Invictus here.

Mitt Romney didn’t have a very good week. When the Romney Campaign releases his 2011 taxes as a subject-changer, it’s a safe bet that things haven’t been going swimmingly.

Let’s oblige them by wading into this tax story.

Here is what we know: GOP candidate Mitt Romney has released his two most recent tax returns. According to Politifact, that’s far fewer than most presidential candidates disclose. As an example, Romney’s father, George, had released 12 years of tax returns. He has steadfastly refused to release the rest, despite being goaded by many players — not just Democrats and media pundits, but by members of the GOP establishment as well. Regardless, he has not been very forthcoming.

Why has he refused? There are no good answers, only speculations. Given that not releasing additional tax docs has cost Romney politically only increases the arm chair hypothesizing. All summer, the incumbent has battered the challenger on this (and related issues). Romney’s approval ratings have been hurt. His refusal is helping to coalesce a detrimental media narrative: There are different rules for people of privilege than for the rest of the country, and Romney has taken advantage of them. These week’s 47% gaffe only plays into that same narrative.

While the Obama ads have been politically effective, it’s been even more surprising that there has not been a successful counter from the GOP candidate. Romney was even vetted as a Veep candidate in 2008 by the McCain camp, where they ostensibly saw his tax records. McCain himself said Romney provided 20 years of records, and has paid his taxes . . . but then again, he passed over Romney for Sarah Palin as Veep.

The Obama campaign has offered to drop the issue if Romney releases just 5 years of tax docs. Still, the Romney camp has refused.

All of these minor sleights and unanswered accusations have led to a cottage industry of imagining what secrets might be hidden in these tax records. We do not know, but we can use some deductive reasoning to come up with some reasonable theories as to why Romney won’t share with voters what he showed the McCain camp (or perhaps, what took place post-McCain).

Here are our 5 top contenders:

1) 0% Tax Rates: The released tax documents show a very low tax rate, and Romney has said he never paid less than a 13% rate over the past 10 years. However, its not inconceivable that through a combination of aggressive tax planning, use of Trusts, earned income carry forwards and use of tax havens like Switzerland, Lichtenstein, Cayman Islands and Bermuda, Romney may have paid no taxes whatsoever in 2009 and years prior. His advisors may have correctly surmised this would be fatal to his Presidential aspirations.

Since I began composing this post, the Romney campaign has released a letter from his accountants to the effect that, over the period reviewed, the Romneys’ lowest tax rate was 13.66 percent (though there was a bit of numerical gymnastics to make that true in 2011). Note that Romney’s letter from PricewaterhouseCoopers discusses “adjusted gross income” — not total income; this subtle difference has already been debunked.

Not surprisingly in the post-Enron, post-WorldCom world, the word of an accountant ain’t worth the pixels used to write it. And, if it’s true, why not just get them out there and be done with with?

Well, maybe it’s:

2) Voter Fraud: The Guardian and others came up with an even simpler theory: That Romney has voted in a state in which he was not technically a resident (i.e. voting in Massachusetts when he was actually a resident of California).

I first saw this in Forbes, which mentioned that “Romney appears to have escaped relatively unsinged from the apparently unrelated revelation that he may have committed voter fraud in January 2010, when – despite not owning a house in Massachusetts and having given every appearance of having moved to California…”

3) Broken Tax Laws: Personally, I assign this a very low to moderate probability. However, without releasing his returns, Romney leaves himself open to speculation that he may perhaps have crossed a line and submitted returns that are somehow numerically fraudulent and/or otherwise illegal (separate and apart from the aforementioned address issue).

BR has raised the issue of Romney’s IRA. William Cohan at Bloomberg has also wondered how he was able to legally amass $102 million in his individual retirement account — tax free! — during the 15 years he was at Bain Capital, despite contribution limits that would seem to make that all but impossible. What sort of rate of return is that, anyway?

Regarding the IRA contributions, Victor Fleischer, Professor of Law at University of Colorado is rather blunt: “Bottom line: Mitt Romney has not paid all the taxes required under law.”

Beyond that, it’s possible he is:

4) Much Wealthier Than Previously Reported: Romney’s wealth has been guesstimated at around $250 million. Returns from which we might infer that his wealth is significantly greater – not that $250 million isn’t a huge number – might be somewhat off-putting to the electorate, particularly in light of Romney’s recent well-publicized 47% gaffe (which actually was not a gaffe at all, but a core belief among some conservatives).

And, finally, a theory I have not seen advanced elsewhere that seems to me as plausible (maybe more so) as any other. I can’t take credit for this idea, but it certainly seems viable:

5) Did Romney Make a “Bet Against America”?: Some facts in support of this theory:

Romney suspended his presidential campaign on February 7, 2008. At that time, the Case-Shiller Comp 20 (NSA) stood at ~175 on its way to ~139 in the spring of 2009. The S&P500 stood in the low-to-mid 1300s, off the fall 2007 high, on its way to the infamous March 2009 666 low.

In 2011, we learned that:

Hedge fund billionaire John Paulson is upping the ante on his already huge bet on Mitt Romney, opening his palatial Southampton home for a late August fundraiser. […] A big bundler for Romney’s campaign, Paulson—who made billions betting on the decline of the housing bubble –

And, earlier this year, there was this:

The Republican candidate has accepted donations from controversial hedge-fund billionaire John Paulson, but Thursday night he made their association more explicit by allowing Paulson to host a fundraiser, Ben Jacobs reports.

Paulson’s housing market short, of course, is now widely considered one of the greatest trades of all-time. Now, I do not know the depth of the relationship between Romney and Paulson. And, importantly, I don’t know when it began. The Romney campaign could, of course, answer those questions – assuming, that is, they ever get asked.

But the question needs to be asked: Do Mitt Romney’s unreleased tax returns – in particular for 2008 & 2009 – contain evidence that he “bet against America” via participation in John Paulson’s wildly successful housing market short and/or, more generally, by being short equity markets during the decline? Of course, such behavior is hardly illegal. But I doubt his personal enrichment during that period (particularly via a housing market short) would play well with the tens of millions of Americans who were simultaneously being financially devastated. If this is the case, it could explain a lot. For example, Romney could not release, say, 2000 – 2007, withhold 2008 and 2009, and have 2010 and 2011 already in the public domain. That’s clearly a non-starter which would only focus the country on those two years and what might be contained in those two returns. The only alternative – which appears to be the way his campaign is playing it – is to declare everything prior to 2010 off-limits. Further, when McCain saw Romney’s returns and declared their contents benign, his (McCain’s) campaign would obviously not have seen the 2008 and 2009 returns, as they’d not yet been prepared or filed. Profiting handsomely from a housing/stock market short could easily be turned into an anti-Romney sound bite that would only add to the narrative of the candidate as a ruthless über-capitalist concerned only for himself while the 47 percent moocher class struggles.

The bottom line is that there’s something in Mr. Romney’s tax returns that he doesn’t want made public. Having bet against America would be at the top of my list – far more devastating, in my opinion, than simply having paid an absurdly low rate.

h/t You Know Who You Are

@TBPInvictus

Adding: I’d be remiss not to acknowledge the comments raising the possibility that Romney participated in the 2009 Swiss Bank Account Amnesty program. Yet another possibility – #6.