Another Romney Financial Scandal

ABC News has decided to sit on what apparently is an explosive interview with Newt Gingrich’s first wife. Why? ABC wants Newt to do well in Saturday’s South Carolina primary. The story will come out eventually, of course, but not before Gingrich’s attacks have weakened Mitt Romney, the eventual GOP nominee.

But ABC isn’t just relying on killing news stories to subvert Romney’s campaign. Today ABC made a positive contribution to President Obama’s reelection campaign–one of countless such that we will see between now and November–with this headline: Romney parks millions in Cayman Islands. Take that, Mitt–what an image! Romney is a tax cheat who hides his fortune in the notorious Caymans. Right?

That certainly is the impression you get from the first few paragraphs of ABC’s story (i.e., all that most readers see):

Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven. …

As the race for the Republican nomination heats up, Mitt Romney is finding it increasingly difficult to maintain a shroud of secrecy around the details about his vast personal wealth, including, as ABC News has discovered, his investment in funds located offshore and his ability to pay a lower tax rate.

“His personal finances are a poster child of what’s wrong with the American tax system,” said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking.

So obviously Romney is avoiding taxes by a pretense that is dubiously legal at best. That certainly is what ABC implies:

[T]ax experts tell ABC News there are other reasons Romney may not want the public viewing his returns. As one of the wealthiest candidates to run for president in recent times, Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune. In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

Official documents reviewed by ABC News show that Bain Capital, the private equity partnership Romney once ran, has set up some 138 secretive offshore funds in the Caymans.

Secretive! Secretive! They’ve caught Romney in some major tax evasion, right?

Well, no, actually. In fact, Romney hasn’t avoided any taxes, let alone illegally evaded them, as you learn if you read the ABC piece to the end:

Romney campaign officials and those at Bain Capital tell ABC News that the purpose of setting up those accounts in the Cayman Islands is to help attract money from foreign investors, and that the accounts provide no tax advantage to American investors like Romney. Romney, the campaign said, has paid all U.S. taxes on income derived from those investments.

“The tax consequences to the Romneys are the very same whether the fund is domiciled here or another country,” a campaign official said in response to questions. …

Bain officials called the decision to locate some funds offshore routine, and a benefit only to foreign investors who do not want to be subjected to U.S. taxes.

Tax experts agree that Romney remains subject to American taxes.

So, in other words, the story here is…what, exactly? Evidently there isn’t one. But that didn’t stop ABC from launching what can only be described as an unfounded smear against the most likely Republican presidential nominee.

Here is my question: Romney is not, in fact, the richest recent presidential contender. That honor goes to John Kerry. Do you remember ABC, or any other news outlet, running stories like this one–“Kerry parks millions in Cayman Islands,” or Switzerland, or whatever–in 2004? No, I don’t either. Most of the rich people in Washington are Democrats. Where are the exposes of their investments, or breathless tales of their (and their accountants’) tax-minimization strategies?

Just kidding, of course. We all know what is going on here.

JOE adds: I cannot resist updating John’s post with the breathtaking introduction to one of the final stories on tonight’s edition of NPR’s All Things Considered. The subject was wealthy politicians. NPR’s Robert Siegel introduces the piece by referencing a long line of wealthy politicians. All of them, except for Michael Bloomberg, inherited their wealth. And all were or are quite liberal. But then Siegel gets to Mitt Romney, a conservative who made his money himself.

If you’re like me, after the “but,” you expect Siegel to make the observation that the big difference between the traditional rich politicians and Mitt Romney is that the former were born to great wealth, while the latter was not. But you would be wrong! Instead, Siegel spends the next several minutes of the broadcast, which I’ve edited out, editorializing about how awful it sounds when Mitt Romney talks about money, compared to how charming and breezy it is when trust-fund liberals talk about money. To NPR, as it is to lords, toffs, and society queens, the distasteful thing about money is not the having of it, but the earning of it.

Alas it is the earning of it that improves the human condition.