If you’re into this sort of thing you can go read Mitt Romney’s tax returns and learn (on page 5 of the 2011 return) that he is in the “independent artists, writers, performers” business, which seems about right. (But which one?) You can also learn that he’s doing okay, financially-wise, and some more specific stuff; tantalizingly, you can’t get a good picture of his returns on assets because his financial disclosure forms are so meaninglessly bucketed. Most crucially, you can learn that he paid about a 15% tax rate on his take last year. There is a lot you can think about this. Some of it revolves around the badness of taxing capital gains at a lower rate than labor income, which, whatever, not my beat. Some of it revolves around the badness of taxing private equity labor income as capital gains, which, I mean, I’m sympathetic to, but also not my beat, but in any case this income is actually capital gains. Like, Mitt wasn’t working at Bain Capital last year. He was just sitting around, doing his “independent artist/writer/performer” thing, collecting money from the other money that he got 20 years ago. That’s what capital gains is. Anyway.
If you’re really into this sort of thing you can also go read Newt Gingrich’s tax return, but you won’t, because the numbers on it are smaller and where’s the fun in that? But USA Today of all people actually went and read it and they found … maybe tax fraud? That was unexpected:
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At many, many points in your Wall Street career, you will encounter a basic quandary, which is, “should I behave like a douchebag here, or should I not behave like a douchebag at this one particular moment in time?” This question is hard because, on the one hand, behaving like a douchebag often brings immediate cash rewards, and can be fun; but on the other hand, there are longer-term reputational consequences to frequent douchebag behavior. Goldman Sachs has a name for its position on this trade-off, which is “long-term greedy,” and you can go think your thoughts about whether and in what circumstances “long-term douchebag” is a relevant substitution.
Speaking of long-term douchebags, William Cohan can NURSE A GRUDGE, man:
Yet, there is another version of the Bain way that I experienced personally during my 17 years as a deal-adviser on Wall Street: Seemingly alone among private-equity firms, Romney’s Bain Capital was a master at bait-and-switching Wall Street bankers to get its hands on the companies that provided the raw material for its financial alchemy. … I never negotiated directly with Romney; he was too high-level for any interaction with me. Rather, I dealt often with other Bain senior partners, who were very much in his mold. In my experience, Bain Capital did all that it could to game the system by consistently offering the highest prices during the early rounds of bidding — only to try to low-ball the price after it had weeded out competitors.
The complaint here is that Bain would put in high bids in early rounds of an auction for a company, and then when other bidders have been eliminated and Bain’s negotiating position was stronger, it would find ways to re-trade on price. And if you’ve ever worked in M&A, or, um, anywhere else, you are laughing hysterically right now at the notion that Bain partners are the only people who re-trade on price.*
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Mitt Romney says he knows a photo in which he appears with other executives at Bain Capital LLC posing with cash in their hands, pockets and mouths will be used against him if he wins the Republican presidential nomination. The 1980s image — called the “Gordon Gekko” photo by some Democrats, a reference to the Michael Douglas character in the movie “Wall Street” — offers an easy attack line at a time of high unemployment and sharp rhetoric against the nation’s top money managers, investors and bankers. “We posed for a picture, just celebrating the fact that we had raised a lot of money and then we hoped to be able to return it with a good return,” Romney said on “Fox News Sunday.” [Bloomberg, earlier]
“First of all, this is a personal choice. From a corporate perspective, we have a lot of Democrats at the firm and my partner, Tony James, has been a supporter of the president. This is my choice, not a Blackstone choice. When we started Blackstone in 1985, the first investment we made in private equity was a joint deal with Mitt Romney at Bain. This turned out to be a marvelously successful deal with a profit of a company making aluminum wheels which expanded very rapidly. We made about 16 times profit. The second deal we did, Mitt led that one – we did that deal at Blackstone and we invited him to be the minority partner and we made 24 times our money. In finance, that’s a way to make friends.” Continue reading »
With a lot of attention on the CBO report finding that out that income inequality has increased dramatically in the past 30 years, you might have a momentary lapse and think something like “say, maybe those protesters are onto something.” Resist the urge! A reader pointed us to this from Greg Mankiw, who is presumably planning his counter-demonstration now:
Here is a fact that you might not have heard from the Occupy Wall Street crowd: The incomes at the top of the income distribution have fallen substantially over the past few years.
According to the most recent IRS data, between 2007 and 2009, the 99th percentile income (AGI, not inflation-adjusted) fell from $410,096 to $343,927. The 99.9th percentile income fell from $2,155,365 to $1,432,890. During the same period, median income fell from $32,879 to $32,396.
Take that, Wall Street protesters! Sure, it may suck that you lost your job, but it probably didn’t pay that much anyway. John Paulson has lost millions!
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