A lot of theories have been put forward to try and explain why Romney has allowed his campaign to become bedeviled by charges of tax dodging, but what if what he is hiding is felonious tax fraud?
Okay, so he’s taken the legal option of delaying filing his 2011 taxes, which every taxpayer is entitled to do without penalty and without having to give any explanation until October 15 this year (I agree it’s a little weird when a super-rich guy who pays accountants by the dozen does this, but hey). The nagging question though is why he hasn’t just responded to the demand that he release two years of tax returns like John McCain did in 2008 by simply releasing his 2009 tax filing, along with the 2010 return he already released?
The answer may well be that 2009 was the year that the Treasury Department decided to offer an amnesty from prosecution for tax fraud to any of the tens of thousands of millionaires who were known or suspected to have illegally hidden income abroad in the Cayman Islands or in Swiss banks — a felony, but one that people thought they’d never be caught at.
That year alone, some nearly 30,000 people, many of them no doubt prominent in society, politics and business, and customers of the finest accounting firms, reportedly voluntarily came forward to the IRS to admit that they had hidden some of the estimated $100 billion in income that crooked rich Americans have for years been secreting away in banks overseas. Under the terms of the program, they were able to just report their fraud, pay the taxes, penalties and interest on the money and then walk away scott free, with no charges and with their returns kept confidential by the agency.
That is, unless they decided to run for national office, where the expectation is that they have to release their income tax returns to the media for inspection.
As journalist Matthew Yglesias has written in Slate, “Romney might well have thought in 2007 and 2008 that there was nothing to fear about a non-disclosed offshore account he’d set up years earlier precisely because it wasn’t disclosed.”
But the scandal that exploded around Swiss megabank UBS, where a whistleblowing employee released some of the names of wealthy Americans who were being allowed to use the bank’s privacy protections to hide their income from the IRS, caused many of America’s super-rich, fearing the worst, to rush for an amnesty offered by the IRS, which was more interested in collecting the money than putting a lot of the country’s toniest people behind bars. The floodgates opened when the US sued UBS demanding the full list of tax criminals from the bank, and then offered an amnesty to those who came forward voluntarily, reported their fraud to the IRS, and paid the required interest and penalties.
Given Mitt Romney’s known predilection for avoiding taxes, it’s hard to imagine him not having taken advantage of the Swiss tax dodge, particularly when so many other people of his class were doing it. Hiding income overseas was, back in the early years of this gilded century, the thing to do–the stuff of mirthful asides over cognac at the Club after a bracing game of golf or polo.
But explaining paying lower taxes than your maid, groundskeeper or horse’s groom to the public is one thing. Explaining deliberately committing massive tax fraud is another. Plenty of Americans have gone to the slammer for years for defrauding the IRS of mere five-figure sums. Most Americans live in a deliberately cultivated fear of the IRS, worrying that they made some mistake on a form or missed a filing deadline, and yet the wealthiest Americans, thanks to the 2009 and subsequent amnesties or partial amnesties, have routinely gotten away with massive fraud, just having to pay penalties and interest, as if they had just inadvertently filed late or made a math error.
None of this is proof that Romney is guilty of felony tax fraud, of course. On the other hand, it is curious that John McCain would have gone for the loopy lady from Wassilla and rejected Romney as his running mate back in 2008. Mitt was seriously in the running as a candidate for the job of VP on the McCain ticket at one point, and the UBS scandal broke right when McCain was picking his running mate. It seems logical that McCain’s vetting team would have asked Romney if the scandal might touch him. Maybe they ruled him out of contention when they got the answer.
In any case, running for president is not for sissies, and there is no presumption of innocence in politics. If Romney did not commit tax fraud back in 2008 and earlier, and did not avail himself of the IRS’s 2009 tax amnesty program, he should have to prove it by releasing his 2007, 2008 and 2009 taxes, and, if the 2007 and 2008 filings turn out to have been belatedly corrected, he should have to show the original filings too.
No doubt the Obama campaign has figured all this out, which would explain why they are offering Mitt Romney a deal that says: “You release five years of your taxes, and we’ll shut up” about demanding even older ones.
It remains to be seen whether conservative and right-wing and libertarian Americans, famous for their loathing of taxes, will decide that Romney is simply doing what they’d all like to get away with doing, and give him a pass on all this tax dodging, or whether they will become so incensed at the idea of this richest of presidential candidates in history cheating on his taxes that they will demand that he prove he didn’t do it before he can have their vote.
Meanwhile, if Romney did commit tax fraud courtesy of a Swiss bank arrangement, and he stonewalls it through the campaign weeks ahead, he runs a huge risk that someone will leak the information. After all, federal employees have to realize that four years of a Romney/Ryan administration will be brutal on their job security, benefits and working conditions. And right now Obama is the boss of the federal government, with his own appointees at Treasury and the IRS.