Everybody knows that the dice are loaded

Everybody rolls with their fingers crossed

Everybody knows that the war is over

Everybody knows the good guys lost

Everybody knows the fight was fixed

The poor stay poor, the rich get rich

That's how it goes

Everybody knows. Leonard Cohen



What was your return on your IRA, Keogh or Pension Plan last year? For the last 15 years? For 1984-1999?

But no matter how well you did, you did not do as well as Mitt Romney between 1984 and 1999. Mitt was allowed to contribute a maximum of $32,000 per year to his IRA and other forms of retirement accounts. So in 15 years, he contributed no more than $480,000.

And yet that account is now worth $102,000,000!

Nicholas Shaxson's Vanity Fair Article about Mitt Romney's investments has been getting a lot of attention primarily because of his use of offshore accounts, as well as Bain's apparent use by foreigners as an offshore tax haven in the U.S. But I haven't heard much about Mitt's astounding return on his retirement account:



Mysteries also arise when one looks at Romney’s individual retirement account at Bain Capital. When Romney was there, from 1984 to 1999, taxpayers were allowed to put just $2,000 per year into an I.R.A., and $30,000 annually into a different kind of plan he may have used. Given these annual contribution ceilings, how can his I.R.A. possibly contain up to $102 million, as his financial disclosures now suggest?



Using simple calculations, that equals a return of about 27% compounded -- more than twice as much as Bernie Madoff's Fictional returns of about 10-11 percent.

And of course, the income is tax free! (Until Mitt needs it to fund his retirement (Hah), or maybe figures out a way to pass it to Tagg or his fund tax free.)

How did he do it? We don't know! Because Mitt has not revealed enough information to find out. The Vanity Fair article speculates that Mitt was allowed to put low valued, "A Shares" of stock in Bain acquisitions into the account, and when that investment did well, the stock went up quickly. But the low valuation was likely based on very questionable assumptions, such as "liquidation value," which a tax professor at USC called "completely inappropriate."

Also, according to Shaxson, Mitt’s and Ann’s I.R.A.’s have also been receiving profit interest from (mostly Cayman Island–based) Bain Capital funds that were set up long after he had left the company, in 1999.

Of course, we are assured that all of this was "completely legal" or maybe more accurately "barely legal." (After all, Mitt is a hustler of the first order.)

But the real question is not was it is legal, but whether it should be. Obama would restrict a lot of the tax practices Romney takes advantage of, and Romney wants to keep them in place or even expand them.

Take it away, Lenny:



Everybody knows the fight was fixed

The poor stay poor, the rich get rich

That's how it goes

Everybody knows.