EDMUND BURKEGlenn Kessler, the Washington Post fact checker, awarded Harry Reid four Pinocchios – the worst possible credibility rating – for claiming that Mitt Romney did not pay taxes for ten years. That award would have been justified if it were based exclusively on the fact that Reid’s claim is based on an anonymous source and is therefore unsubstantiated. Moreover, even in the rough-and-tumble of politics, serious charges based on anonymous sources are unfair.
But that was not Kessler’s reasoning. Kessler attempted to evaluate – based on the tax information that Romney has released, that is, his 2010 tax return and his 2011 estimated tax return – how likely it is that Romney paid no federal income taxes at all in prior years. Kessler writes:
In other words, this tax return shows a portfolio that is not structured to yield zero taxes. We spoke to a number of tax experts, all of whom said that, given Romney’s current portfolio, it was highly improbable for Romney to have had 10 years with tax-free returns — though there could have been one or two years with little or no taxes.
That reasoning is flawed. It is based on the assumption that Romney’s 2010 and 2011 tax returns are representative of his earlier returns, at least in terms of the structure of Romney’s holdings, if not on the balance of income and losses.
But if that’s the case, then Romney would have released more tax returns. He is paying a considerable political price for refusing to do so. If his last two years are representative of earlier years – with the possible exception that there may be a year or two of exceptionally low taxes – then the sensible thing would be to release earlier returns, even many years of returns to demonstrate that a couple of years of zero or close to zero taxes were out of the ordinary.
The logical assumption is not that Romney’s 2010 and 2011 tax returns are representative of earlier years; it is precisely the reverse, namely, that earlier returns are markedly different in a way that makes them much more politically harmful.
Kessler had a number of experts review Romney’s two returns to assess how likely it was he paid no taxes for ten years. One said that “given the portfolio in 2010” that was unlikely. This expert also said: “It is improbable that a man of his wealth would have paid no taxes for 10 years.” Those are two different things. The correct question is not whether – using same structure and devices that Romney employed in 2010 – he is likely to have paid no taxes for ten years; it is whether he could have structured his holdings in some fashion that would have allowed him to have paid no, or extremely low, taxes for a considerable period of time. It is not clear whether Kessler’s expert was answering that question.