everyone up. Right? Only f...ing 13%. And that doesn't include all the money he's got tucked away in Swiss Bank accounts and off shored in the Caymans. Give me a break.

[zbdent]

28. "capital losses" ... I mentioned that here the other day ...

http://www.democraticunderground.com/?com=view_post&forum=1251&pid=72715

[hughee99]

33. Has he actually seen Romney's returns?

Or is this just more of the same sort of thing we've seen over the last few days anyway explaining how this number can still be misleading. In any case, Romney didn't pay 13% of his gross or his adjusted gross. He paid NO taxes for 10 years. None.

[On the Road]

38. Well, You Don't Know if Harry Reid is Telling the Truth

and even if he is, you don't know whether (1) his contact is telling the truth or (2) which ten years his contact was referring to.

Frankly, it is possible that Romney will release more years of tax returns before November that will support his 13% claim, and that it will serve to vindicate him. That would be a tragedy.

[hughee99]

39. I'm sure Reid is telling the truth though there's no way to prove he's not.

You're right, though, I have no idea whether his contact is.

Romney will eventually release his returns. My theory is that his returns won't show anything overly embarrassing (maybe his rate will be a low or he'll have some odd deductions, but nothing big). The reason he's holding them back is because he lied on them. He doesn't want to make them publicly available because someone out there will dig into it and figure it out given enough time. Once the election is over, he'll be president and can bury them, or be a failed candidate, in which case no one will give a shit. I expect to see returns around mid-october.

[TomCADem]

40. The Fact Is That Even A 13% Rate Is Very Low

The main point is not what specific rate Romney is paying. Rather, its the fact that despite our allegedly progressive tax structure, the very rich pay lower effective tax rates than most Americans. The tragedy is not that Romney might be doing it illegally. I think the tragedy is that this might be legal, which is why it should be exposed, particularly when Romney/Ryan oppose the expiration of the Bush tax cuts for the rich and are pushing for bigger tax cuts.

[On the Road]

59. The Main Point Will Change in a Second

if Romney ever releases his returns. If he did pay at least 13%, Romney would be vindicated, and it will be impossible to make any legitimate point about tax avoidance.

That's the politics of it, which is why Reid needed to have been sure of the claims' accuracy before making it public. There is a reason Jon Stewart and Rachel Maddow were all over him for that announcement.

It is even conceivable that the source might have been sympathetic to Romney -- the old Karl Rove trick of pseudo-debunking a legitimate attack. This is especially true if the story happened the way Reid related it, which seemed to be that someone called him up specifically to relate that piece of information.

[TomCADem]

60. Yet, This Embraces A Double Standard. "Mainstream" Republicans...

... do not merely make wild speculation. In Romney/Ryan's case, they make statements that are patently false. Look at Romney/Ryan's false charges on Medicare and Welfare. Is President so vindicated that he can rest on his laurels given the fact that these lies are demonstrably false?

So, I don't buy this idea that Romney releases his tax returns and suddenly people start the champagne toasts that he pays 13% in taxes.

[Skittles]

35. LOVE it when the experts fill us in

yes INDEED