Much has been made about Romney's stonewalling over the release of his past tax returns, despite releasing 23 years worth to the McCain campaign in 2008 to be vetted for a potential VP slot. From recent interviews and Jed's front page diary it would appear that those 23 years are not the problem that Mittens is trying so desperately to avoid.
Of course, as Jed alludes to, it is also possible that McCain's vetting operation was so inept that it could not have dropped a baseball and hit the ground based on who actually was approved. In that case, there may be bombshells left to uncover from the 1985 to 2008 returns.
A recent blog post by NYU tax law professor Daniel Shaviro (hat tip to Paul Caron's TaxProfBlog for leading me to Daniel Shaviro's blog) adds to the speculation that the year 2009 just might be the reason for Rmoney's reluctance to release anything other than last year.
More beneath the orange curly-q.
As noted in the introduction, it appears that Romney had no problem releasing 23 years worth of tax returns to the McCain campaign in 2008 when he was being considered for the VP position; a position that he eventually lost to Sarah Palin. That alone, losing anything to Sarah Palin, should be an automatic disqualifier in life, but I digress.
My guess, along with Daniel Shaviro's is that there are no major bombshells in those 23 years of returns. Yes, they will show massive wealth, and possibly even lower tax rates, with some as low as 0% during the period, but those, while potentially embarrassing, were probably legal and can be explained as just good tax planning and taking advantage of the current Internal Revenue Code.
The problem appears to be one year, and one year alone, 2009. What could be in that year that is so troubling to Mitt?
As Mr. Shaviro points out in his blog, none of us can do more than speculate as to what could be in there, but he points to some salient points (my emphasis in bold):
1) We know from the 2010 tax return, in which he had a net capital loss carryforward from 2009, that he zeroed out his net capital gains - including from carried interest Bain income - in 2009.
2) 2009 was the last year in which he received certain Bain payments as the playout of his "retroactive retirement."
3) It's been hard to understand what benefit he thought he was getting from the Swiss bank account, and there was an IRS amnesty program in 2009 for fraudulent nondisclosure of offshore income. If he had to come clean in 2009, this might be embarrassing, especially given that there was an iron fist inside the IRS leniency offer (i.e., if you held out, they might get you without any amnesty).
From the first two items above, it may be a reasonable guess that Romney had a lot more gross income in 2009 than 2010 and 2011, yet paid less tax or even zero tax.
So is it possible that Mitt was doing something illegal and took advantage of the IRS's amnesty program in 2009 and knows this would devastate his campaign now?
Shaviro goes on to say
We know from attachments to the 2010 return that some of his "blind trusts" were engaged in transactions identified by the IRS in Notice 2002-35, which pertains to fake loss-generating scams that involved abusing and misinterpreting the notional principal contract regulations. So far as the blind trust aspect of that is concerned, note that Romney himself once called blind trusts an "age-old ruse." But I am unclear about how much to make of the 2010 disclosure, given that it would have undermined expecting to get the tax benefits if the deals at issue were complete scams. So it has struck me as conceivable that the blind trusts did something in the ballpark of required 2002-35 disclosure but less extreme and more legally defensible.
Another interesting point that is brought up in the piece is the idea that Romney, and more importantly his tax advisers, realized that he would be "audit-proof" due to running for President in 2012. The IRS would be very reluctant to audit him and risk the perception of looking too political or for the damage it might do to the President's image of using the IRS against political opponents. In Shaviro's words:
Still, willingness to do extremely aggressive tax sheltering (such as through loss generation from circular flows of cash) in 2009 would not come as a huge surprise, even though it seems like a dumb idea if you are preparing to run for president again. I wonder if the very fact that he was running for president might have led him to figure that he was audit-proof, on the ground that the IRS would look too political if it started challenging things.
But would Romney have really been this aggressive, he's running for office for Pete's sake? Or perhaps while he technically signed his return he was not involved in the day to day running of his life, could that be the answer? Or perhaps he was entitled to do this beacause in the words of his fellow top 1%er Leona Helmsley, ""We don't pay taxes. Only the little people pay taxes.""
I personally do not think we will be receiving any more tax returns from Romney no matter what happens in the campaign. That year, 2009, is too big to be able to explain away and will only make him look worse. As George Will said on Sunday (never thought I'd be quoting George Will on anything other than baseball),
“The cost of not releasing the returns are clear,” Will said. “Therefore, he must have calculated that there are higher costs in releasing them.”
So what should we do about his lack of transparency?
Keep hammering him. Keep this up. Ask the question every time there is a press availability. Do not lose focus on this. Keep repeating it over and over and over to everyone that you meet. "Romney must have something BIG to hide since he doesn't want the American people to see his tax returns." Suggest something illegal in the way of offshore trusts, or even the simple fact that he paid no taxes. Just keep speculating until he proves you wrong. Even if he does eventually release the returns and it does prove you to be wrong, there is no shame in that. Remember, even if it is wrong, if you repeat it enough it becomes the truth; at least that what happens for the Republicans!