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SALT LAKE CITY — Bloomberg Businessweek interviewed Mitt Romney and compared investing in a business to the American people electing a president. Bloomberg asked Romney whether, when he invested in a company, he would want to see more than two years of financial reports. Romney said the standards aren't the same, because "I'm not a business." He said he already has made "full financial ¬disclosure" of all his investments and he "will provide a full two years of tax returns."
When Romney was vetted in 2008 as a possible John McCain running-mate, Romney gave McCain's campaign 23 years of his tax returns to examine. Obama's former chief of staff Rahm Emanuel said, after reviewing Romney's tax returns, McCain opted for Sarah Palin instead. Steve Schmidt, who was McCain's top adviser in 2008, replied that Romney's tax returns were not viewed as a problem by the McCain campaign.
Will his refusal now to release more than two years of tax returns hurt Romney in November? Republican election expert, James E. Campbell, says "No," because the only thing that will matter to voters in November is the economy.
Some prominent Republicans (including former Mississippi governor Haley Barbour, former Republican National Committee chairman Michael Steele, and the Weekly Standard's editor Bill Kristol) have advised Romney to disclose more of his tax returns immediately, so he can move past this distraction and get back to attacking Obama on the economy. However, Romney has stated repeatedly that there will be no more tax returns disclosed. In response, some people and the media have begun asking, "Why won't Romney release more tax returns?"
Conservative political analyst George Will said that, "The cost of not releasing the returns are clear. Therefore, he must have calculated that there are higher costs in releasing them."
Republican strategist Matthew Dowd agreed and said, "There's obviously something there, because if there was nothing there, he would say, ‘Have at it.' So there's obviously something there that compromises what he said in the past about something."
People are speculating about what Romney's other tax returns show.
- We know Romney paid a tax rate of 14 percent in 2010 and he has estimated he would pay a similar rate in 2011. Maybe he paid taxes at much lower rates in prior years.
- When the stock market collapsed in 2008, Romney may have had a capital loss that, when carried forward, resulted in him paying no federal taxes in 2009.
- Romney maybe paid very low tax rates by using a "carried interest" tax exemption, which would allow him legally as private-equity investor to pay capital gains taxes on what are otherwise hundreds of millions of dollars of income.
- Romney may have used other legal tax "sheltering" strategies to take full advantage of offshore accounts in the Bahamas and Switzerland, plus the contribution of hard-to-value securities at low valuations to his IRA (which since have increased in value).
- Some people think Romney might have abused offshore accounts, shell companies, and other sophisticated tax avoidance strategies, and he also might have deducted as a business expense some of the $35 million he spent on his presidential campaign in 2008.
The Obama campaign has released a web video that urges Romney to "come clean" about his taxes. The Obama campaign also is using surrogates to keep Romney's undisclosed tax returns in the 24-hour news cycle as often as possible, obviously to draw media attention away from the weak economy.
For example, Obama campaign adviser David Axelrod said, "what I am suggesting is that he's taken advantage of every single conceivable tax shelter loophole that we can see." Senate majority leader Harry Reid recently said that a person who had invested with Romney's company, Bain Capital, had called his office and told him that Romney did not pay any taxes for 10 years. So far, Reid has refused to identify his source, and Romney has denied the allegation.
Whatever Romney's undisclosed tax returns contain, it is clear this issue is not going away any time soon.