The curious behavior of Mitt Romney

Mitt Romney is not a good public speaker. I find it painful to listen to him. Even a short clip of his speeches reveals someone who seems uncomfortable in that role because he lacks the ability to make his points clearly. What has got him so far is money and preparation plus the backing of the party establishment, the media, and the oligarchy, coupled with his willingness to say anything to pander to his audience. This is what makes so puzzling his repeated stumbles on the question of his own taxes, a topic that he must surely have known was coming. His performance on this issue is weirdly awkward for someone who prides himself on his careful preparation.

There seems to be increasing intrusiveness in the political process resulting in the current expectation that candidates for major office must release their income tax returns, their medical records, and since the birther nonsense, maybe even their birth certificates. I personally fail to see the relevance of candidates’ personal lives (and that includes their tax returns) in weighing their merits for public office. So I can understand why some candidates resent being asked to reveal their personal information.

I think candidates should be able to retain the rights to their privacy and don’t care how rich or poor they are or how much they give to charity. What I am much more concerned about is influence peddling and outright bribery and would much rather see more transparency in those areas that would reveal quid pro quos that work against the public interest.

Having said all that, the idea that candidates must release their tax returns has become the norm. All candidates know this and this makes the stumbling evasiveness of Mitt Romney on this issue so peculiar since he must have known it was coming. If he had refused to release them on principle, saying that his private affairs are no one else’s business, he might have got away with it. At least I would have sympathized. Instead he has just tried to dodge and weave and changed his story. Stephen Colbert has fun at his evasiveness.

After the beating that he took in South Carolina, he has now said that he will release his 2010 returns and an estimate of his 2011 taxes tomorrow, but he is clearly doing so reluctantly.

So what could be the problem? The most common reason suggested is that he may be paying only about 15% of his income in taxes, which is a lot less than what most middle class people pay. But he has already said this publicly (although under pressure) so why the further hesitation?

The problem for Romney is not that he is very rich. American voters don’t seem to care and they even admire people who are wealthy. But as Matt Taibbi perceptively pointed out a few months ago when Wall Street executives were complaining that they were being unfairly portrayed as evil, people in America don’t get angry at the wealthy simply because they are rich, they get angry at people whom they think got rich by cheating. The anger at Wall Street is because of the perception that they did not do so fair and square but lied and cheated their way to wealth by rigging the rules in their favor. I think that Romney is afraid that he will be seen as a cheater.

Why? One possibility is that he may be paying even much less than 15% by using various tax loopholes that are effectively available only to rich people, such as parking his money offshore in the Cayman Islands and elsewhere. Rightly or wrongly, people view offshore bank accounts (and the Cayman Islands are notorious as a haven for cheaters) as evidence of shadiness and the excessive exploitation of tax loopholes as cheating, if it results in much lower rates of tax payments than ordinary people.

Another possibility is that he may have hidden much of his income using such devices as the ‘carried interest’ loophole. The idea that millions of dollars of income may not even be counted as income would strike some as cheating.

Romney may also have been using some shady tax shelters that have passed the mild scrutiny of the IRS but may not withstand the closer scrutiny that will come with lots of reporters analyzing his records. The oligarchy has been highly successful in having the number of auditors in the IRS reduced and its focus shifted away from aggressive enforcement of the tax laws so the wealthy have become remarkably creative at finding ways to avoid paying taxes.

If Romney’s release of his tax returns in April reveal nothing sensational, that will lead to suspicions that his taxes for 2010 (which were filed in 2011) and this year were prepared with his current campaign in mind and may not reflect what he has done in previous years, and that will ratchet up the pressure for him to release his previous years’ taxes. It does not help him that his father George Romney apparently released his own tax returns when he ran for president in 1968 and did so for the previous 12 years because he said that the returns for any given year may be a fluke.

I do not expect any bombshells in the tax returns that will be released tomorrow. Romney strikes me as too cautious a person to engage in outright illegality. But I think that they will reveal a lot about how the oligarchy exploits the tax system to pay at far lower rates than the rest of us, and that may start a useful conversation of how they have managed to rig the system so much in their favor.


  1. Somite says

    Another obstacle might be the individuals and firms involved in Romney’s tax preparation. I bet a lot of what is in those tax returns might be considered trade secret by those firms and may not want their tricks exposed publicly.

  2. Henry Gale says

    Mano said:

    But I think that they will reveal a lot about how the oligarchy exploits the tax system to pay at far lower rates than the rest of us….

    I think where you say ‘exploits’ Mr. Romney will say ‘follows.’

    I think his team is most worried about one question, how much money has Mr. Romney made without working a single day.

  3. Wayne says

    I agree that candidates personal lives shouldn’t be a topic for discussion. I do not care, for example, that Mitt has sexual interactions with his dog, or has accounts at Tiffanys, or any other of the of the inane crap that often gets trotted out in elections. But I do care about hypocrisy. Mitt is likely to be a supporter of tax reforms that favor the wealthy at the expense of society. In short, he and his supporters have a financial dog in the fight for the future of the US. The revelation that despite his enormous wealth he effectively pays less tax than the people who mow the lawns at his mansion speaks directly to to his priorities as a potential national leader.

  4. Mano Singham says

    I don’t know that what Romney did counts as hypocrisy, though. As far as I know, he thinks that everyone’s taxes should be lowered. I think he is wrong, as I think you do too, but it is not the same as being hypocritical, is it?

    The argument about whether the tax system is fair is something that can be discussed without knowing the tax returns of any given individual. We have known for a long time that people like Romney pay taxes at much lower rates because their income comes from investments and is not classified as ordinary income.

    Fraud and the perception of cheating is another matter, though, and this is perhaps where he is worried.

  5. Henry Gale says

    This New Yorker article is very interesting.

    As a result, private-equity firms are increasingly able to profit even if the companies they run go under—an outcome made much likelier by all the extra borrowing—and many companies have been getting picked clean. In 2004, for instance, Wasserstein & Company bought the thriving mail-order fruit retailer Harry and David. The following year, Wasserstein and other investors took out more than a hundred million in dividends, paid for with borrowed money—covering their original investment plus a twenty-three per cent profit—and charged Harry and David millions in “management fees.” Last year, Harry and David defaulted on its debt and dumped its pension obligations. In other words, Wasserstein failed to improve the company’s performance, failed to meet its obligations to creditors, screwed its workers, and still made a profit. That’s not exactly how capitalism is supposed to work.

  6. thewhollynone says

    Now you see, I didn’t know that about Harry and David. I get their pears delivered every December, but won’t do that any more.

  7. Wayne says

    Point taken. It would only be hypocrisy if he called for tax increases while persistently dodging taxes.

  8. Henry Gale says

    So here is the answer to my question:

    Republican Mitt Romney’s tax returns show he had over $42 million in income during the past two years, not from wages but from investing the millions he made during the business career he now argues makes him the most qualified 2012 candidate for president.

    So Mitt made 42 million on the last 2 years without working a single hour.

    I wonder if this is going to have legs.

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