Romney Legally Avoids Taxes With Huge Family Trust

PHOTO: Republican presidential candidate, former Massachusetts Gov. Mitt Romney gestures during a fundraising event at the Union League, Friday, Sept. 28, 2012, in Philadelphia.
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Republican presidential candidate Mitt Romney has gradually moved $100 million into a family trust, which has allowed him to avoid paying estate taxes. According to Bloomberg News, the trust does not technically qualify as an inheritance, meaning he has been able to legally avoid paying estate and gift taxes, which ran as high as 55 percent in the 1990s.

Romney also has investments abroad, including in the Cayman Islands, and a Swiss bank account. He paid a 14 percent tax rate in 2010.

Bloomberg reports the trust was set up for Romney's children and grandchildren, and the money in the trust does not count toward his $250 million net worth.

Bloomberg's Jesse Drucker wrote that, "In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc. If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: 'I Dig It.'"

The Obama administration has estimated that closing the loophole would bring the government almost $1 billion in the next decade, an estimate that Stephen Breitstone, co-head of the taxation and wealth preservation group at law firm Meltzer, Lippe, Goldstein and Breitstone LLP, told Bloomberg is laughably low.

While the trust is legal, the timing is somewhat unfortunate for Romney. Democrats have been criticizing the candidate for a recently released video of him saying nearly half the country pays no income taxes and is "dependent upon government."

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