Monday, September 3, 2012

Romney Elitist Tax Breaks

As I have said before, I am not against tax breaks. However, it is certainly instructive to understand that elitists like Mitt Romney have special loopholes written for themselves, which lower their tax rates significantly, while the rest of us continue along with no loopholes anywhere comparable.

Here's WaPo:
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....

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.
This is another example of how in the US the rich are becoming richer, while the rest of us fall behind. Tax laws and regulations are written in ways to benefit those who are part of the elitist club, and no one else.


  1. It would be nice to know how he's building wealth by not getting it stolen from him by the government.

    If I had to take a bet, he's been a major investor in master limited partnerships and royalty trusts. They're superior forms of corporate structuring for long-lived assets and the cash generated off of those assets. Instead of dividends, they pay distributions to unit holders who are being returned their capital. The tax rules are more complicated (different filings with the treatment of depreciation), but many of the pipeline, transmission, and mining companies are set up this way. They're really great ways of owning assets that produce cash and are long-lived.

    The corporate tax rules are such that you get triple taxed on dividend producing stocks. Not the case under MLPs. They seem to make a tremendous amount of sense if you're holding on to multi-generational wealth.

  2. In the words of Rothbard (or maybe Mises), somebody keeping their money through a tax loophole is not the same as somebody receiving money through a government subsidy.

    Romney is only keeping what is his, not taking from somebody else. Romney isn't doing the robbing, the state is, unless of course you think the state actually owns everything and is giving more of it to Romney than he deserves.