Mitt Romney’s Kids Pay an Even Lower Tax Rate Than He Does

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.

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.

GREAT JOURNALISM, SLOW FUNDRAISING

Our team has been on fire lately—publishing sweeping, one-of-a-kind investigations, ambitious, groundbreaking projects, and even releasing “the holy shit documentary of the year.” And that’s on top of protecting free and fair elections and standing up to bullies and BS when others in the media don’t.

Yet, we just came up pretty short on our first big fundraising campaign since Mother Jones and the Center for Investigative Reporting joined forces.

So, two things:

1) If you value the journalism we do but haven’t pitched in over the last few months, please consider doing so now—we urgently need a lot of help to make up for lost ground.

2) If you’re not ready to donate but you’re interested enough in our work to be reading this, please consider signing up for our free Mother Jones Daily newsletter to get to know us and our reporting better. Maybe once you do, you’ll see it’s something worth supporting.

payment methods

GREAT JOURNALISM, SLOW FUNDRAISING

Our team has been on fire lately—publishing sweeping, one-of-a-kind investigations, ambitious, groundbreaking projects, and even releasing “the holy shit documentary of the year.” And that’s on top of protecting free and fair elections and standing up to bullies and BS when others in the media don’t.

Yet, we just came up pretty short on our first big fundraising campaign since Mother Jones and the Center for Investigative Reporting joined forces.

So, two things:

1) If you value the journalism we do but haven’t pitched in over the last few months, please consider doing so now—we urgently need a lot of help to make up for lost ground.

2) If you’re not ready to donate but you’re interested enough in our work to be reading this, please consider signing up for our free Mother Jones Daily newsletter to get to know us and our reporting better. Maybe once you do, you’ll see it’s something worth supporting.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate