This is news that’s not going away fast. Did you know that Mitt Romney has an Individual Retirement Account? In the US, this “IRA” is a retirement scheme where you can put your own money aside, tax free, up to a certain so-many thousand dollar amount a year figure. You hopefully invest it in good things, and then it becomes this nest egg when you retire.
Word has it that Mitt Romney’s nest egg is between $21 million and $101 million, in this same sort of IRA. How do you put $6,000 a year away in an IRA and get $21 million?
Tax experts are wondering about it. Some surmise that he has used an aggressive accounting position, saying that limited partnerships that he owned through Bain were only worth a small amount (low basis), when, in fact, these partnerships were later worth significant money. Depending on how and when the partnerships were contributed into the IRA, it’s possible that they could have 100 times-ed themselves over the years.
It’s quite a shade of gray area, though. Because it all depends on whether the original contribution amount, as I say, the “basis”, can be supported. The layman isn’t going to catch what is going on–it’s going to look like a big tax dodge—and this might be the reason Mitt Romney won’t release his tax returns. My own sense is that the low basis really isn’t supported, and that’s why Romney would rather talk about something else. We’ll only know more if and when Romney releases the tax returns.
Did you know that Bain Capital has been active in Japan? I had heard of the company, which is now so tied to the 2012 presidential election, for the first time when I was in Japan. I met fast food entrepreneur Ernie Higa through a social circle, and later heard about how he had sold his 12% of Domino’s Pizza Japan to Bain Capital in early 2010. He was the guy who really innovated pizza delivery in Japan back in the 1990s—a true entrepreneur—and went in with SMBC another financial backer whose name escapes me (Daskin?) to build out a 179 store franchise.
In my view, Japan of 2010 was hopelessly overfranchised in the restaurant market, so I wondered what Bain was up to. I still do wonder who got the better end of that deal. A Salon article about Bain and fast food investing in general says that the company likes to go in with debt, because they can use cash flow to service it while they figure out how to squeeze a profit out of whatever endeavor they get into. To me, it starts to sound like just moving a lot of shells around. Can anyone tell me if Domino’s is still going great in Japan? Aren’t Pizza-La and Pizza Hut right in there, still nipping at the heels? If not grabbing the whole leg?