Friday, July 20, 2012
Following up on my previous post, Tobin: The Tax Treatment of Ann Romney's Dressage Horse Activity: Forbes: Both Left and Right Got the Taxes on the Romneys' Olympic Horse Wrong, by Janey Novack:
If Mitt Romney caves and releases more years of his tax returns, expect mass tax confusion. Oh sure, Americans will get (and Democrats will flog) the main point: thanks to the low 15% tax rate on long term capital gains and carried interest and to his expensive tax advisers, Romney pays a lower effective tax rate than many TurboTax users do. (During 2010, the one year he has released, his federal income tax tab came to just 13.7% of his adjusted gross income.)
So why confusion? Because the tax code is filled with arcane provisions and rich folks’ exploiting those breaks generally aim to tell the Internal Revenue Service the minimum required. Consider just one tiny onshore item on Williard M. & Ann D. Romney’s 203-page joint 1040 for 2010. That item is a $77,731 loss from Rob Rom Enterprises LLC, which owns Rafalca, the horse that equestrian Jan Ebeling will ride for the U.S. in the “dressage” competition in the London Olympics. Dressage, as The New York Times deliciously put it, is a sport in which “horses costing up to seven figures execute pirouettes and other dancelike moves for riders wearing tails and top hats.” Ann Romney took up dressage after being diagnosed with multiple sclerosis, has used Ebeling as her trainer for a decade and owns Rob Rom in partnership with Mr. Ebeling’s wife and another Romney family friend.
(Hat Tip: Greg McNeal.)