If you look down a few spaces on the Recent Diary list, you'll see an item from kavips on a Bloomberg story, just out, reporting that Mitt Romney avoided federal income taxes altogether from 1996 through 2009 through a Charitable Remainder Unitrust (CRUT) set up supposedly in favor of the Mormon Church.
The irony is strong in this one. It's yet another example of the favorite Republican tactic of accusing your opposition of your own failings. You see, Mitt Romney is a member of the 47 percent, paying no federal income tax, relying on a Government handout (in this case, a tax break), and taking no responsibility for his own life. All that would be left would be for him to vote to re-elect President Obama.
The Bloomberg story is at pains to point out that the maneuver Mr Romney used is legal (or at least, it was legal when he set it up, before Congress realized that it really is an egregious loophole and closed it, grandfathering in taxpayers that had already driven through it). Mr Romney used a provision of the tax law intended to encourage charitable giving, but when uncharitable people hire uncharitable tax lawyers, it leads to this type of analysis:
In general, charities don’t owe capital gains taxes when they sell assets for a profit. Trusts like Romney’s permit funders to benefit from that tax-free treatment, said Jonathan Blattmachr, a trusts and estates lawyer who set up hundreds of such vehicles in the 1990s.
“The main benefit from a charitable remainder trust is the renting from your favorite charity of its exemption from taxation,” Blattmachr said. Despite the name, giving a gift or getting a charitable deduction “is just a throwaway,” he said. “I used to structure them so the value dedicated to charity was as close to zero as possible without being zero.”
Even better, the structure of the Romney's trust shifts more of the investment risk onto the Mormon Church than the Romneys:
The current investing strategy favors the Romneys over the charity because they get a guaranteed payout, said Michael Arlein, a trusts and estates lawyer at Patterson Belknap Webb & Tyler LLP.
“The Romneys get theirs off the top and the charity gets what’s left,” he said. “So by definition, if it’s not performing as well, the charity gets harmed more.”
So if you're keeping score at home, the Romneys' maneuver
a) Allowed them to join the 47%,
b) May have allowed them to short-change the Mormon Church relative to their tithing obligation, and
c) Shifted investment risk onto the church.
And that, friends, is a trifecta of personal responsibility.