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

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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.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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