Last week, Senate Majority Leader Harry Reid (D-Nev.) caused quite a stir when he said he’d heard from a Bain Capital investor that Mitt Romney hadn’t paid income taxes for 10 years. Which investor? Reid didn’t say. Why should anyone take the claim seriously? Reid couldn’t say. He heard a rumor, and he passed it along.
Team Romney and the Republican establishment were apoplectic, but Reid didn’t back down. On the contrary, the more the GOP complained, the more the Senate leader repeated the claim.
Yesterday, Reid’s office even added some new details.
A top aide to Senate Majority Leader Harry Reid (D-Nev.) provided new details Wednesday on the identity of Reid’s source for the claim that Mitt Romney did not pay taxes for 10 years. Romney has since called on Reid to release the name of the source.
“This person is an investor in Bain Capital, a Republican also, and somebody who has been dealing with Romney’s company for a long, long time and he has direct knowledge of this,” said Reid aide Jose Parra, referring to Romney’s tax returns.
Romney told ABC News that he would check his records to determine if he ever paid a lower rate than the 13.9 percent he paid in 2010. Despite requests from the network, however, Romney has yet to provide the information.
These are some pertinent details, to be sure, and would appear to narrow the universe of possible Reid sources. Indeed, speculation picked up overnight about the identity of the unnamed investor.
But there’s a related angle to this that’s also worth considering while we wait for tax returns that Romney refuses to disclose. The various fact-checkers who’ve slammed Reid have raised a relevant argument: putting aside the propriety of sharing unsubstantiated allegations, the claim is unreliable because it can’t be true. Romney, the argument goes, couldn’t have gone a full decade without paying income taxes.
And if Reid’s underlying claim is just too implausible to believe, nothing else matters – his source, at that point, is irrelevant.
The closer one looks, however, the more it appears this pushback is itself dubious, and it’d be a mistake to dismiss the possible veracity of Reid’s claim out of hand.
Brian Beutler had a good report on this yesterday.
For instance, a TPM reader posited that, under the terms of his retirement, Romney’s severance could have flowed directly into his tax exempt IRA, shielding it from taxation for years, and driving his effective rate down dramatically.
Tax experts TPM spoke with believe it’s a plausible strategy – but question whether he’d be able to whittle his effective tax rate down to zero.
To erase his federal tax liability this way Romney would’ve had to eschew other income sources, or figure out ways to zero out his effective tax rate on that income too.
“[I]t struck me as plausible,” NYU tax expert Daniel Shaviro, who’s been a leading analyst of Romney’s public financial information, told TPM. “The reason people have been saying he must have paid something is that they’ve figured he must have (as in 2010) had some dividend and interest income plus other ordinary (rather than capital gains) stuff such as speaker fees. Zeroing all that out, if he had such income every year, would have required tax shelter losses that would very likely be deemed (by the IRS and many legal experts) as abusive.”
This doesn’t prove Reid is right, of course. It just means Reid could be right, in large part because of Romney’s suspicious IRA with over $100 million in it.
One more thing: if the accusation is true – at this point, it’s still a big “if” – Romney has a very serious problem. It would be inordinately difficult for an out-of-touch, car-elevating, Swiss-bank-account-owning, multi-multi-millionaire to tell mainstream voters, “While you were working hard and paying taxes, I was using accounting tricks to shield my vast fortune – a fortune I made while laying off American workers.”
Indeed, a whole lot of Republicans would start asking their presidential candidate, “If you knew about this all along, why did you even run?”