The substance of this claim goes to Romney’s years on the board of Marriott International. According to Bloomberg News, he joined the board of directors in 1993 and became head of the board’s Audit Committee, a position he held for six years. By this point, Romney had already established himself as a successful fund manager.
His second year on the board, Marriott took advantage of a tax reduction method that Daniel Shaviro, a tax professor at the New York University School of Law, described to us this way:
"You and I purport to give each other, say $70 million. (But these cash flows are themselves largely fictional - e.g., I ‘borrow’ from you the money that I am ‘paying’ you). I then deduct the $70 million that I paid you, and don't include the $70 million that you paid me. End of story."
[edit]
The Internal Revenue Service began cracking down in 2000. In 2008, the government estimated $6 billion in taxes had gone uncollected. A series of court decisions stated that the perpetrators were guilty of "subverting the legislative purpose of the tax code by engaging in transactions that are fictitious or lack economic reality simply to reap a tax benefit."
Citing court documents, Bloomberg reported that in 1994, an investment banker faxed a proposal to a senior tax attorney at Marriott. By creating new partnerships, the company could post a paper tax loss without doing itself any real financial harm. This was Son of Boss in action. Through it, Marriott reported $71 million in losses that the courts ultimately decided did not exist.
By the mid-2000s, Marriott was in court defending its use of this tax shelter. In 2008 it lost; the company appealed and lost again in 2009.
PolitiFact | Barack Obama links Mitt Romney to infamous tax shelter 'Son of Boss'
His second year on the board, Marriott took advantage of a tax reduction method that Daniel Shaviro, a tax professor at the New York University School of Law, described to us this way:
"You and I purport to give each other, say $70 million. (But these cash flows are themselves largely fictional - e.g., I ‘borrow’ from you the money that I am ‘paying’ you). I then deduct the $70 million that I paid you, and don't include the $70 million that you paid me. End of story."
[edit]
The Internal Revenue Service began cracking down in 2000. In 2008, the government estimated $6 billion in taxes had gone uncollected. A series of court decisions stated that the perpetrators were guilty of "subverting the legislative purpose of the tax code by engaging in transactions that are fictitious or lack economic reality simply to reap a tax benefit."
Citing court documents, Bloomberg reported that in 1994, an investment banker faxed a proposal to a senior tax attorney at Marriott. By creating new partnerships, the company could post a paper tax loss without doing itself any real financial harm. This was Son of Boss in action. Through it, Marriott reported $71 million in losses that the courts ultimately decided did not exist.
By the mid-2000s, Marriott was in court defending its use of this tax shelter. In 2008 it lost; the company appealed and lost again in 2009.
PolitiFact | Barack Obama links Mitt Romney to infamous tax shelter 'Son of Boss'
