TREASURE ISLANDS

Romney paid 13% tax for last 10 years? Tax profs call bullshit

My recent Vanity Fair piece portrayed Romney as someone who, while not obviously getting caught decisively breaking the law, is confident striding boldly into the fuzzy grey areas between what is legal and what isn’t. (That’s often where the best money is to be made, especially on Wall Street.) My article starts with an interview with someone who worked under Mitt many years ago and related how he gave the person roundabout instructions to pretend to be someone else, in order to get access to secret information from the competitors of Bain & Co’s clients.

In other words, Romney asked them to lie.

It is in that context that one might read this article by Victor Fleischer, a top U.S. tax professor, who has questioned a statement by Romney — without supporting evidence — that he “never paid less than 13 percent.”

Now tax is an incredibly slippery thing, of course: one follow-up question, for example, would be ’13 percent of what?” Fleischer’s analysis of Romney’s recent claim neatly captures the spirit of what I found:

Romney is claiming that he paid at least 13% in taxes every year.  I call bullshit. . . .  What’s interesting is that Romney’s claim could be literally true but misleading — which means that Romney is full of bullshit, but not a dirty liar.

Given Romney’s repeated pattern of legal gymnastics and grey-area-paddling that I discovered during my research (and there was plenty more which didn’t make it into the final article: take a look a this excellent though complex subsequent Jesse Drucker story, for instance) it is, to my mind, a fairly sure bet that Romney is wading deep into the grey areas of what is true.

Ed Kleinbard, whom I also quoted, has more:

“It is extremely improbable that he paid 13% in 2009, just as it’s extremely improbable that he paid zero for 10 years straight.”

You can read an explanation of probable truth-gymnastics here or in Fleischer’s shorter, readable article: essentially, it depends what you are dividing by what to get your percentage, and can still pretend you paid a 13% tax rate even if the dollar amount of the ‘income’ you are putting in the numerator of your calculation is embarrassingly small as a percentage of your economic income and wealth.

And of course, Romney could easily demonstrate that he really did pay that rate. As Ezra Klein puts it in the New York Times:

“He can’t refuse to release the returns — returns that all recent presidential candidates have released — and expect that people will simply trust that there’s nothing weird going on in them.”

Oh, and that was another theme of my article, summed up in this quote:

What Romney does not get,” says Jack Blum, a veteran Washington lawyer and offshore expert, “is that this stuff is weird.