As we all know, much of Mitt Romney's wealth is derived from "carried interest," a share of the profits from investments that Bain Capital made while he was CEO. This income is taxed at the same 15 percent rate as ordinary capital gains, which is why Romney's tax rate is so low.

But it turns out there's another interesting tidbit about carried interest that I've never heard of before: It's a great way of passing along a huge inheritance to your kids without paying any taxes. David Cay Johnston explains:

Johnston: The Romneys gave $100 million to their sons and paid not one penny of gift tax. They were able to take assets they have that are producing enormous income and, under the law, give that money to their children and not pay any taxes on it.

Sambolin: Is that something you specifically found in what has been released to you?

Johnston: Yes. I have suspected this and written about it in my column that this is what happened, and last night, Brad Malt, the attorney for the Romneys, confirmed to Reuters that we were correct. They have not paid a penny of gift tax. That's because Congress allows a very tiny group of people—the Romneys by their income are in the top 1 percent of the top 1 percent—to not count as having any value the real source of their income, something called carried interest, if they give it to their children.

Welcome to the wonderful world of estate planning for the super wealthy. The Romney kids will have to pay taxes when they start taking income from the trust their father set up for them—at the usual 15 percent rate paid by millionaires, of course—but the inheritance itself is blissfully tax free. It's just another of the many benefits of running a private equity firm.

I know it's a cliche to say that an election-year State of the Union address is a campaign speech on steroids, but tonight's State of the Union address was.....a campaign speech on steroids. At one point or another, I think I heard a shout out to virtually every conceivable voting bloc in the nation. We need to double work study jobs, double our exports, double tax deductions for domestic jobs, double our trade complaints against China, and double down on clean energy. We need an all-of-the-above energy policy and an all-options-on-the-table policy against Iran. We salute the million soldiers who served in Iraq, we're going to train two million Americans with new job skills, and we're planning to develop enough clean energy to power three million homes. We're going to save $10 billion in regulatory costs and $100 billion in energy costs. We're going to cut the deficit by $2 trillion.

There was even a shout out to process wonks:

Some of what’s broken has to do with the way Congress does its business these days. A simple majority is no longer enough to get anything — even routine business — passed through the Senate. Neither party has been blameless in these tactics. Now both parties should put an end to it. For starters, I ask the Senate to pass a rule that all judicial and public service nominations receive a simple up or down vote within 90 days.

That's not going to happen, but even a couple of sentences in the SOTU is more attention than this usually gets. Still, I wish Obama had explicitly stated that the Senate now requires 60 votes instead of 50 to pass legislation. If he's going to pander to us process wonks, he should at least do it right.

I'm a Democrat and a fan of the president, but even I found this speech formulaic, devoid of interesting ideas, and built almost solely for applause lines. Presumably this means that it's going to poll through the roof. Joe and Jane Sixpack will love it. And with that, Campaign 2012 has officially gotten underway.

Here's the latest from the cyberlords who now rule our existence:

Google will soon know far more about who you are and what you do on the Web. The Web giant announced Tuesday that it plans to follow the activities of users across nearly all of its ubiquitous sites, including YouTube, Gmail and its leading search engine.

....Consumers won’t be able to opt out of the changes, which take effect March 1.

Luckily I've mostly resisted the siren call of the Googleverse aside from their search engine. But I guess I'm starting to think that I should be more careful even there. Am I just being paranoid? Or should I start using some kind of add-on to prevent Google from tracking my activity? What says the hive mind?

Last night, asked if he favored rounding up illegal immigrants and deporting them, Mitt Romney said no. Instead, he replied, "The answer is self-deportation." This produced a steady stream of jokes on Twitter, but in fact this is a term of art that's long been used by anti-immigration activists. Adam Serwer describes what it means:

What "self-deportation"—the favored approach to immigration of the GOP's right-wing—actually means is making life so miserable for unauthorized immigrants that they "voluntarily" leave. Here's Mark Krikorian of the Center for Immigration Studies (the anti-immigrant think tank that tried to mainstream the "terror baby" conspiracy theory) explaining the concept in 2005:

The solution is to create "virtual choke points"—events that are necessary for life in a modern society but are infrequent enough not to bog down everyone's daily business....The objective is not mainly to identify illegal aliens for arrest (though that will always be a possibility) but rather to make it as difficult as possible for illegal aliens to live a normal life here.

....When Romney is discussing "self-deportation," he's talking about creating a United States where parents are afraid to register their kids for school or get them immunized because they might be asked for proof of citizenship. He's talking about the type of country where local police can demand your immigration status based on mere suspicion that you don't belong around here. "Self-deportation" is just a cleaner, less cruel-sounding way of endorsing harsh, coercive government polices in order to make life for unauthorized immigrants so unbearable that they have no choice but to find some way to leave.

Well, that's what it means on the extreme right, anyway. But the truth is that many on the left, including both Barack Obama and me, support the same idea in a more humane version. Here's me six years ago, for example:

I'm basically in favor of a market-style approach that tweaks incentives to increase the cost of immigrating illegally while decreasing the cost of immigrating legally. At some point, if you can enact the right basket of policies to get the costs right, you'll reduce illegal immigration to a point we can live with.

So: crack down on employers because that's probably the the cheapest and easiest way of discouraging illegal immigration. If it's hard to get a job, you're less likely to cross the border. At the same time, make it easier to immigrate legally with a reasonable path to citizenship. This makes "getting in line" more attractive. Do these things right and there just aren't very many people left who find the illegal route more attractive than coming over legally.

I don't want mass roundups of illegal immigrants (or people who look like they might be illegal immigrants) and I don't want their kids to go without education or healthcare. But I do support the idea of making E-Verify more accurate and more widespread, something that would make it more difficult for illegal immigrants to get jobs and probably lead more of them to leave the country. Like most supporters of comprehensive immigration reform, however, I only support this if it's paired with efforts to make it easier to immigrate legally and to provide current immigrants with a path toward permanent residence. If simple human decency isn't reason enough for this, common sense and self-interest both point in the same direction.  It's simply not plausible that stricter enforcement all by itself will ever work given our country's obvious appetite for the services that immigrants provide. Supply and demand are flip sides of the same coin, and if we want a program that actually works over the long term, we have to address both.

According to a new study, doctor visits that result in a referral to a specialist have grown by 159% over the past decade. Suzy Khimm summarizes the reasons for us:

The big question is why doctors have become more likely to send their patients to specialists. Part of the answer, Landon finds, has to do with health care becoming more complex, with new technology that demands more speciality care. Physicians have also found themselves with more preventive tests and screenings to handle, which may cut into time to deal with other issues. And, part of it likely has to do with the economics of referrals: Doctors who have an ownership stake in their practice are 50 percent more likely to refer to a specialist, which would increase the total revenue generated by a given patient.

There's not much we can do about the fact that medicine is becoming increasingly complex. That's likely to just get worse. But the financial incentives for referrals sure seem ripe for reform. Obamacare makes a stab in this direction with its pilot program for accountable care organizations, but there's no telling yet if it will have a significant impact. Stay tuned.

Jonathan Bernstein analyzes Newt's performance in last night's debate and says one thing I agree with and one thing I don't. First, here's the part I think is wrong:

If people were looking for ammunition against Newt Gingrich, he supplied plenty of it Monday during an early and extended exchange with Romney, in which Newt floundered badly on the subject of Freddie Mac, his ethics scandal when he was speaker, and other weaknesses.

I had exactly the opposite reaction. If you already know the facts about the ethics scandal, then you'll think Newt floundered. If you don't — and I think this describes about 95% of the audience — Newt's explanation either (a) sounded OK or (b) muddied the waters enough that you came away thinking it was just routine campaign sniping. Besides, it was 15 years ago. Romney really needs to have a clearer, sharper attack on the ethics charges if he expects this to stick.

And here's the part I think is right:

What Monday demonstrated [] is that Newt’s reputation as a brilliant debater is actually a fraud. What Newt has done well isn’t debating the other candidates; what he’s done well is attacking the moderators, and it works especially well when there’s a partisan Republican audience ready to cheer any shots at the liberal media. That’s not going to happen in general election debates. More broadly, he’s quite good at using language designed to appeal especially well to Rush Limbaugh listeners: Chicago-style politics, Saul Alinsky, teleprompters, and more. Terrific, again, for provoking a big reaction from a partisan audience of intense, highly-informed conservatives. Utterly useless in general election debates.

Yep. Newt's sneering, condescending tone is pitch perfect for the tea party crowd, but extremely off-putting for the less partisan folks who will determine November's results. And without that, Newt's got nothing. He doesn't really do any better on substance than Romney or any of the others, and he certainly doesn't have any native charm. If he tries to take his sneer on the road in a general election, he'll be no more successful than Rick Perry was at trying to transplant his Texas-style campaigning to a national audience.

Last night I read Bruce Bartlett's new book, The Benefit and The Burden: Tax Reform-Why We Need It and What It Will Take. It's written as a primer on American taxes, and it's a great introduction for anyone who doesn't really know much about the U.S. tax system and wants to learn the basics. It's clear, short, and a quick read.

Still, I confess that I was sort of charmed by Bruce's apparent optimism that genuine tax reform will be on the table after the election is over. "Genuine," of course, means broadening the tax base and getting rid of loopholes and deductions, and being revenue neutral at a minimum. In other words, it's not a tax cut. What are the odds of that?

Pretty slim. And yet, what do I see when I open my copy of the LA Times this morning?

President Obama will use his State of the Union address this evening to make a renewed case for an overhaul of the tax reform, one of a host of "common sense" ideas advisers say he'll offer to shore up the American economy and tackle the growing deficit.

...."We want to reward wealth and prosperity and success. But if we're going to move forward as a country, reduce our deficit, invest in things like manufacturing and education, how are we going to pay for it?" [David Plouffe] said on NBC's "Today" show. "There's no question that we have a tax code that's far too complicated, far too complex. And when the middle class, the average middle-class worker is paying more in taxes than people who are making $50 (million), $60 million a year, we've got to change that."

I still don't believe this is going to happen. Republicans are simply too deeply invested in the theology of both tax cuts and corporatism to cooperate on anything resembling genuine tax reform. It's not 1986 anymore.

Still, you never know. And it certainly demonstrates that Bruce has freakishly great timing. Tonight people will tune in to the State of the Union address and hear Obama calling for comprehensive tax reform, and tomorrow they'll all stampede to their local Barnes & Noble to find a nice, short book that explains what tax reform is all about. Bruce will become an overnight millionaire, right?

While Mitt Romney and Newt Gingrich were busy giving rabble-rousing speeches about how the appeaser-in-chief has been touring the globe apologizing for America and hollowing out our military influence, guess what happened?

Europe slapped a boycott on Iranian oil Monday, signaling that the Islamic Republic's second-largest market is likely to dry up as part of a U.S.-led sanctions campaign that has already inflicted serious damage on Iran's economy and sharply increased tensions.

....In the past, Europe often has resisted U.S. efforts to build pressure on Iran. "If you had told me a year or two ago that the Europeans would do something like this, I would have said you were crazy," said Mark Dubowitz, executive director of the Foundation for Defense of Democracies, a research group in Washington that favors strong sanctions.

....The effect will be amplified by a new round of U.S. sanctions, which, if fully implemented, will prevent companies that do business with Iran's central bank from dealing with American companies....China says publicly that it will not yield to pressure to give up Iranian oil, but it has reportedly cut back on purchases for January and February and is pushing for discounts.

How about that? Europe is now fully on our side, Russia and China are officially neutral but not actively undermining us, and Iran is starting to feel serious pressure. Somebody's foreign policy seems to be having an actual effect.

It can't be President Obama, though. Too weak. Here's what's really happening: the EU is desperately getting on the sanctions bandwagon because they're afraid that President Gingrich will bring down the hammer after he wins a landslide 535 electoral votes in November (the big-government leeches in DC stubbornly hold out against the tide, of course). The fear of Newt is forcing them to get serious for the first time ever.

Think I'm joking? Ten bucks says some actual conservative columnist makes this argument. For all I know, someone already has.

Reuters reports on the "voluntary" restructuring of Greece's debt:

Euro zone finance ministers on Monday rejected as insufficient an offer made by private bondholders to help restructure Greece's debts, sending negotiators back to the drawing board and raising the threat of Greek default.

....Banks and other private institutions represented by the Institute of International Finance (IIF) say a 4.0 percent coupon is the least they can accept if they are going to write down the nominal value of the debt they hold by 50 percent.

Greece says it is not prepared to pay a coupon of more than 3.5 percent, and euro zone finance ministers effectively backed the Greek government's position at Monday's meeting, a position that the International Monetary Fund also supports.

I love the smell of voluntary in the morning. Felix Salmon has more.

Mitt Romney has released his two most recent tax returns:

Mitt Romney offered a partial snapshot of his vast personal fortune late Monday, disclosing income of $21.7 million in 2010 and $20.9 million last year — virtually all of it profits, dividends or interest from investments.

That's pretty impressive. Not the fact that Romney paid a 13.9% tax rate on this haul — we already pretty much knew that. No, I'm talking about the fact that he made $21 million each year. Most public reports put Romney's wealth in the neighborhood of $250 million, which means he got a return of about 8.4% both years. That's a real return of around 7% during a generally slow-growth period when most people are scrounging around just to find safe investments that pay a point or two more than treasuries. When it comes to managing big pots of money, it looks like Romney hasn't lost his old magic.