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With the release of the Gawker Files and assuming they are accurate (no one has yet to claim they are not), some interesting new information is now in public view.

Take, for example, the case of Bain Capital Fund VIII LP, a fund the Romneys admit to receiving money from in 2010 and 2012.

According to Gawker, (read the paragraph carefully for the bombshell), this fund states:

The Partnership is a qualified intermediary and intends to conduct it operations so that it will not be engaged in a United States trade or business and, therefore, will not be subject to United States federal income or withholding tax on its income from United States sources.... Under the current laws of the Cayman Islands, there are no income, estate, transfer, sales, or other Cayman Islands taxes payable by the Partnership.
One phrase in the paragraph above is the key.  I highlight it and explain its relevance below the magic sperm-preventing squiggle below.

UPDATE 1 - 11:56am  Mittens is the gift that keeps on giving

 Mit Clarifies Everything.  Shares more Bain experience:

HOPKINS, Minn. - Creating a potential headache for his campaign, Republican presidential candidate Mitt Romney said big businesses in the U.S. were “doing fine” in part because they get advantages from offshore tax havens.
UPDATE 2 - 12:05 pm

Many thanks for the rec list.  Haven't been here for a long time.  Also thanks to someone who cross-posted this to DU.  I think there is much more to this story, especially after Mit's slip noted in Update 1 above.  Harry Reid was onto something.

UPDATE 3 - 12:09 pm - I missed this little tidbit earlier

From the NYT article, para 7: Bain official confirms accuracy of Gawker Files:

“The unauthorized disclosure of a number of confidential fund financial statements is unfortunate,” said Alex Stanton, a Bain spokesman.
UPDATE 4 - 1:27 pm
Thanks to many others are doing great work sifting through all this.

Check bobswern's diary currently on the Rec List: NYT: Bain’s tax “dodging” is "not legal," “subject to serious I.R.S. challenge”

Also hungrycoyote's just posted diary: NYT Finds Hidden Clues in Romney's 2010 Taxes to Calculate What 2009 Taxes Looked Like

See more about Mit's claim of 13% taxes paid from the NYT article at the bottom of my diary.

bolding mine:

The Partnership is a qualified intermediary and intends to conduct it operations so that it will not be engaged in a United States trade or business and, therefore, will not be subject to United States federal income or withholding tax on its income from United States sources... Under the current laws of the Cayman Islands, there are no income, estate, transfer, sales, or other Cayman Islands taxes payable by the Partnership.
According to the Wall Street Journal, Romney has VERY CAREFULLY told an interviewer:
“The so-called offshore account in the Cayman Islands…is an account established by a U.S. firm to allow foreign investors to invest in U.S. enterprises and not be subject to taxes outside of their own jurisdiction,” Mr. Romney said.
Romney is clearly speaking about himself.  HE and his wife, Ann, (and any other partners) seem to be the "foreign" investors in Bain Capital Fund VIII LP under Cayman Islands law.

As a result, confirmed by Bain Capital Fund VIII LP's own written statement, one purpose of Bain Capital Fund VIII LP is to "not be subject to United States federal income or withholding tax on its income from United States sources..."

Their stated purpose is "to invest in U.S. enterprises" and at the same time to "not be subject to United States federal income or withholding tax on its income from United States sources..."

Is that really what ANYONE wants in a leader of this country?

According to Bain Capital Fund VIII LP, the fund (Romney, Ann, and partners) can earn income in the United States and avoid not just Income Tax, but ALL taxes including payroll taxes.

How does this affect you and me?

Let's say you or I make $100,000.  I am self-employed so I pay both halves of Social Security and Medicare.  Even if I were just an employee, my employer is still paying the employer share, which could go to me if we had a "legal" way to avoid them.

So the cost of paying me $100,000 per year is really a cost of $107,650 including the employer cost of Social Security and Medicare.  

Then deducted from the pay are my Federal Income Tax, State Income Tax, Social Security and Medicare.

$100,000  Gross Pay
   20,370  Federal Income Tax (21%bracket)
     4,320  State Income Tax
     4,200  Social Security
     1,450  Medicare
$ 30,340  Total Taxes
$ 69,660  Net Pay - Cash Received

So either my employer (or in my case, me) spends $107,650 on annual salary.

My effective total tax bracket (in the 21% federal bracket) is 30.4%

Now let's say to make it easy, Mit and Ann Romney, through the "legal" tax dodges afforded Bain Capital Fund VIII LP, earn the same $107,650.

$107,650  Gross Income
$          0  Federal Income Tax
$          0  State Income Tax
$          0  Social Security
$          0  Medicare
$          0  Total Taxes
$107,650  Net Income - Cash Received

We all know there other direct and indirect taxes on earned income - State and Federal Unemployment Taxes, Disibility, etc.  I just did a quick look at the big ones.

It is beginning to look as if Harry Reid knew exactly what he was talking about.

And why we need to demand that Mit Romney come clean with his tax returns.

This quote is so funny I had to put it in twice:
UPDATE 1 - 11:56am  Mittens is the gift that keeps on giving

 Mit Clarifies Everything.  Shares more Bain experience:

HOPKINS, Minn. - Creating a potential headache for his campaign, Republican presidential candidate Mitt Romney said big businesses in the U.S. were “doing fine” in part because they get advantages from offshore tax havens.
UPDATE 3 - 12:09 pm - I missed this little tidbit earlier

From the NYT article, para 7: Bain official confirms accuracy of Gawker Files:

“The unauthorized disclosure of a number of confidential fund financial statements is unfortunate,” said Alex Stanton, a Bain spokesman.
UPDATE 4 - 1:29 pm
More from the New York Times:
Mr. Romney’s return shows how wealthy Americans with foreign earnings can sharply reduce their tax liability in the United States. In 2010 Mr. Romney reported $2.73 million of gross foreign income. On that amount, he paid foreign taxes of $67,173, or just 2.5 percent of his gross foreign income.

After all his deductions (including the kind of noncash charges that are central to all tax shelters, like depreciation) that multimillion-dollar sum declines to just $392,000 in taxable income. This amount appears on his federal tax return, but at his 13.9 percent effective rate, the federal tax on that income — $54,627 — was more than offset by a $129,697 tax credit for foreign taxes he paid in 2010 and earlier years.

Yes, Mit and Ann may have paid 13% in taxes, even "federal" taxes, but to whom???

The New York Times seems to be saying that from one fund, the Romneys owed $54 thousand in taxes but didn't have to pay it because they paid $129 thousand in taxes to some foreign government.  How is this supporting America?

Which countries does Mit support with his tax payments?  China, Russia, Saudia Arabia?

One more reason the American people need to see the Romney tax returns.

Originally posted to Eman on Fri Aug 24, 2012 at 09:07 AM PDT.

Also republished by The Bain Files.

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