Son of Boss

Peter
Reilly has an interesting theory on what’s behind Mitt not releasing his old
tax returns. Of course, you have to take this with a grain of salt, because it’s
Forbes magazine, and you know what a hotbed of radical Socialists they are.

Basically, it goes like this. There was this (tax shelter/accounting scam)
which went by the name Son of Boss. It
fabricated imaginary capital losses which you could use to write off your
capital gains. In 2000, the IRS started cracking down on this. It was a fairly
contentious and drawn out process. In fact, one case went to the Supreme Court
this year. It was eventually decided that the trick was illegal, but the statute
of limitations was cut down to just 3 years, so that violators wouldn’t have to
pay back all of the profits they made using it. They only had to pay back the
last 3 years.

One of the companies which was prosecuted for this was Marriott. Mitt Romney
was on their board at the time they were using Son of Boss, and headed
the audit committee. That means that he was definitely aware of this scam. We
also know that most of his income is in the form of capital gains. Could it be
that he was also using this trick? If so, when it was declared illegal, did he
pay back all of his back taxes, or just the last 3 years? If he only paid back
the last three years, then he would still be correct in his statement that he
“… pay[ed] all the taxes owed, and not a penny more”. But really, how would it
look if we found out that a Presidential candidate had pocketed a big payoff
from illegal tax returns, and only avoided paying it back because the statute of
limitations had expired?

I would also note that this theory fits pretty well with what we know about
Mitt’s Swiss bank accounts. If you were trying to hide gains from the IRS, a
Swiss bank account would have been pretty handy.

It also fits pretty well with Harry Reid’s recent assertions. If Mitt’s
income is almost all capital gains, then an accounting scam which lets you avoid
paying capital gains taxes could drive your rate pretty close to zero.