Friday, July 13, 2012

Explaining Bain: Wealthy Play by Different Set of Rules

How can you be called CEO on important documents and get paid, all while being inactive in a company that you are the sole shareholder of? We're all trying to figure that out because it doesn't seem to make sense. The New Yorker says that's the way it is for folks like Romney who breathe rarified air. The wealthiest get benefits and loopholes and tax havens that normal people don't get. They don't play by the same rules that we do:
What Romney’s career shows, after all, is that once you’re at the top, you can keep being called C.E.O. even if you’re not even working at the company. You can get paid a hundred grand a year—chump change for Romney, to be sure, but twice the U.S. median income—while doing, by your own account, nothing at all for the company. You can build up an I.R.A. worth tens of millions of dollars when the maximum annual contribution is four thousand dollars. (Henry Blodget suggests here that Romney’s ownership of Bain Capital shares may explain how that I.R.A. could have legally gotten so big.) And, above all, if you manage a private-equity firm, you can reap the benefit of the carried-interest tax loophole and pay a much lower tax rate on your income than the vast majority of Americans, and you can continue to reap the benefit of that loophole even after you stop working for the firm. None of these things is illegal, but none of them are things that ordinary Americans can benefit from, and that’s the real scandal of Romney’s career at Bain. Read more New Yorker
As Obama says:
“Most Americans figure if you are the chairman, CEO and president of a company, that you are responsible for what that company does.”