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   XPost: alt.politics.bush, alt.gossip.celebrities, alt.politics.economics   
   XPost: misc.consumers   
   From: clitteigh@yahoo.com   
      
   Though I wouldn't necessarily want to touch any of them.   
      
   But last year I let a poor orphan girl pet one of my five dressage   
   horses.   
      
   That's got to count for something.  Doesn't it?   
      
   ================   
      
   "Mitt Romney exited Bain Capital with rare tax benefits in retirement"   
      
      
   By Tom Hamburger   
   September 2,  2012   
      
      
      
   BEFORE MITT ROMNEY RETIRED from Bain Capital, the enormously   
   profitable investment firm he founded, he made sure to lock in his   
   gains, both realized and expected, for years to come.   
      
   He did so, in part, the way millions of other Americans do — with the   
   tax benefits of an individual retirement account. But he was able to   
   turbocharge the impact of those advantages and other tax breaks in his   
   severance package from Bain in a way that few but the country’s super-   
   rich can ever hope to do.   
      
   As a result, his IRA could be worth as much as $87 million, according   
   to his estimates, and he can continue to earn tax-advantaged income   
   from Bain more than a decade after he formally left the firm.   
      
   The Republican presidential nominee has been “scrupulous” about   
   observing the tax code, said Romney campaign spokeswoman Michele   
   Davis. “His income is reported and taxed in full compliance with U.S.   
   law, and he has paid 100 percent of what he has owed.” She added that   
   the financial holdings of Romney and his wife, Ann, are managed by a   
   blind trust the Romneys do not control.   
      
   Romney’s former colleagues say his retirement package is a well-   
   justified reward for a chief executive who built Bain from scratch in   
   1984 into a financial powerhouse that backed business successes such   
   as Staples and the Sports Authority.   
      
   The structure and tax treatment of his retirement, including the IRA,   
   was legally sound and appropriate, they say, adding that he has earned   
   less money over his career than some other top private-equity   
   executives, who earned billions of dollars during the same period.   
      
   Details of Romney’s retirement assets are somewhat vague because he   
   has released only one year of full tax returns and declined to provide   
   additional specifics about his personal finances. But interviews with   
   Bain executives and accounting professionals show that he was able to   
   take advantage of tax benefits in innovative ways open only to a   
   narrow slice of extremely affluent people — mostly those who work in   
   private-equity firms and other investment partnerships.   
      
   His severance package, for instance, allowed him to continue sharing   
   in the profits of the company as if he were still a partner managing   
   it, according to his 2010 tax return and interviews with present and   
   former Bain executives. And because he benefited from the firm’s   
   investments as if he were an active Bain partner, he paid taxes at a   
   lower rate on these earnings than if they were treated as ordinary   
   retirement income. Romney negotiated the package when he was leaving   
   the firm, Bain executives said, while he set up his IRA long before.   
      
   IRAs were established by Congress nearly 40 years ago to help people   
   save for their retirement. Under the law today, individuals may   
   contribute up to $5,000 per year and employers may contribute up to   
   $50,000 a year to an employer-sponsored IRA. The money is invested,   
   and the investments grow tax-free until retirement. There is no limit   
   on how much money an IRA can earn tax-free.   
      
   What determines an IRA’s growth is the performance of the investments,   
   and Bain enabled Romney, its other employees and its partners to score   
   big on that front. It was not uncommon for senior Bain executives to   
   accrue IRAs valued at tens of millions of dollars, according to former   
   and present company employees, by buying into Bain investments at very   
   low prices and then reinvesting the returns in other low-priced Bain   
   investments after the initial investments appreciated.   
      
   When Romney was chief executive, Bain set up Simplified Employee   
   Pension IRAs, or SEP-IRAs, under which the company contributed up to   
   $30,000 a year to employees’ retirement accounts, according to people   
   familiar with the program. Many of the employees decided to use this   
   contribution to buy stock in the companies that Bain had acquired in   
   the course of its business as a private-equity firm.   
      
   Bain executives encouraged such IRA investments. They demonstrated to   
   Bain’s outside clients, who were also investing in the stock of these   
   acquired companies, that Bain employees were putting their money where   
   their mouth was and sharing in the risk with outside investors. The co-   
   investment strategy was good for building relationships with clients.   
   “Employee investing has always been an essential part of the culture   
   of the firm,” said Bain spokesman Alex Stanton.   
      
   Like other IRA investors, Romney will pay a 35 percent tax on the   
   funds in his account when he ultimately withdraws them, said Davis,   
   the Romney campaign spokeswoman. Until then, he can use the money in   
   the account to buy and sell stock and other assets, repeatedly re­   
   investing the money inside the IRA, without having to pay tax rates of   
   up to 40 percent for short-term capital gains. That’s a huge benefit,   
   tax experts say.   
      
   Romney’s IRA growth could be dramatic, in part, because he, like other   
   Bain employees, was given access to a type of shares in Bain-backed   
   companies that were often private and low-valued when the employees   
   bought in and then were managed by Bain for growth and an eventual   
   sale or public share offering that would maximize shareholder value.   
      
   These “A-shares” were priced by Bain at a fraction of another category   
   of stock known as “L-shares,” which functioned like preferred stock,   
   paying dividends and getting priority for payouts. The A-shares, or   
   common shares, were riskier and thus priced lower, so it was possible   
   that a relatively small IRA in­vestment could buy significant amounts   
   of the A-shares in some companies. The use of a dual-share structure   
   is not unusual in the financial industry, and under financial   
   accounting rules the A-shares must reflect a true market value of the   
   underlying assets. Often, the value of these initially cheap A-shares   
   soared, along with the company’s value.   
      
   Consider the example of Physio-Control, which was bought by Bain in   
   1994. The company, a maker of defibrillators, saw its business take   
   off in the following years, with Bain’s initial investment multiplying   
   21 times. Under the dual-share structure, the rewards were heavily   
   tilted toward the A-shares. The value of an A-share purchased in 1995   
      
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