In an election year certain to be defined by the growing gap between the wealthy and everyone else, Mitt Romney’s time at Bain Capital—during which he bought and restructured companies for a profit—is a liability. The Romney campaign knows this and has been aggressive in trying to turn Bain into a strength for Romney. In his stump speeches and debate performances, Romney has made Bain the centerpiece of his economic message, and when attacked on his former career, he presents it as a net positive. To wit, here’s how the Romney campaign responded after Newt Gingrich accused him of destroying American jobs:
Mitt Romney comes from the private sector, where the economy is built by hard work and entrepreneurial drive. It’s clear that after 30 years as a Washington insider, Newt Gingrich has no clue how the real world economy works. After 25 years in business, Mitt Romney understands how jobs come and go, and what we need to do to get our economy back on track.
With the The New York Times’s recent revelation that Romney has been collecting income from Bain since leaving in 1999, it might be more difficult for the former Massachusetts governor to play this game. As The Times describes, Romney “negotiated a retirement agreement with his former partners that has paid him a share of Bain’s profits ever since, bringing the Romney family millions of dollars in income each year and bolstering the fortune that has helped finance Mr. Romney’s political aspirations.” What’s more, this income is exempted from the normal marginal tax rates. The Times explains:
[S]ince Mr. Romney’s payouts from Bain have come partly from the firm’s share of profits on its customers’ investments, that income probably qualifies for the 15 percent tax rate reserved for capital gains, rather than the 35 percent that wealthy taxpayers pay on ordinary income. […]
“These are options that are not available to the ordinary taxpayer,” said Victor Fleischer, a law professor at the University of Colorado who studies financial firms. “You continue to take your carried interest—a return on labor, not capital invested—and you’re paying 15 percent on it instead of high marginal income rates.”
In other words, at the same time that he is trying to portray himslf as a champion of the middle class, Romney is collecting large amounts of investment income, paying a low tax rate, and pushing for new policies that would yield him—and others with his wealth—lower taxes and greater income.
By itself, Romney’s time with Bain isn’t enough to sink his standing with a general electorate. But when attached to the revelation that he has continued to profit from layoffs and corporate restructuring, it becomes a potent attack on a candidate who—in appearance and substance—represents the interests of the one percent.