Romney's IRA: Investment gurus can you explain this to me?

#52
#52
lawgator1 said:
It just fits the overall narrative of the Obama campaign perfectly. They could not have asked for a better candidate in that respect.
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Appears to be the direction it's going. Second Massachusetts politician in eight years who will get hammered for being out of touch.

Substitute wind surfing for horse dressage.
 
#53
#53
Velo Vol said:
Appears to be the direction it's going. Second Massachusetts politician in eight years who will get hammered for being out of touch.
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yeah, because God knows Obama can't run on his record so he and his sycophants have to run around creating armies of strawmen to run against
 
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#54
#54
lawgator1 said:
So he can put in shares of a company "worth" next to zero, as his $30,000 a year, in anticipation that when Bain takes them public the actual value of the contribution will be in the millions?

That's quite a loophole.

Can I do that?
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this question means you know absolutely nothing about the venture / equity type investments he was making. The timing of those investments dictates the value and the risk scenarios would blow your seemingly incapable mind.
 
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#55
#55
lawgator1 said:
Its the placement of the shares in an account designated as tax-deferred that is the problem. Had he bought the shares at face value for pennies and held them in a traditional securities account, then he would owe taxes if, when the real values of the shares kicked in, he did anything with them.

By placing them in the IRA, once the value exploded -- as he knew they would -- he can convert them into anything he wants, as long as he doesn't withdraw until he reaches the relevant age.

Thus, by manufacturing a temporary fake value so as to fit them into the $30,000 limit, he can in fact negotiate them within the IRA framework and avoid the taxes.

Look, no matter what spin you try to place on it its a tax dodge. It was designed to allow him to do exactly what he did, which is make money without having to pay taxes on it, at least until he thinks he is getting the best tax treatment available on it.

It is legal, that is not the problem. The problem is that it shouldn't be legal and such gimmicks are what Bain and Romney are all about. Its the last thing we need right now, especially since we know that Romney shipped huge amounts of cash overseas, again to avoid paying taxes and spending or investing in the US.

I'm not saying that Romney is personally to blame. I have no reason to think he didn't play by the rules. But the rules are the problem, they are not fair, they are biased and rigged to favor people in his position. And that's wrong.
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good grief. That's a lot of dead wrong going on. Limit yourself to two sentences and, while your ratio will still utterly suck, you'll have less gross incorrectness.
 
#56
#56
volved said:
The problem is that you are clueless. If the shares were in Bain Capital and Romney did not sell them then there would not be any taxes due regardless of whether or not they were within an IRA.

See Warren Buffett. He is worth billions but he has never paid any taxes on those billions because he has never sold his shares in Berkshire Hathaway.
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oops. LGs idiotic presumption that Romney wouldn't get pounded on liquidation is full blown silly.
 
#57
#57
lawgator1 said:
You should really read the thread before making comments like this as you appear either to be lazy (for not having read it) or rather dumb (for not having understood it).

I mean, at least say you didn't bother to read it. At least then you'd have an excuse.
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in this thread you're calling someone else dumb? Are you kidding me.

Just because you're looking for a place to write the politics bible according to LG, doesn't mean that your point is any less stupid than it might otherwise be.
 
#58
#58
BigPapaVol said:
this question means you know absolutely nothing about the venture / equity type investments he was making. The timing of those investments dictates the value and the risk scenarios would blow your seemingly incapable mind.
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If you control the value and the timing, it's an east game.

"Today, December 30, 1996, I declare the shares worth 5 cents each. In 10 days, I will release them into the market at $50 a share. But today they are 5 cents and I am putting $30,000 of then, at 5 cents, into my IRA for the 1996 year."

Ten days later ....

"Whats that you say? My 1996 $30,000 investment has ballooned in less than a fortnight into $10 million? Hallelujah! Blessed be the market and my well timed gamble. I guess I'm just a brilliant investor."

"Now, please sell half of that and place that $5 million into a cash reserve account within the IRA. "

"Whats that you say ? I don't have to pay taxes ? I would have had to pay a million in taxes if I'd done it as a normal trade? Well, sure am glad I didn't go that route."
 
#59
#59
LG is channeling his inner-GS today, all he needs now is some crudely photoshopped images hotlinked from Kos or Huffpo
 
#60
#60
This so "the uniformed leading the ignorant" and why I read this crap just like I peak at wrecks on the freeway. LG surely doesn't practice corporate law, tax law, labor law or anything that remotely resembles them. The hypotheticals on how Romney's pension plan got to be worth so much demonstrate a complete ignorance of tax law, DOE rules and a naivety about commerce that would even make Obama blush. The simple answer is Romney was a incredibly successful investor who took advantage of existing tax laws written by Ds and Rs alike and has deferred taxes on huge gains.

As Supreme Court justice Learned Hand once wrote and is still true:

"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."
 
#61
#61
Redstater said:
This so "the uniformed leading the ignorant" and why I read this crap just like I peak at wrecks on the freeway. LG surely doesn't practice corporate law, tax law, labor law or anything that remotely resembles them. The hypotheticals on how Romney's pension plan got to be worth so much demonstrate a complete ignorance of tax law, DOE rules and a naivety about commerce that would even make Obama blush. The simple answer is Romney was a incredibly successful investor who took advantage of existing tax laws written by Ds and Rs alike and has deferred taxes on huge gains.

As Supreme Court justice Learned Hand once wrote and is still true:

"Anyone may arrange his affairs so that his taxes shall be as low as
possible; he is not bound to choose that pattern which best pays the
treasury. There is not even a patriotic duty to increase one's taxes.
Over and over again the Courts have said that there is nothing sinister
in so arranging affairs as to keep taxes as low as possible. Everyone
does it, rich and poor alike and all do right, for nobody owes any
public duty to pay more than the law demands."
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Point is, the law should be changed to get rid of the loophole. Obama can't get it passed. Romney would never even try.

You guys keep trying to make this about the minimum standard you can -- legality. No. It's about what is fair. And if the law creates the loophole unfairly and he benefits, that matters.
 
#62
#62
lawgator1 said:
Point is, the law should be changed to get rid of the loophole. Obama can't get it passed. Romney would never even try.

You guys keep trying to make this about the minimum standard you can -- legality. No. It's about what is fair. And if the law creates the loophole unfairly and he benefits, that matters.
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Kind of like how GE has paid no taxes in recent years due to loopholes but they contributed more to Obama's campaign than McCain's during the 2008 cycle so I guess that makes it ok.


What The Top U.S. Companies Pay In Taxes - Forbes.com

General Electric: Recipients | OpenSecrets
 
#63
#63
lawgator1 said:
If you control the value and the timing, it's an east game.

"Today, December 30, 1996, I declare the shares worth 5 cents each. In 10 days, I will release them into the market at $50 a share. But today they are 5 cents and I am putting $30,000 of then, at 5 cents, into my IRA for the 1996 year."

Ten days later ....

"Whats that you say? My 1996 $30,000 investment has ballooned in less than a fortnight into $10 million? Hallelujah! Blessed be the market and my well timed gamble. I guess I'm just a brilliant investor."

"Now, please sell half of that and place that $5 million into a cash reserve account within the IRA. "

"Whats that you say ? I don't have to pay taxes ? I would have had to pay a million in taxes if I'd done it as a normal trade? Well, sure am glad I didn't go that route."
Click to expand...

Surely you're joking about controlling the valuation? Please be joking.
 
#64
#64
lawgator1 said:
Point is, the law should be changed to get rid of the loophole. Obama can't get it passed. Romney would never even try.

You guys keep trying to make this about the minimum standard you can -- legality. No. It's about what is fair. And if the law creates the loophole unfairly and he benefits, that matters.
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amazing how your argument has "evolved" so many times in this thread

illegal
no investment
no risk
unfair manipulation (maybe that one will stick)
 
#65
#65
BigPapaVol said:
Surely you're joking about controlling the valuation? Please be joking.
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Actually, not at all.

That was the beauty of the system. When Bain bought a business, like Domino's pizza, it issued stock. To itself. Bain set the price. To itself.

Knowing that it would then place the preferred stock on the market, or at least have their own value tied to common stock that was to be issued.

And that's the real whammy. It's not just having your $450,000 MAXIMUM contribution somehow add up to over $100 million. It was using the IRA mechanism to avoid taxes on the transaction.

Quite clever.

But something completely out of the reach of any but the wealthiest.
 
#67
#67
lawgator1 said:
But something completely out of the reach of any but the wealthiest.
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There is nothing stopping you. You can put shares of your law practice in an IRA at a nickel a share and when/if they reach a value of a dollar a share you will have your 20X return sheltered just like Romney.
 
#68
#68
volved said:
There is nothing stopping you. You can put shares of your law practice in an IRA at a nickel a share and when/if they reach a value of a dollar a share you will have your 20X return sheltered just like Romney.
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Can't sell shares in a law firm to nonlawyers. At least not in Florida.
 
#69
#69
lawgator1 said:
Actually, not at all.

That was the beauty of the system. When Bain bought a business, like Domino's pizza, it issued stock. To itself. Bain set the price. To itself.

Knowing that it would then place the preferred stock on the market, or at least have their own value tied to common stock that was to be issued.

And that's the real whammy. It's not just having your $450,000 MAXIMUM contribution somehow add up to over $100 million. It was using the IRA mechanism to avoid taxes on the transaction.

Quite clever.

But something completely out of the reach of any but the wealthiest.
Click to expand...

I'm 99% sure you are completely describing the process and tax laws wrong here.
 
#70
#70
lawgator1 said:
Actually, not at all.

That was the beauty of the system. When Bain bought a business, like Domino's pizza, it issued stock. To itself. Bain set the price. To itself.

Knowing that it would then place the preferred stock on the market, or at least have their own value tied to common stock that was to be issued.

And that's the real whammy. It's not just having your $450,000 MAXIMUM contribution somehow add up to over $100 million. It was using the IRA mechanism to avoid taxes on the transaction.

Quite clever.

But something completely out of the reach of any but the wealthiest.
Click to expand...

This is the only thing that bothers you. It drives you crazy.

Yes, LG being rich does have some advantages. I'm glad you realize that.

Maybe that's the reason everyone wishes they were rich.

Go figure.
 
#71
#71
volinbham said:
I'm 99% sure you are completely describing the process and tax laws wrong here.
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I'm basing it on the article explaining how $450,000 saved $30,000 a year for 15 years could be $102 million at the end of that period.

That's the way they say it can be done. Do you have an alternative explanation ? I mean, one that is remotely plausible ?
 
#72
#72
NEOCON said:
This is the only thing that bothers you. It drives you crazy.

Yes, LG being rich does have some advantages. I'm glad you realize that.

Maybe that's the reason everyone wishes they were rich.

Go figure.
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I've got no problem about his making money.

But if he wants to run the country, I do care how he used a tax haven to mischaracterize income so as to avoid taxes.

Legal or otherwise.
 
#73
#73
lawgator1 said:
I'm basing it on the article explaining how $450,000 saved $30,000 a year for 15 years could be $102 million at the end of that period.

That's the way they say it can be done. Do you have an alternative explanation ? I mean, one that is remotely plausible ?
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What I'm saying is your contention that they set the value of Domino's to near zero for example is simply not true. Reread the article - the value is low due to the LBO of Domninos given the debt to equity ratio. Bain didn't set the value these shares and certainly didn't make them artificially low at their discretion.

We also see 5 - 10 possible scenarios discussed across the articles; each speculative and relatively complicated. The second article in particular suggests that if there is any funny business going on with valuations then the IRS would be involved.

In short, we see why he's reluctant to publish his returns - particularly from this time. It is highly complicated but most assuredly legit however it still gets twisted by those who don't understand and scream INJUSTICE.
 
#74
#74
I'm not sure, but would Bain set their own price? Does that not rely on a valuation of some sort?
 
#75
#75
lawgator1 said:
I've got no problem about his making money.

But if he wants to run the country, I do care how he used a tax haven to mischaracterize income so as to avoid taxes.

Legal or otherwise.
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Using the tax code is mischaracterizing income?

Awesome.
 
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