Lost in the discussion of Romney's available deductions (the ones to which he is entitled but which he has not, so far, deducted) is a much bigger question:
Where is the 7.2 million dollars he included as income in his estimated taxes but which has magically (retroactively) disappeared from his taxes "as prepared"???
(full disclosure- I am a Ludite, and don't know how to embed links, but the information contained here is widely know to all Kossacks.)
Consider:
1. Estimated 2011 income $20.9 million, estimated deductions $4.02 million, estimated tax $3.2 million.
2. 2011 tax "as prepared": income $13.7 million, deductions taken $2.25 million, tax $1.94 million.
The big question, which has been lost in the discussion of his choosing not to (currently) take all of his deductions for charity (most a required tithe to his church)
is what happened to $7.2 million dollars in income, which he had realized by April 15 when he filed his estimated taxes, and upon which he paid tax at that time.
For high net worth individuals, and particularly those with partnerships which own partnerships which own partnerships… April 15 is rarely enough time to file. Each partnership must wait until the partnership owning it has completed its taxes. So requesting an extension is not unusual.
However- in April of 2012, Romney knew how much income he had received from his partnerships for 2011, because he had already received it. The $20 plus million he estimated was not an estimate of how much he was still going to receive. There was no income to arrive later, since any distributions coming after December 31, 2011 would have gone to 2012 taxes. By April, Romney and his accountants knew how much had been distributed from his enterprises. What was not known, presumably, was the expenses and deductions against the income distributed. Romney had already received $20.2 million.
SO MR. ROMNEY- WHAT HAPPENED TO THE 7.2 MILLION DOLLARS IN INCOME YOU HAD RECEIVED IN 2011 BUT ARE NOW NOT DECLARING IN YOUR TAXES? Hint: it didn’t disappear.
Clearly, Mr. Romney decided to retroactively forgo taking that income in 2011, and to leave it in the corporation/partnership(s) which had distributed it. Leaving aside the fact that these entities are purportedly in a “blind trust” (which clearly has better eyesight than I do), how many of us have the option of deciding which tax year to take our income?
If money is kept in an American corporation, it is taxed as retained earnings at 35%, and then taxed again when it becomes income. Naturally, most corporation/partnerships distribute those earnings each year to avoid this. Entities registered in the Cayman Islands, however, do not have this problem. No taxes are paid until the money is “repatriated” to the US. So Romney does not pay taxes on that income until he ultimately decides to receive it. Note, I’d bet $10,000 that the money has not disappeared. Romney still has it- it just isn’t in the US.
Retroactively deciding to not take that $7.2 million in income in 2011 left Romney with a new problem. Since he had previously said he would (had) taken the income, he had given sufficient money to the Morman church for that income. (Aside: can you pay your tithe in advance or is every year a new clean slate? Can you average your percentages like PWC did or do you actually have to keep track of the dollar amounts?) Anyway, if he took all his deductions now his effective tax rate would be 9.2%, unacceptable even to Romney since he had previously said he would pay 15%. As noted everywhere, he can claim those deductions later (and maybe already has.) But why would he decide to create the discussion? Why did he decide to not take the $7.2 million he had previously received? He had previously disclosed incomes of greater than $20 million. He had shown an estimated 2011 income of $20 million. The total was not news or likely to create controversy.
If he had included the $7.2 million as income, however, its source would have to be shown. The only plausible explanation is that the source of those millions was even more toxic than the amount.
Will any journalist have the Brass, to use Mr. Clinton’s phrase, to ask Romney where the $7.2 million went, and why he decided not to take it as income this year?
What is so toxic about the source of that income that he couldn't risk letting "you people" know?