On “This Week”, Jake Tapper called out Mitt Romney’s claim that he would get tough on China. Tapper said, “Is there not a disconnect between what Governor Romney says he wants to do with China and how he’s continuing to profit off of those very problems he criticizes?”
TAPPER: In Ohio especially, Governor Romney has been making a big issue about cracking down on China and China’s cheating. There is this other issue though, Governor Romney gets a cut of the profits from Bain Capital’s investments in Chinese companies and in companies that are currently offshoring U.S. jobs to China. Is there not a disconnect between what Governor Romney says he wants to do with China and how he’s continuing to profit off of those very problems he criticizes?
In December of 2011, the Romney campaign attempted to deal with this conflict by claiming that the candidate shed all of his interests in China at the same time as Romney made “confronting China” a central part of his message, but the truth is that he still holds interests in Bain Capital that make a profit off of investments in Chinese companies, one of which is being sued by Microsoft for piracy of American products.
In September of 2012, the Romney campaign admitted to PolitiFact that Romney was still invested in China. The campaign claims the money is invested through Romney’s blind trust, but even Mitt Romney once warned that blind trusts were a ruse.
In fact, Mitt Romney’s blind trust doesn’t meet federal requirements for a blind trust. It’s called a blind trust because the candidate chooses to call it so, not because it adheres to the federal rules that would qualify it as such.
Romney is much closer to his trustee, Malt, than federal rules would allow. The two men both have close ties to Bain Capital, Romney as founder, and Malt as a lawer to the firm. Romney retains large investments in Bain. None of this matches the criteria of independence and arm’s length dealings that are spelled out in the federal rules.
In March of 2012, Romney denied knowing that he was invested in Chinese companies but now in September, having the matter brought to his attention by an article in the New York Times, his campaign admits it, but claims Romney had nothing to do with it.
Not only is Romney profiting from his Chinese holdings, one of which is being sued for piracy of American products, but he also managed to pay a very low rate on those earnings by a trick that at once treats him as if he is still managing the company while he claims he’s not.
The Washington Post broke it down, “[Romney’s] severance package, for instance, allowed him to continue sharing in the profits of the company as if he were still a partner managing it, according to his 2010 tax return and interviews with present and former Bain executives. And because he benefited from the firm’s investments as if he were an active Bain partner, he paid taxes at a lower rate on these earnings than if they were treated as ordinary retirement income.”
In 2011, $5.5 million of Romney’s income came from ‘carried interest,’ which is a form of compensation for private equity managers/executives taxed at the capital gains rate rather than the rate for income.
Naturally this isn’t a trick that you should try at home unless you have million dollar lawyers to defend you when the IRS comes calling. Taking retirement income and turning it into capital gains under the guise that you are still a managing partner when you are not a managing partner and thus claim you can’t be held accountable for the managing partners’ decisions is a rare advantage saved for the top 2%, who are still very, very mad at the lazy 47% for not paying more in taxes.
On China, Romney is as hypocritical as he has revealed himself to be on most issues of the day. The only thing he seems sure of is that a 20% tax cut starting with the rich will save us all. The rest is nothing but campaign rhetoric often belied by his own actions even as he feverishly and with great neediness to be loved by all proclaims it on the trail.
Tough on China for cheating, but not when he’s making money off of that cheating that steals from American companies? You betcha. Kudos to Jake Tapper for coming prepared with some hard facts today.
I’d like to see the mainstream media discuss the labor conditions that allow Romney’s Chinese investments to be so profitable, given Romney’s utter cluelessness about the working class here (he proclaimed a $19,000 a year job to be a good middle class job) and his belief that the Chinese factory he visited was surrounded by wire to keep wannabe workers out instead of fencing the workers in.
Additional Sources: Wall Street Journal 12/17/11