It’s crunch time.
The last week to file those tax returns on extensions. President Obama filed his return on time in April. Mitt Romney got extensions and filed later. I waited to see their returns before filing mine. Obama’s return is about 25 pages, similar to mine. We use almost the same tax forms, though he earns and donates substantially more than I do. Both of us have salary and investment earnings. I have some stock investments while all his investments are in US Treasuries. We both write. He earned $400,000 from his books. I learned, well, less. Both Obama and I made bad investments years ago that still reported on our tax returns. The Obamas donate $1,000 to $5,000 to a few dozen charities. Mine tend to be a digit shorter. The Obamas gave their kids $24,000 each. I paid tuition.
The Romney returns are in a different class. First, they had four returns, including three trusts, which totaled approximately 1 thousand pages long. Romney had no salary. He must be unemployed like he told an audience in Iowa last spring. Romney had $15,000 in medical expenses. To him, that’s less than a rounding error. To me, that’s my annual insurance cost. He made $260,000 in director fees. Is he still serving on corporate boards?
Approximately 75% of the Romney returns – hundreds of pages – are dozens of Form 8621 to report PFIC investments. That’s a Passive Foreign Investment Company. The Romneys had investments in the Cayman Islands, Amsterdam, Ireland, Switzerland, Germany and Luxembourg. It’s easier to learn to speak Dutch, Italian, and French than to read their tax returns. Romney’s foreign investments appear to conflict with his political positions. He invested in German and Danish pharmaceutical companies doing stem cell research, Chinese state-owned oil companies, an Israeli company manufacturing a “morning after pill,” Swiss, French, Italian and Japanese banks and manufacturers doing business with Iran, and a Chinese education company sued for US copyright infringement. Romney has been running for president for six years. Why didn’t he sell those investments years ago?
Last spring, when questioned about paying a lower tax rate that a secretary, Romney said that a person who paid more tax than legally required should not be president. This year, to get his tax rate up to 14%, he purposely didn’t deduct about $2 million of contributions and voluntarily paid an extra $500,000. If he loses, he has three years to amend his returns and get that money back.
One-third of his tax bill was the “alternative minimum tax” which he’s pledged to eliminate. That will save him $675,000. He also paid over $100,000 tax to foreign countries, which reduced his U.S. tax bill. Since most of his income flowed through trusts, what I really wanted to know was how much of his $20 million went to his kids, but those forms weren’t included. Romney surely paid more to have their returns prepared that I earned.
Well, back to my return. Where’s that receipt I was looking for? That would save me $27.