Did Romney Screw Over The Mormons Too?

I'm guessing everyone who reads DWT already voted. But, just in case... I want to remind anyone who hasn't that Romney has still not come clean on his taxes and that Bloomberg reported last week that he doesn't appear to have paid any taxes between 1996 and 2009, using a loophole and the Mormon Church to avoid paying his fair share-- or even any share at all. The irony is that it looks like he's even managed to stiff the Mormons... which explains why he has made it clear he would rather lose the presidential race than do what every single other candidate-- from both parties-- has done in recent history: release his taxes.

In 1997, Congress cracked down on a popular tax shelter that allowed rich people to take advantage of the exempt status of charities without actually giving away much money.

Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996.

The charitable remainder unitrust, as it is known, is one of several strategies Romney has adopted over his career to reduce his tax bill. While Romney’s tax avoidance is legal and common among high-net-worth individuals, it has become an issue in the campaign. President Barack Obama attacked him in their second debate for paying “lower tax rates than somebody who makes a lot less.”

In this instance, Romney used the tax-exempt status of a charity-- the Mormon Church, according to a 2007 filing-- to defer taxes for more than 15 years. At the same time he is benefiting, the trust will probably leave the church with less than what current law requires, according to tax returns obtained by Bloomberg this month through a Freedom of Information Act request.

In general, charities don’t owe capital gains taxes when they sell assets for a profit. Trusts like Romney’s permit funders to benefit from that tax-free treatment, said Jonathan Blattmachr, a trusts and estates lawyer who set up hundreds of such vehicles in the 1990s.

“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”

When individuals fund a charitable remainder unitrust, or “CRUT,” they defer capital gains taxes on any profit from the sale of the assets, and receive a small upfront charitable deduction and a stream of yearly cash payments. Like an individual retirement account, the trust allows money to grow tax deferred, while like an annuity it also pays Romney a steady income. After the funder’s death, the trust’s remaining assets go to a designated charity.

Romney’s CRUT, which is only a small part of the $250 million that Romney’s campaign cites as his net worth, has been paying him 8 percent of its assets each year. As the Romneys have received these payments, the money that will potentially be left for charity has declined from at least $750,000 in 2001 to $421,203 at the end of 2011.

I bet there are a lot of angry Elders in the Mormon hierarchy today! I wonder if any of them read the Financial Times, a pretty conservative newspaper based in London that endorsed President Obama for reelection yesterday.

Tuesday’s election is arguably as important as any since 1980, when Ronald Reagan’s victory accelerated a shift to deregulation and supply-side economics. Today, after the Great Crash of 2008, the US economy is recovering, albeit too slowly for many Americans out of work or in search of a decent-paying job. US pre-eminence is under threat in a world where advanced knowledge is widespread and low-cost labour readily available. In Afghanistan, the Middle East, north Africa and the South China Sea, America’s resolve is being tested.

Neither candidate has provided convincing answers on how he would respond to these challenges. In a risk-averse campaign dominated by political consultants, both men have displayed a poverty of ambition. There have been few glimpses of a better future, of opportunities to be seized thanks to cheap natural gas and America’s potential for energy self-sufficiency.

What is clear is that both men have a different philosophy of government. Mr Obama is an interventionist. He staked all on healthcare reform, bringing 30m Americans into a safety net. The president also pushed through a $787bn stimulus package that saved the country from another Great Depression. He poured billions into rescuing the Detroit car industry and secured several hundred thousand jobs. His other legacy is the Dodd-Frank act, the most sweeping reform of Wall Street since the 1930s, though one which has only been fitfully implemented.

...The more serious objection to Mr Romney is that he has gone through so many contortions to win his party’s nomination that it is hard to see how he would govern in practice. His wishlist includes an aspiration to raise Pentagon spending by a fifth while cutting everyone’s taxes and still somehow balancing the books. Such fiscal alchemy is an exercise in evasion, not a recipe for sustainable economic recovery.

Mr Romney’s latest positioning as a pragmatic centrist appears to fit far better than his earlier incarnation as a rock-ribbed conservative Republican beholden to the Tea Party. The trouble is that it is impossible to be sure. His protean persona relies more on market research than any innate political philosophy.

As in his response to Hurricane Sandy, Mr Obama has shown that purposeful government can be part of the solution rather than the problem. Four years on from the financial crisis, with extreme inequality an affront to the American dream, there remains a need for intelligent, reformist governance. Mr Obama, his presidency defined by the economic crisis, looks the better choice.

Pretty weak case for reelection. I'm not sold. Too bad there isn't a better choice. When you watch this video, keep in mind that every one of the asshole speaking on camera is now a Mitt Romney surrogate, although most are preparing to attack him next week: