Taxes are for the little people.

This follows the conservative style of government. Say government does everything wrong, prove it by intentionally breaking the law or writing broken rules, and now point to the very thing you broke as proof the entire thing is broken.

wow. that is derptastic.
nothing but guesses.

Here is a simpler answer.
The IRA consisted of stock holdings that have greatly appreciated.
Do people think that Larry and Sergei just put $6k/year in their IRA?

There is a reason the Bain Funds have raised over $25,000,000,000 - great historical returns. So what a surprise that his investments would also do well.

Grand_Moff_Joseph: I don't care what party a person represents: Anyone who makes and stashes massive wealth outside the oversight and taxation authority of this country has no business even ASKING to be the Commander in Chief.

You want to lead this country? Then put your money where your talking points are.

You do know that IRA holdings aren't taxable until they are withdrawn, right?
And gains in the IRA account aren't taxed until they are withdrawn, right?

The author of TFA didn't seem to know that.

You want to live in this country and criticize candidates? Then put your brain in gear instead of reciting talking points and being a partisan hack.

Three Crooked Squirrels: tenpoundsofcheese: wow. that is derptastic.
nothing but guesses.

Here is a simpler answer.
The IRA consisted of stock holdings that have greatly appreciated.
Do people think that Larry and Sergei just put $6k/year in their IRA?

There is a reason the Bain Funds have raised over $25,000,000,000 - great historical returns. So what a surprise that his investments would also do well.

He would have to have consistent between 28 and 29% over 30 years. Every single year. Here's an IRA calculator. You can play with the numbers yourself. No "stock holding" portfolio performs that well. Hell, Madoff's scam was so enticing because he consistently got about 13% returns, and no one could figure out how Madoff got even 13% year after year. Putting in $6,000 a year and getting a consistent return of 13% over 30 years would leave Romney with just north of $2,000,000.

He didn't have stock holdings in that thing. Most likely, he put in partnerships that were sure to grow exponentially, but that were currently valued at almost nothing because they weren't turning a profit yet. And they grew in there tax free. I'm guessing it's legal. But he didn't have just stock holdings in that thing.

so you went from" didn't have stock holdings" to didn't have just stock holdings in the space of a paragraph. You are sure of it...but then.

So which is it? Citation?

So tell me which partnerships are "sure to grow exponentially" ? You are kidding, right? You think these things are guaranteed? If he failed, his IRA would be worth $0.

Lastly, if you put founder's shares of Staples or Sports Authority in your IRA, your annualized return over the last 20 years would be a lot better than 29% a year.

Three Crooked Squirrels:

Here is a simpler answer.
The IRA consisted of stock holdings that have greatly appreciated.

My point was that, yeah, there could have been some normal stocks that joe schmoe could also have bought on the open market, but that's not how it grew to $100,000,000. I meant no more and no less.

I will add that I seriously doubt anything he did was illegal. But he is exploiting a loophole. 401(k)s are intended to grow tax free to provide for a comfortable retirement. Romney's has grown to mega-wealth levels tax free.

It is not a loophole. If he failed in his investments, the 401k would be worth nothing.
If you bought 2k/year of Microsoft stock for only the first 5 years, your holdings would be worth over $1M today. Is that exploiting a loophole?
Of course if you bought Enron stock, you would have $0.

Brooks Hamilton is founder of Brooks Hamilton & Partners, which designs 401(k) plans for corporate clients such as Neiman Marcus and Frito-Lay. In this interview, Hamilton discusses his long career in the benefits industry, the explosive growth of 401(k) plans and the mutual fund industry in the 1980s and '90s, his discovery of a "yield disparity" in 401(k) plans and how this disparity threatens to undermine the entire 401(k) retirement system.

....
You're saying that the Department of Labor has numbers that [show that] back in 1974, companies were footing the bill for 89 percent, ... and 25 years later they're putting in 49 percent. So companies have saved 40 percent of their costs nationwide?

There has been a cost shifting of 40 percent from contributions made by the employer to contributions made by the employee.

....

... So you mean that when you looked at the evidence, you found out that the person who did the best was making 48 percent in a quarter and the person who was doing the worst was losing 9 percent a quarter.


Yes, that's correct.

That's big a gap.


It was stunning. I couldn't assimilate it. I didn't know how to think about it. It was far beyond anything I would have ever guessed.

And these are in the same 401(k) plan with the same investment options.

That's correct. ... They were all large plans with $100 million, $200 hundred dollars in the plan and 1,000, 2,000 participants or more. So these were big plans, and they were scattered geographically, some up East and some on the West Coast.

... So you're looking at the top performer and the bottom performer. That's individuals. But could you see a difference by categories?


Yes. ... So we decided to look at the top 20 percent and the bottom 20 percent. ... We saw the same thing over and over. ... Say the bottom 20 percent had an investment return for the year of 4 percent. The top 20 percent would be anywhere between five and seven times that number. ...

Like 30 percent?

Yeah, 30 percent right. ... I label[ed] this yield disparity. I just coined the term. I thought, we have a yield disparity that is a financial cancer in our great, beautiful 401(k) movement. I had never seen it before, but it was everywhere I looked.


What do you mean, a financial cancer?

It would destroy the opportunity for ordinary workers to retire in dignity. They couldn't get there from here. There is no way. Number one, they are contributing too little, too late for the most part. They are contributing the least, and then they are getting lousy investment performance. ...

But were your samples large enough for you to trust them?

Absolutely. I'm looking at 50,000 people in a population of maybe 30 million people in 401(k) plans at that time, ... scattered in every ZIP code in this country, so I knew that what I saw was real, and I found it frightening. ...


... So when you are looking at that concrete evidence of disparity in yield, is there any correlation between [investment income] and the kind of income and education people have?

I don't know about education, because it wasn't a data element in our database, but annual income was. Every client that we did this examination of, in every case, the 20 percent at the top not only had the highest investment income -- like 30 percent or whatever -- they also had the highest average annual pay, whereas the bottom 20 percent not only had the lowest investment income, four percent, they had the lowest average annual pay. And ... the people at the top 20 percent often were putting in less money as a percentage of pay ... because there was a limitation imposed by the law on what they could contribute, so it wasn't driven by the fact that they were putting in more. ...

Are you saying you found a correlation between the salary levels of people and their ability to manage their investment? Higher-paid people got better investment results and lower-paid people got worse?


That's exactly what I'm saying. In fact, it was the only correlation; there was no other.

So what you are saying is the best-paid people, the richest people are getting richer and the middle-class workers are falling further behind?

Yes, that's exactly what I'm saying.

Lsherm: Three Crooked Squirrels: He didn't have stock holdings in that thing. Most likely, he put in partnerships that were sure to grow exponentially, but that were currently valued at almost nothing because they weren't turning a profit yet.

So is that the loophole? The article wasn't very good about explaining it. Say you have a $2 million dollar interest in a fund that isn't generating any profit yet. You slide it into your IRA with a zero value, but if the next year that fund returns $500,000, now you have $500,000 in your IRA?

The article didn't explain it because they made it up.

Same with crooked squirrels. A partnership is not valued based on whether or not it was turning a profit yet. There are plenty of businesses that have had a market value and not yet profitable.

Funds don't generate profits. They generate returns. You can't just make up what you think the value of your investment is, since if audited, you will go to jail (unless you are Charlie Rangel).

In your example, If you put $2M in a fund, then the fair market value at the time you put it in is $2M.

The only way you go from 0 value to 500k in value in is if some underlying event happened that generated that return. Example, you invested 6k in a fund that was able to buy founder's shares in Staples. Years later Staples goes public and those shares increased from 10 cents to $10. Your 6k is now worth $600k.

Quick! Somebody point out which laws he broke!!!!

GAT_00: This follows the conservative style of government. Say government does everything wrong, prove it by intentionally breaking the law or writing broken rules, and now point to the very thing you broke as proof the entire thing is broken.

doyner: socodog: Quick! Somebody point out which laws he broke!!!!

That's exactly the point.

there aren't laws there and he wants to keep it that way...

socodog: Quick! Somebody point out which laws he broke!!!!

Shouldn't we be looking higher than he did not break any laws.

netizencain: Grand_Moff_Joseph: I don't care what party a person represents: Anyone who makes and stashes massive wealth outside the oversight and taxation authority of this country has no business even ASKING to be the Commander in Chief.

You want to lead this country? Then put your money where your talking points are.

Well, there goes every standing politician higher than city councilman.


Citation needed

tenpoundsofcheese: There is a reason the Bain Funds have raised over $25,000,000,000


I knew you'd be here defending your masters

socodog: Quick! Somebody point out which laws he broke!!!!


Damn, and here I thought Republicans were the party of religion and morality. Turns out they're all a bunch of shady crooks who skirt the line between legal and illegal to make as much money as possible and run over anyone who gets in their way.

Assassinating citizens extrajudicially isn't against the law according to your guy and he wants to keep it that way.

//you people are too farking easy. Troll off

RELIGION OF RAPIDLY APPRECIATING CRONY MICROFUNDS AND UBIT OFFSHORE TAX DODGING

intelligent comment below: Damn, and here I thought Republicans were the party of religion and morality. Turns out they're all a bunch of shady crooks who skirt the line between legal and illegal to make as much money as possible and run over anyone who gets in their way.

That's funny... but not ha-ha funny. :(

The article doesn't get into the main issue with the IRA scheme.

In retrospect, it was a colossal farkup. He (or his heirs) will pay more in taxes because of this than if he hadn't bothered at all.

Really.

This scheme was cooked up when capital gains taxes were much higher. Particularly in the period after Ronald Reagan doubled effective capital gains taxes on high earners (which he did, btw). The idea was to put special classes of stock in your IRA that had a decent chance of going ballistic if the Bain-held companies did even moderately well. I'm guessing it'd be even easier today with high-leverage derivatives or whatever.

But, knowing what happened to tax rates since, it was dumb. When Romney pulls money out of these accounts, it will be subject to his normal marginal income tax rate. Which is in the 35% bracket. As would his kids, and probably great-grandchildren. But, he'd be able to massage when he recognized those gains.

But, if he had put these 'magic bean' equities in a normal non-IRA portfolio? He'd only be paying the Bush-cut 15% rate on the capital gains, at least any he took out between 2003 and the present.

So, yeah, he tried to game the system. It backfired.

In reality, it's moot. He'll tithe out of the appreciated IRA funds so it won't be taxed anyway. Which is fine, if you are okay with non-taxable 'charitable' giving like that.

socodog: /you people are too farking easy. Troll off

Oh... haha! You were lying to people about your beliefs to try and upset them! What a hilarious and awesome display of your character...

socodog: Assassinating citizens extrajudicially isn't against the law according to your guy and he wants to keep it that way.

//you people are too farking easy. Troll off

Ahahaha, good show ol' chap, we thought you were a disingenuous retard, but you were only pretending! How clever. You sure tricked me!

Why? What's the point? Does it amuse you in some way to have people that you don't know think you're a moron?

Tax law experts we spoke to explained to us how an IRA could in theory reach the size of Romney's. And though it's impossible to know - without more information from Romney - whether he's avoided any taxes, the experts explained how a massive IRA could easily benefit from legal avoidance of one obscure U.S. tax.

But as Shaviro imagined it, "Rather than borrowing to hold investment assets, the U.S. tax-exempt [the IRA] creates a [fund] in the Caymans and the entity then borrows to hold the investment assets. So all that the US tax-exempt ends up getting is dividends... and it hasn't literally borrowed to get them at all. Hence, no UBIT."

In other words Romney's IRA may hold stock in Romney's offshore funds, those funds could have levered up and yielded huge returns to the IRA. That would allow Romney not just to circumvent the annual contribution limits, but to avoid a 35 percent tax that would have kicked in if the IRA had taken on the debt-financed investments directly.

So basically, this article can be boiled down to "Romney has a $100M IRA, here are a bunch of other things we made up that might be true."

This is the definition of hating on someone just because they're successful. Let's get some evidence: did he break any laws? Is he keeping money overseas to avoid taxation? Next time you want to write an article, do so on facts rather than baseless speculation.

Wyalt Derp: Why are you h8rz so afraid of a rich, Conservative robot?

Hey, it's not as if Romney got caught putting fancy mustard on his arugula...

Lawnchair: When Romney pulls money out of these accounts, it will be subject to his normal marginal income tax rate. Which is in the 35% bracket.

So Romney is simultaneously an evil 1%er who avoids paying his fair share of taxes, and a rube because he pays the maximum marginal rate? Got it.

intelligent comment below: tenpoundsofcheese: There is a reason the Bain Funds have raised over $25,000,000,000


I knew you'd be here defending your masters

just pointing out the reality for the partisan-hack-reality-handicapped here.

sorry you are butt hurt by reality...again...