With a fortune estimated to be as large as a quarter of a billion dollars, Mitt Romney is among the wealthiest men ever to run for president.
But attacks from Democrats and Republicans over his career in the leveraged buyout business and his reluctance to release his tax returns have underscored another central fact about Romney: The wealth that has helped underwrite his career in politics remains shrouded in considerable secrecy, which now poses a major political risk on the campaign trail.
Romney’s finances are complex and far-flung. He and his wife, Ann, have reported holdings in dozens of publicly traded companies, mutual funds and high-end investment partnerships, with much of their family wealth held in blind trusts that conceal their full size from public view.
Romney’s disclosure on Tuesday that he pays an effective tax rate of about 15 percent on his income focused new attention on some aspects of his finances, including his millions of dollars in donations to the Mormon Church and his continuing compensation from Bain Capital, the private equity firm he left more than a decade ago.
Just three days ahead of the South Carolina primary, Romney’s opponents on Wednesday vigorously exploited uncertainty about his finances by demanding that he release his tax returns before their party picks a nominee, while Democrats, previewing likely attacks in a general election campaign, accused Romney of having something to hide. The matter is also leading to more scrutiny of his tax proposals.
"We can’t fire our nominee in September," Gov. Rick Perry of Texas said on Wednesday on "Fox and Friends." "If we’ve got a flawed candidate going forward who’s going to get eaten alive either because of business practices or because of the taxes and the system that’s set up, we need to talk about it now."
Whether the attacks will help or hurt Romney with voters remains to be seen. And Romney aides said privately that they were prepared for the attacks on Romney’s wealth, which they believe will backfire, aligning Romney’s critics with liberals and rallying more Republicans to his side. But even some allies of Romney’s raised concerns: Gov. Chris Christie of New Jersey, one of his top supporters, said in interviews on Wednesday morning that Romney should make the returns public "sooner rather than later."
If there is one thing Romney has been consistent on over the years, however, it is taxes. In his campaigns for the U.S. Senate, governor of Massachusetts and president, he has never once released his tax returns — not even in 1994, when he made a major issue out of Sen. Edward M. Kennedy’s refusal to release his own returns.
Romney has not pledged to release past returns, and the one he has suggested he would release, in April, is a work in progress, leaving his lawyers an opportunity to shift his income and liabilities in ways that could minimize any political fallout.
At the end of last year, he could have arranged to have some of his compensation deferred. There are a variety of mechanisms, like grantor retained annuity trusts, that athletes, entertainers and businesspeople routinely use to push their income and tax liability into the future and spread it out over years.
An examination of Romney’s public financial disclosures and other documents reveals some outlines of his wealth and potential tax liabilities.
Even if nearly all of his income was taxed at the 15 percent rate levied on dividends and long-term capital gains, Romney would be eligible to lower his tax bill by deducting charitable donations, property taxes, and state and local taxes.
Romney practices tithing, donating at least 10 percent of his income to the church, and he is entitled to deduct those contributions from his income. But Romney, who has had to contend with a bias that some voters harbor against Mormons, has said little about his millions of dollars in donations to the church.
Public records show that the Romneys have given $9.5 million to their family foundation since 1999. The foundation, in turn, has donated $4.7 million to the Church of Jesus Christ of Latter-day Saints, and $300,000 to Brigham Young University, which is Romney’s alma mater and is owned and operated by the church. The church contributions came in several large chunks, including $1.8 million in 2008 and $1.9 million in 2003.
In addition, records from the Securities and Exchange Commission show that the Mormon Church has reaped more than $13 million over the last 15 years by selling shares in companies that Bain Capital invested in, including Burger King Holdings and Domino’s.
The Romney campaign said some of Romney’s tithing had been stock donations. But it is impossible to glean from the filings which shares were donated at Romney’s behest and which were donated by other Bain employees. (The company had several Mormon partners.) The shares the church sold included more than $700,000 in holdings in the DDi Corp. and American Pad and Paper, two companies that Bain invested in and that eventually filed for bankruptcy.
The church reaped the biggest gains from more than $4 million in shares in Wesley Jessen VisionCare, a maker of soft contact lenses, that it sold in the late 1990s, according to the SEC filings. Bain invested $6 million in the company in 1995, an investment that was valued at more than $300 million at the end of 1999, according to a prospectus distributed by a division of Deutsche Bank Securities to potential investors.
The campaign declined to specify which donations, or what amount, had involved Romney. Bain’s donations of stock to the Mormon Church were first reported on Tuesday by ABC News.
In the financial disclosure forms that Romney has filed as Massachusetts governor and a presidential candidate, he has reported over the years that he has had a financial interest in funds like charitable remainder trusts, which in some instances can allow substantial tax deductions.
Romney’s campaign declined to answer questions about the tax implications of those trusts or to specify where he pays state income taxes and how much.
Properties owned by Romney have also paid more than $920,000 in local taxes since 2007, according to public records. Like all homeowners, the family appears to pay keen attention to its property tax bills. When billed for $134,909 in property taxes on their beachside home in San Diego in 2009, the Romneys appealed the assessment, according to an official at the city property assessor’s office.
They won the appeal. The bill was reduced by $9,617, for a total of $125,292.