Mojo - July 2012

The IRS Is Aggressively Auditing "Global High-Wealth Individuals"—People Just Like Mitt Romney

| Tue Jul. 24, 2012 2:57 AM EDT
Mitt Romney

In 2009, IRS Commissioner Doug Shulman announced that the IRS had created a new task force to audit people he called "global high-wealth individuals." These new IRS targets, Shulman explained, have tens of millions of dollars in income and assets and "make use of sophisticated financial, business, and investment arrangements with complicated legal structures and tax consequences." They often have an intricate web of related business entities like S-corporations and other pass-through entities they control, along with various off-shore accounts and business entities. In other words, they're people like Mitt Romney.

There aren't that many people in the "global high-wealth individual" group—only about 8,000 taxpayers a year who have more than $10 million in annual income—and Romney is "exactly the kind of taxpayer the program was designed to look at," says Rebecca Wilkins, a lawyer at the Citizens for Tax Justice who used to work with rich clients as a CPA. It's possible for someone with a lot of income, like a corporate CEO, to have a fairly simple tax return, Wilkins says. But Romney's return from 2010 (the only completed one he's released so far) weighs in at 203 pages; 55 pages are simply devoted to disclosing the existence of a host of foreign transactions in tax havens like the Cayman Islands. In his domestic portfolio, there's Romney’s IRA, to which he was legally able to contribute only around $30,000 a year but which is now mysteriously worth between $21 and $102 million. It's the sort of stuff that the new IRS unit is supposed to vet.

Romney's campaign has said he's never been audited. "I pay all the taxes that are legally required and not a dollar more," Romney said during a January primary debate. But IRS audits on Romney's fellow elite global high-wealth individuals have turned up quite a bit of extra money for the government. Out of the 36 high-wealth individuals audited in fiscal 2011 and the first five months of fiscal 2012, the IRS discovered an extra $47 million in taxes that should have been paid by 24 people in that group. Those figures suggest that some mega-rich people using aggressive-but-legal tax avoidance schemes are still not paying all they owe. There's no telling whether Romney deserves an audit or would pass one. But as long as he doesn't release his tax returns, speculation will continue about what's on those returns and whether they need a good look.

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Corning Pays Zero Federal Taxes, But Tells Congress It Wants A Tax Cut

| Mon Jul. 23, 2012 6:38 PM EDT

Corning International, the company best known for its heat-resistant glass cookware, paid zero federal income taxes on nearly $1 billion in income last year, but apparently that was still too much. Testifying at a House Ways and Means Committee hearing on corporate tax policy on Friday, Corning vice-president Susan Ford asked Congress for "a substantial reduction" in Corning's corporate tax rate.

To be fair, Corning would pay Uncle Sam much more than nothing it didn't resort to arcane accounting maneuvers. Ford told members of Congress that Corning paid a 36 percent income tax last year, but what she didn't tell them is that Corning once again deferred its tax payments. According to the watchdog group Citizens for Tax Justice, Corning has paid zero taxes in the past four years. Between 2008 and 2010, a period in which Corning made $1.9 billion in U.S. profits, Corning actually received a $4 million tax refund.

The hearing on corporate tax policy comes at a time when the White House has proposed lowering corporate tax rates while closing tax loopholes, leveling the playing field for business. The changes are supposed to be revenue neutral, though Corning and other companies seem to want more. "American manufacturers are at a distinct disadvantage to competitors headquartered in other countries," Ford told members of Congress. "Specifically, foreign manufacturers uniformly face a lower corporate tax rate than U.S. manufacturers."

Except when they don't. In 2011, Corning paid an average foreign tax rate of 17 percent—far more than what it paid in the United States.

Boats, Bottles, and Billy the Kid: The Other Koch Brother

| Mon Jul. 23, 2012 3:13 PM EDT
Bill Koch at an America's Cup press conference in 1992.

Now that he's given $2 million to the main pro-Romney super-PAC, William Koch has joined his brothers David and Charles as one of 2012's top conservative moneymen. Bill, David's twin, also made much of his money from his family's energy holdings, though he's not quite as rich as his better-known siblings. Forbes puts his net worth at $4 billion, versus his brothers' combined worth of $50 billion, the result of a drawn-out legal battle over the family fortune that left Bill and the eldest Koch brother, Frederick, behind.

Though he's given money to Republicans such as Rep. Allen West (R-Fla.) and has used his company, Oxbow Carbon, to lobby against wind turbines off Cape Cod, Bill has not gotten involved with his brothers' shadowy political fundraising operation. "Bill Koch isn't Charles Koch and he isn't David Koch," his spokesman told the Village Voice. "He's not his brother's keeper."

What Bill Koch does like to keep: Wine and art. According to Antiques and Fine Art, Koch's Florida house has a "computerized wine cellar" that provides "easy access" his collection, whose size has been estimated at somewhere between 35,000 and 43,000 bottles. Koch once believed he possessed bottles of French wine signed by legendary oenophile Thomas Jefferson, but he later claimed they were bogus and sued the dealer and Christie's auction house. Last year, Koch told the Economist that he has spent $4 to $5 million on fake wines. He did not say how much he has spent on his ongoing lawsuits (five at last count) against the alleged purveyors of counterfeit wine.

Koch also has an extensive and eclectic collection of fine art, including works by Monet, Chagall, and Winslow Homer. Not content to let his favorite pieces collect dust, Koch seasonally schleps them to and from his summer home. As AFA explains:

Koch annually chooses artwork from his 400-strong collection to transport from his 40,000 square foot primary residence in Florida to the Cape Cod beach house. At a third of the size, the summer home accommodates only a careful selection. Thus, favorites such as enormous Fernando Botero sculptures, Alfred Stevens's engaging The Coquette, and much of the maritime collection (excluding over 120 boat models of every defender and challenger in the America's Cup), travel north while the majority of Koch's trove stays behind.

Koch's other passion is sailing. In 1992, he won the America's Cup at a reported cost of $68 million. "Financially, I would say win or lose, it's not worth it," he told ESPN. "If you asked me…if I knew what I know now, would I do it, the answer to that would be no."

"Wild Bill" also has a thing for the Old West. In 2010, he quietly purchased Buckskin Joe, a Colorado town/movie set/tourist trap, and relocated its buildings to his ranch. Last June, he spent $2.3 million on the only authenticated photograph of Billy the Kid. That's still $300,000 more than he's spent on Romney, one of his cheaper hobbies.

Study: Super-Rich Hiding $21 Trillion In Offshore Tax Havens

| Mon Jul. 23, 2012 1:57 PM EDT

Mitt Romney isn't alone. The world's wealthiest citizens have socked away a mind-blowing amount of money in offshore tax havens: Likely around $21 trillion, but as much as $32 trillion. That's according to a new report from the Tax Justice Network, a British think tank. To put that in perspective, the combined gross domestic products of the United States and Japan are around $21 trillion.

This gargantuan stash of money belongs to fewer than 10 million people, and $9.8 trillion of it belongs to just 100,000 people, the Tax Justice Network estimates. Here are the countries that are losing the most money to offshore tax havens:*

While offshore tax havens have an image of being operated by shady banks in tropical backwaters, the report found that the majority of the $21 trillion was actually managed by well-known private banks. The three largest tax haven players are UBS, Credit Suisse, and Goldman Sachs. For more on the Tax Justice Network's findings, you can read their full report (PDF).

Correction: The original version of this article stated that the countries in the chart were the top offshore destinations for tax dodgers. In reality, they are the top sources of money sent to offshore accounts in places like the Cayman Islands.

Romney's Rainmakers Dump Millions Into His Super-PAC

| Mon Jul. 23, 2012 12:26 PM EDT

June was the best month ever for super-PACs since their creation in 2010. In all, super-PACs large and small reeled in $55 million last month, according to the Sunlight Foundation. That brings their overall haul for the 2012 election cycle to $313 million.

Leading the charge in the outside money wars was Restore Our Future, the pro-Romney super-PAC run by dark-money guru Carl Forti. Restore Our Future raised $21 million in June. Seven families ponied up $15 million of that haul: casino tycoon Sheldon Adelson and his wife, Miriam; Boston financier John Childs; Dallas investor Harlan Crow; the company owned by Bill Koch, brother of the billionaires Charles and David Koch; Houston homebuilder Bob Perry; former Rick Santorum bankroller Foster Friess; and TD Ameritade executive Joe Ricketts.

And in an even more encouraging sign for the Romney super-PAC, USA Today points out that one in 10 donors to Mitt Romney's campaign have also given to Restore Our Future. Fundraisers says that kind of donor crossover is key to a presidential super-PAC's success—and that crossover has so far eluded the super-PAC supporting President Obama.

Restore Our Future wasn't the only GOP super-PAC to notch a record month. American Crossroads, the super-PAC cofounded by Karl Rove, raised $5.7 million in June, including $2 million from Texan Bob Perry. John Childs also chipped in $500,000 to Crossroads last month in addition to the million each he gave to Restore Our Future and the Club for Growth.

Priorities USA Action, the pro-Obama super-PAC, also beat its monthly fundraising record, pulling in $6.2 million. Donors included Qualcomm founder Irwin Jacobs ($2 million), actor Morgan Freeman ($1 million), and Chicago media executive Fred Eychaner ($1 million).

After Bachmann Allegations, Clinton Deputy Reportedly Under Police Protection

| Mon Jul. 23, 2012 11:02 AM EDT
Huma Abedin.

In June, five Republican members of Congress, including Rep. Michele Bachmann (R-Minn.), sent letters to the nation's top law enforcement, defense, and intelligence agencies warning that the Muslim Brotherhood, an international Islamist organization, had infiltrated the United States government. Bachmann and her associates—Reps. Trent Franks (R-Ariz.), Louie Gohmert (R-Texas), Thomas Rooney (R-Fla.), and Lynn Westmoreland (R-Ga.)—demanded an investigation, and Bachmann told radio host Sandy Rios that "it appears that there are individuals who are associated with the Muslim Brotherhood who have positions, very sensitive positions, in our Department of Justice, our Department of Homeland Security, potentially even in the National Intelligence Agency."

There is not even a smidgen of credible evidence to back up the charges Bachmann and her colleagues have made. But one of the individuals Bachmann has singled for her supposed ties to the Muslim Brotherhood—Huma Abedin, a longtime aide to Secretary of State Hillary Clinton—has suffered very real consequences. Abedin, who's married ex-Rep. Anthony Weiner, with whom she has a new baby, has received threats in the wake of Bachmann's charges and is now under police protection, the New York Post reported Sunday. Sen. John McCain (R-Ariz.) took to the Senate floor last week to defend Abedin, but that hasn't been enough to stop the witchhunt.

People for the American Way, a liberal advocacy group, has called on Speaker of the House John Boehner (R-Ohio), who called Bachmann's charges "pretty dangerous," to remove her from the House Intelligence committee as a way of sending a message that this kind of conduct is unacceptable.

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How Obama Put a Silencer on His Support for an Assault Weapons Ban

| Mon Jul. 23, 2012 10:43 AM EDT

In the aftermath of the horrific shooting in Aurora, Colorado, I thought the below piece I wrote over two years ago deserved reposting. By the way, I would add that after the Gabby Giffords assassination attempt, the president disappointed gun-control advocates by not using the moment to address gun violence with specific and forceful policies, such as an assault weapons ban.

Obama Puts a Silencer on Assault Weapons Ban

—By

| Fri May. 21, 2010

When Mexican President Felipe Calderon addressed the US Congress on Thursday, he called for the United States to reinstate the ban on assault weapons that expired in 2004 under the Bush administration. Calderon noted that a ban on these weapons, which are flowing south across the border to violent drug cartels, could help Mexico reduce the horrific violence that has seized parts of that country.

Calderon might be forgiven for assuming that this would be a reasonable request to make to the Obama administration. While campaigning for the presidency, candidate Barack Obama backed permanently reinstating the ban. After he assumed office, his administration quickly announced it would proceed on this front. On February 25, 2009, Attorney General Eric Holder declared,

As President Obama indicated during the campaign, there are just a few gun-related changes that we would like to make, and among them would be to reinstitute the ban on the sale of assault weapons.

Holder specifically noted that resurrecting the ban would reduce the number of guns pouring into Mexico and fueling the violence there.

Compare Holder's unequivocal statement to how the White House these days addresses the matter. Hours after Calderon's appearance on Capitol Hill, press secretary Robert Gibbs was asked about this issue. Here's the full exchange:

Q: Robert, speaking of President Calderón, this morning in his address to Congress, he asked lawmakers to reinstate the assault weapons ban, something the President has supported in the past.  Does the President still support that and does he plan to lean on Congress to make progress?

GIBBS:  I would — because the President largely got asked this question yesterday about both drugs and weapons moving across the border, I’d point you to the answer that he gave about increased inspections on cargo that’s moving from the north to the south.

You know the rest. At Obama's joint press conference with Calderon the previous day, this is what the president said,

Through increased law enforcement on our side of the border, we’re putting unprecedented pressure on those who traffic in drugs, guns, and people.  We’re working to stem the southbound flow of American guns and money, which is why, for the first time, we are now screening 100 percent of southbound rail cargo.

Nothing about an assault weapons ban. A Mexican journalist followed up and asked Obama, "Shouldn’t there be an initiative that will regulate guns as they are sold? Is there going to be a ban?" Obama again talked about interdiction efforts and didn't address the assault weapons ban.

Not only will the White House not make good on candidate Obama's promise to revive the ban or Holder's announced decision to do so, it won't even talk about the assault weapons ban. Not a word. The reason is obvious: Obama and his aides don't want to spark a backlash from the NRA and voters who cling to their guns—especially as Democrats ride toward a difficult mid-term election. On this dicey topic, Obama cares most about ducking a political bullet.

We're Still at War: Photo of the Day for July 23, 2012

Mon Jul. 23, 2012 9:46 AM EDT

With a swift yank, Spc. Justin Israel, a cannoneer with the 4th Infantry Brigade Combat Team, 1st Infantry Division, pulls the lanyard on “Thor," an M777A2 155mm Howitzer. US Army photo by Sgt. 1st Class Bruce Williams, HHB 2-32 FA.

Politicizing Tragedy and the Aurora Theater Shooting

| Fri Jul. 20, 2012 2:00 PM EDT

Early Friday morning, as Americans were waking up to the horrifying news of a mass shooting at a midnight showing of the latest Batman film in Aurora Colorado, someone was writing a press release. A political pundit was outlining the early draft of an op-ed explaining how there is no more vivid example of what ails America than those lost in Aurora. Politicians and their speechwriters began crafting careful statements, seeking to find the exact right measure of solemn regret and hardened resolve. 

Is this disturbing? It's said that one should never try to "politicize" tragedies like this one. President Barack Obama said Friday morning that "there are going to be other days for politics, this I think is a day for prayer and reflection." Mitt Romney, his Republican rival, said "I stand before you today not as a man running for office, but as a father and grandfather, a husband, and American." Both the campaigns and some of their respective third-party allies have asked networks to pull negative advertisements from television in the state. No one wants to make a scene at a funeral. 

There's something quite political about that, though. After all, the reason the campaigns are behaving this way is not just because of decorum, but because a breach of decorum would exact a political cost. Politics are an inevitable part of a collective national trauma, which, for better or for worse, is how America treats incidents like this one.  It's not only appropriate to ask how we got here—it would be irresponsible not to. We frequently treat politics as a team sport, but it isn't one. Trying to avoid politics trivializes politics, which is the means by which we make collective decisions as a society. A discussion about policies that could prevent future tragedies like this couldn't be more appropriate. 

Politics itself is not the problem, but there are reasons we react with revulsion to the thought of "politicizing" tragedies. What repells us is the rush to collective blame, the lightning impulse to assign responsibility to one's political adversaries. There is nothing like an actual monstrous act to demonstrate the silliness of our tendency to reduce one another to caricature. Shortly after the shooting, the website of the late Andrew Breitbart published speculation, quickly hyped by conservative internet maven Matt Drudge, that the suspect in the the shooting was a registered Democrat. With no apparent sense of irony, the website later published an "exclusive" press release from a Tea Party group criticizing ABC News' Brian Ross, who made the outrageous decision to speculate publicly that the suspect might have been involved with a local Tea Party organization. I don't know Ross' political views, so I can only describe his actions as inexcusably reckless. (ABC later apologized.)

To look at the the frightened eyes of the survivors in Aurora, and see only our own intrinsic goodness, and our political enemies' implacable evil, is the most impenetrable vanity. It's not politics, it's just tribalism. And it's grotesque. But we shouldn't mistake this kind of pettiness for politics itself, which is far too important an arena to cede to those who are incapable of seeing a tragedy and wondering, above all, what it says about themselves. We should be talking about why this happened, and what, if anything, can be done to prevent it from happening again. 

National tragedies are political. They're too important not to be. 

Drudge, Breitbart.com, and ABC on the Dark Knight Rises Theater Shooting: #Fail

| Fri Jul. 20, 2012 11:17 AM EDT

At least 12 people were killed in a mass shooting at a midnight showing of The Dark Knight Rises in Aurora, Colorado. The name of the suspected gunman, now in custody, is James E. Holmes. What we know about him this morning: He's a white male, mid-20s, with an apartment in Aurora.

Here's Matt Drudge tweeting a thinly sourced Joel Pollak report at Breitbart.com: 

The James Holmes tracked down by Breitbart.com is 25 years old and registered at an address in La Plata County—roughly a six-hour drive from the alleged shooter's apartment, according to Google Maps.

And now, here's ABC News' Brian Ross earlier today, irresponsibly speculating on the shooter's possible Tea Party link (ABC later withdrew the claim and apologized):

There are a lot of people in Denver and Aurora with the legal name of James/Jim Holmes.

Dozens of people are injured. At least 12 people are dead. The body count could rise. Even the 2012 attack dogs are taking a siesta from the partisan mudslinging in the wake of the tragedy. If you're going to publish a story about an alleged mass murderer's politics, you had better get it right.