Taxes, Offshore Accounts and Corruption
This week, the U.S. Senate passed legislation backed by President Obama extending tax cuts for the 98 percent of Americans who need it, while allowing the Bush-era tax cuts for the wealthiest Americans to expire on schedule at the end of this year. These cuts benefit the working men and women who are struggling during the worst economic crisis since the Great Depression. Yet, Mitt Romney and the right-wing politicians who control the U.S. House of Representatives stand in the way of enacting these cuts. They are holding hostage middle-class tax cuts in their pursuit of additional cuts in taxes for the wealthiest people in America. In fact, the tax plan released by Romney in March of this year would cut taxes for the top 1 percent by nearly $150,000 per year, while the bottom 20 percent of working Americans would have their taxes increased. That makes no sense, but it is the plan pushed by Romney and his backers.
Romney is among the right-winger ideologues who claim that the wealthy need tax cuts to invest in jobs. They ignore the historic fact that tax cuts for the top 1 percent have never produced jobs. We tried that experiment in the Bush years and got the worst job creation record in the history of the American presidency. While it has never worked in the past and won’t work now, it would also greatly increase the deficit, unlike the legislation supported by President Obama and the Senate. According to the Tax Policy Center, Romney’s plan would add $900 billion to the deficit in 2015, when the changes would go into full effect.
But Romney has other problems on taxes. Romney has only released one year of his tax returns. His father, George Romney, released 12 years of tax returns when he ran for president in 1968. President Obama has released every tax return of his since 2000. Romney’s determination to hide his returns suggests that there is something in them that he does not want the American people to see. We know from the one year return that he has released that Romney may have sheltered millions of dollars from taxes in places like Switzerland, Bermuda and the Cayman Islands. He claims that he didn’t save a dollar in taxes, which seems absurd. Equally troubling, however, is Mitt Romney’s response to the demands that he release his tax returns to give the American public a clearer picture of his financial holdings and obligations. He says he’s given us enough, most recently in an interview on the NBC Nightly News with Brian Williams which aired on Wednesday night.
Why is this important? Who cares that a man we know is wealthy put money in overseas accounts and created shell companies overseas with hidden assets? All of us should care. A study released earlier this week by the Tax Justice Network calls the fight against tax havens “one of the great challenges of our age.” The Tax Justice Network is an independent organization launched in the British Houses of Parliament in March 2003. Their report estimates “the amount of funds held offshore by individuals is about $11.5 trillion – with a resulting annual loss of tax revenue on the income from these assets of about 250 billion dollars.” Mitt Romney and Bain Capital have helped to create and sustain this international system where the rich can hide their wealth, while everyone else plays by a different set of rules. Needless to say, at a time when federal, state and local budgets are squeezed here at home, Romney’s off-shore financing may be hiding assets that are not taxed, thereby increasing the taxes of everyone else who pays for vital public services.
According to the Tax Justice Network, companies and individuals like Bain and Romney who benefit from off-shore accounts avoid paying their fair share for things like infrastructure, education and the rule of law here at home. “The rest of us shoulder the burden,” they report. “As a result, tax havens are heightening inequality and poverty, corroding democracy, distorting markets, undermining financial and other regulation and curbing economic growth, accelerating capital flight from poor countries, and promoting corruption and crime around the world.” We need to see Mitt Romney’s tax returns to get a clear picture of the extent he has been involved in these corrupt practices.
Questions also need to be answered about Romney’s extraordinary IRA account, which grew to more than $100 million in value even though contributions are limited by law. How did he amass such wealth in his IRA? Steve Rattner, another hedge fund manager, has spoken with other financiers to see if they had IRAs with similar growth. “None of us had even known this was a possible trick,” Rattner says, although he doesn’t know exactly what Romney did. “He has pushed the envelope all the way to the edge, to his benefit, and I think Americans would find that pretty distasteful.”
Romney says he has abided by the letter of the law. But his tax return for 2010 revealed – for the first time – that he has participated in a corrupt international investment and banking system where the rich are able to hide their wealth while nurses, corrections officers, school workers and others pay their fair share of taxes. We will only know the extent of Mitt Romney’s involvement in these activities when he releases his tax returns for the past 10 years. He needs to do so before the American people can make an informed decision about is candidacy. More than 100 years ago, Justice Oliver Wendell Holmes, Jr. noted that “taxes are what we pay for a civilized society.” We need to see Mitt Romney’s returns to determine if he has met his responsibilities. Until he provides us with these records, questions will remain unanswered and concerns will remain strong that there is something serious being hidden from the people of the United States.