When government sets aside other people's earnings for a special group that hardly needs help, we have a right to get mad, don't we?
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. ...Tom Hamburger, WaPo
Since there is nothing illegal about doing this -- it's a problem with the tax code. It's not Romney's fault, right? Well, the trouble is that this particular problem with the tax code is available only to the very, very rich. Romney decided, when he signed his tax returns, to break the intent of the law.
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. ...WaPo
A 35% tax rate will catch up with him eventually, but there's plenty he can do with the money in the meantime, while avoiding any capital gains.
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 reinvesting 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. ...WaPo
All the way along, Mitt Romney has benefited from social, political, and financial rules that gave him an edge. He was born into a prosperous family. He was virtually guaranteed the best education this country offers -- from educational institutions which, however legitimately, benefit financially from a favorable tax system. He went into a business which operates, tax-wise, in a situation that's so protected from scrutiny that you catch breaks no one else can get. And the beat goes on even as the millions pile up in a private account.
He can't expect to escape criticism for choosing the "me" route every time, thumbing his nose at the notion that someone who likes to think of himself as a responsible citizen and prospective president should have more respect for his country's institutions.