Mitt Romney and Marriott’s Taxes : CJR
Mitt Romney’s taxes were all over the news last month when it turned out he paid just 13.9 percent of his $22 million 2010 income in federal taxes.
That turns out to be high compared to some of the tax returns filed by hotel giant Marriott International when Romney served on its board of directors. That 13.9 percent is twice what Marriott paid one year when Romney headed its audit committee, thanks to tax schemes that got the company successfully sued (twice) by the Justice Department.
Bloomberg News’s Jesse Drucker has the scoop here as he continues to dig up tax shelters with colorful names. We’ve seen the Double Irish, the Killer B, the Deadly D, and now Son of BOSS.
Bloomberg paints a picture of overly aggressive tax avoidance while Romney was on the company’s board. Senator John McCain, long before he was Romney’s 2008 opponent, hammered Marriott, calling the tax shelters a “scam.” Two IRS lawsuits resulted in federal court rulings against the company that recovered hundreds of millions of dollars in unpaid taxes. And the company shelters cash in a shell company in Luxembourg, to boot. Here’s a quote on Son of BOSS:
“This is pretty much the poster child for those classic early tax shelters: you use a hyper-technical reading of the tax law to obtain what are, by any standard, unwarranted tax benefits,” said Robert Willens, a tax-accounting analyst in New York who advises investors.
And here’s Bloomberg on another of Marriott’s tax-avoidance plans, one that didn’t get it in trouble with the authorities, though the IRS questioned it at least twice.
In 2001, Marriott bought four synthetic fuel plants to use the credit. Companies could get the benefit by producing fuel after they sprayed coal with various substances, regardless of environmental improvement from the procedure. The process gave rise to a derisive nickname for the subsidy: “Spray and pray.”
Such credits cut Marriott’s tax bill sharply. In 2002, its first year receiving the benefit, Marriott legally claimed $159 million of such credits, cutting its effective tax rate to 6.8 percent.
I went back through the clips to see if there was much reporting on whether this synfuel business had any real environmental benefit or if it was purely for tax purposes. There was less than I would have hoped, but Don Barlett and James Steele did have a 2004 Time cover story on the industry, which it called “The Great Energy Scam.”