<h1>Why won't Romney release more tax returns?</h1>
<div class="cnn_stryathrtmp">
<div class="cnnByline">By <strong>Edward D. Kleinbard</strong> and <strong>Peter C. Canellos</strong>, Special to CNN</div>
<div class="cnn_strytmstmp">updated 12:50 PM EDT, Wed July 18, 2012</div>
</div><p class="cnnEditorialNote"><em><strong><br></strong></em></p><p class="cnnEditorialNote"><em><strong>Editor's note:</strong> Edward
D. Kleinbard is a professor at Gould School of Law at the University of
Southern California. He is the former chief of staff of Congress's Joint
Committee on Taxation. Peter C. Canellos, a lawyer, is former chair of
the New York State Bar Association Tax Section.</em></p>
<p><strong>(CNN)</strong> -- By announcing that he will release no
further tax returns beyond his 2010 and 2011 returns, Mitt Romney
appears to have exempted himself from the proud bipartisan tradition of
presidential nominees displaying genuine financial candor with the
electorate.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph2">What is more, his
disclosure to date is in the wrong direction: It is the release of
Romney's past returns, not his current ones, that matters.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph3">Since George Romney
inaugurated the practice more than 40 years ago by releasing 12 years of
tax returns in his bid for the Republican Party nomination,
presidential nominees have been transparent with voters about their
personal finances. For this reason, we have not suffered a significant
tax scandal involving a nominee or sitting president since President
Richard Nixon's abuse of the tax code.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph4">Either Romney has an
unresolved father figure issue, or he has some special reason not to
follow a tradition established by his father.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph5"><a href="http://politicalticker.blogs.cnn.com/2012/07/17/romney-campaign-expected-to-launch-multipronged-effort-to-rebut-attacks/" target="_blank">News: Romney campaign expected to launch multipronged effort to rebut attacks</a></p>
<p class="cnn_storypgraphtxt cnn_storypgraph6">Given Romney's financial
sophistication, it has been assumed by some that there cannot be any tax
skeletons in his closet. His reluctance to disclose past returns,
however, undermines that assumption. We are left with the difficult task
of plausibly reconstructing his financial record based on the one full
return that he has released. The result is troubling.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph7">Mitt Romney is
extraordinarily wealthy, but that is not a justification for
nondisclosure. He has made no secret of his wealth, and required
campaign disclosures already hint at its magnitude. While Romney may
have dissembled about when he actually left Bain Capital, he has been
disassociated with the firm long enough that he cannot argue that his
tax returns will reveal proprietary secrets.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph8">Nor is this just an
exercise in financial titillation or gossip. Disclosure goes to the
heart of the truthfulness with which a nominee engages the American
people, and it assures us that he in fact has comported himself before
the election with the high moral character we associate with a future
president.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph9">Romney's 2010 tax return,
when combined with his FEC disclosure, reveals red flags that raise
serious tax compliance questions with respect to his possible tax
minimization strategies in earlier years. The release in October of his
2011 return will at best act as a distraction from these questions.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph10">So, what are the issues?</p>
<p class="cnn_storypgraphtxt cnn_storypgraph11">The first is Romney's
Swiss bank account. Most presidential candidates don't think it
appropriate to bet that the U.S. dollar will lose value by speculating
in Swiss Francs, which is basically the rationale offered by the trustee
of Romney's "blind" trust for opening this account. What's more, if you
really want just to speculate on foreign currencies, you don't need a
Swiss bank account to do so.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph12">The Swiss bank account raises tax compliance questions, too.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph13"><a href="http://politicalticker.blogs.cnn.com/2012/07/18/americans-view-romneys-campaign-more-unfavorably-than-obamas/" target="_blank">News: Americans view Romney's campaign more unfavorably than Obama's</a></p>
<p class="cnn_storypgraphtxt cnn_storypgraph14">The account seems to
have been closed early in 2010, but was the income in fact reported on
earlier tax returns? Did the Romneys timely file the required disclosure
forms to the Treasury Department (so-called FBAR reports)?</p>
<p class="cnn_storypgraphtxt cnn_storypgraph15">The IRS announced in
2009 a partial tax amnesty for unreported foreign bank accounts, in
light of the Justice Department's criminal investigations involving
several Swiss banks. To date, some 34,500 Americans have taken advantage
of such amnesty programs. Did the Romneys avail themselves of any of
these amnesty programs? One hopes that such a suggestion is
preposterous, but that is what disclosure is for -- to replace
speculation with truth-telling to the American people.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph16">Second, Romney's $100
million IRA is remarkable in its size. Even under the most generous
assumptions, Romney would have been restricted to annual contributions
of $30,000 while he worked at Bain. How does this grow to $100 million?</p>
<p class="cnn_storypgraphtxt cnn_storypgraph17">One possibility is that a
truly mighty oak sprang up virtually overnight from relatively tiny
annual acorns because of the unprecedented prescience of every one of
Romney's investment choices.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph18">Another, which on its
face is quite plausible, is that Romney stuffed far more into his
retirement plans each year than the maximum allowed by law by claiming
that the stock of the Bain company deals that the retirement plan
acquired had only a nominal value. He presumably would have done so by
relying on a special IRS "safe harbor" rule relating to the taxation of a
service partner's receipt of such interests, but that rule emphatically
does not apply to an interest when sold to a retirement plan, which is
supposed to be measured by its true fair market value.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph19">Third, the vast amounts
in Romney's family trusts raise a parallel question: Did Romney report
and pay gift tax on the funding of these trusts or did he claim
similarly unreasonable valuations, which likewise would have exposed him
to serious penalties if all the facts were known?</p>
<p class="cnn_storypgraphtxt cnn_storypgraph20">Fourth, the complexity
of Romney's one publicly released tax return, with all its foreign
accounts, trusts, corporations and partnerships, leaves even experts
(including us) scratching their heads. Disclosure of multiple years' tax
returns is part of the answer here, but in this case it isn't
sufficient. Romney's financial affairs are so arcane, so opaque and so
tied up in his continuing income from Bain Capital that more is needed,
including an explanation of the $100 million IRA.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph21">Finally, there's the puzzle of the Romneys' extraordinarily low effective tax rate.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph22">For 2010, the Romneys
enjoyed a federal tax rate of only 13.9% on their adjusted gross income
of roughly $22 million, which gave them a lower federal tax burden
(including payroll, income and excise taxes) than the average American
wage-earning family in the $40,000 to $50,000 range. The principal
reason for this munificently low tax rate is that much of Romney's
income, even today, comes from "carried interest," which is just the
jargon used by the private equity industry for compensation received for
managing other people's money.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph23">The vast majority of tax
scholars and policy experts agree that awarding a super-low tax rate to
this one form of labor income is completely unjustified as a policy
matter. Romney has not explained how, as president, he can bring
objectivity to bear on this tax loophole that is estimated as costing
all of us billions of dollars every year.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph24"><a href="http://politicalticker.blogs.cnn.com/2012/07/17/romney-cites-incident-of-helping-campaign-contributor/" target="_blank">News: Romney cites incident of helping campaign contributor</a></p>
<p class="cnn_storypgraphtxt cnn_storypgraph25">The U.S. presidency is a
position of immense magnitude and requires a thorough vetting. What the
American people deserve is a complete and honest presentation by Romney
of how his wealth was accumulated, where it is now invested, what
purpose is served by all the various offshore vehicles in which he has
an interest and what his financial relationship with Bain Capital has
been since his retirement from the company. These are all factors that
go to the heart of his character and values.</p>
<p class="cnn_storypgraphtxt cnn_storypgraph26">For a nominee to
America's highest office, a clear and transparent reporting of his
finances should be nothing more than routine.</p><br clear="all"><br>-- <br>Art Deco (Wayne A. Fox)<br><a href="mailto:art.deco.studios@gmail.com" target="_blank">art.deco.studios@gmail.com</a><br><br><img src="http://users.moscow.com/waf/WP%20Fox%2001.jpg"><br>
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