Furthermore, these tricks illustrate that Romney's financial success is not, in fact, just about "making good investments" (although he certainly made many of them), but about taking advantage of loopholes and tricks that a handful of people with considerable financial means can exploit.
Lastly, although such tricks may well be perfectly legal within the letter of the tax code (it depends whether the value that Romney placed on the IRA-shares really was reasonable--a question that's worth looking into), they're clearly miles from the spirit of what IRA tax-deferral laws were designed to encourage: Namely, providing a little tax help to help average Americans save modest amounts of money for retirement.
By limiting IRA contributions to a few thousand dollars a year, Congress clearly meant these vehicles merely to be tools with which Americans could save a bit each year on a tax-deferred basis--not to place high-risk/high-reward bets that could allow people to amass vast fortunes beyond the reach of the IRS.
Romney and his colleagues, obviously, never needed the tax help to save for retirement--because they quickly had more money than they would ever need to retire on. So for Romney and Bain, the IRAs were merely tools with which to allow returns to compound without paying taxes.
And it also likely explains, again, why Romney is so adamant about keeping his tax returns secret. Because the "L" shares and "A" shares tax trick was likely only the beginning. And, for obvious reasons, Romney doesn't want average Americans to discover any more details like this.
Read more: businessinsider.com |
