I wouldn’t call this a “bombshell,” because we already know Romney’s finances are riddled with slight of hand gimmicks, but a report released by Bloomberg today casts serious shade on Mitt Romney’s claims of donating significant portions of his wealth to charity and calls into question his morals. If he has any.
In 1997, Congress cracked down on a popular tax shelter that allowed rich people to take advantage of the exempt status of charities without actually giving away much money.
Individuals who had already set up these vehicles were allowed to keep them. That included Mitt Romney, then the chief executive officer of Bain Capital, who had just established such an arrangement in June 1996. [...]
In this instance, Romney used the tax-exempt status of a charity — the Mormon Church, according to a 2007 filing — to defer taxes for more than 15 years. At the same time he is benefitting, the trust will probably leave the church with less than what current law requires, according to tax returns obtained by Bloomberg this month through a Freedom of Information Act request.
In general, charities don’t owe capital gains taxes when they sell assets for a profit. Trusts like Romney’s permit funders to benefit from that tax-free treatment, said Jonathan Blattmachr, a trusts and estates lawyer who set up hundreds of such vehicles in the 1990s. [...]
Romney’s CRUT, which is only a small part of the $250 million that Romney’s campaign cites as his net worth, has been paying him 8 percent of its assets each year. As the Romneys have received these payments, the money that will potentially be left for charity has declined from at least $750,000 in 2001 to $421,203 at the end of 2011.
To recap — Romney claims that his generous donations to charities are justification for his low tax rate, but the truth is at least one of the charities set up by Mitt Romney in the 1990s is paying him dividends.
Such a maneuver is no longer legal, but his money-pot “charity” was grandfathered into the today’s system.
The Bloomberg report describes this as “renting from your favorite charity of its exemption from taxation,” and that “the Romneys get theirs off the top and the charity gets what’s left,” meaning that Mitt Romney receives a guaranteed payout from this “charity” while the Mormon Church receives very little.
This all makes sense if your idea of charity is allowing rich people to pretend they’re donating just to funnel money through a tax-exempt washer, which I have no doubt is a belief held by Willard M. Romney.
Mitt Romney wants you to believe he knows what it’s like to stand outside in the rain and ring a bell, but what he’s not telling you is that he’s pocketing dividends from every dollar in the pot.
Contacted by Bloomberg for a response, the Romney campaign responded by saying “The trust has operated in accordance with the law.”
It was legal. But if you or I did this today, it would probably be called money laundering.