Romney punts on carried interest (again)March 7, 2012: 11:31 AM ET
As a private equity investor, Mitt Romney earned millions in additional income through the tax treatment of carried interest as capital gains rather than as ordinary income. As a presidential candidate in 2007, Romney said that he believed that carried interest should continue to be treated as a capital gains. As a presidential candidate in 2012, however, Romney tap-dances around the issue of carried interest as if it's a nuclear land-mine.
The latest example came this morning, when Romney was a guest on CNBC's Squawk Box program. When asked about carried interest, Romney replied with an awkward non-answer:
"I think you have to look at each dimension of our income streams and ask is this a true capital gain or is it ordinary income. And you look to either the Courts or the IRS to look at the various structures of investment vehicles and say 'gosh is this a true capital investment with the risk of loss or is it instead ordinary income with no particular risk of loss. If it's ordinary income you should treat it as ordinary income, if it's capital gain you should treat it as capital gain. I don't believe that it's Congress' job or an Administration's job to go through and say 'hey these people are making to much money let's change their tax rate to make them less able to be financially successful.' I think you do however, need to apply the code in a consistent way across across the board. And that's probably something we should take a close look at to see if we're treating capital gains as capital gains or are we treating, in some cases, carried interest as capital gains when it's more like ordinary income."
Can you find a policy position in there? Me neither. Part of the problem may have been that Kernan asked his question in an indirect, ham-handed manner -- particularly when compared to how Andrew Ross Sorkin asked the same question of Marc Andreessen last week -- but Romney certainly had the chance to take a stand on the issue.
This comes two months after Romney staffers dodged my question about carried interest, during a media call about Romney's tax returns.
In fact, there are some parallels between Romney's tax return kerfuffle and his refusal to deal directly with the carried interest question.
If you'll recall, Romney seemed completely unprepared to answer a debate question about when he'd release his returns, even though: (1) The issue had been dominating the campaign that week, and (2) All modern presidential candidates, sooner or later, release their tax returns -- particularly if they become their party's nominee. It was as if the teacher had handed out the questions to tomorrow's test, and Romney didn't bother to look at them.
In the case of carried interest, Romney must know that he'll have to take a position before November. The Obama campaign is going to make private equity a major part of its anti-Romney narrative, and carried interest tax is one of the few relevant policy debates it can have on the subject (Obama reiterated his support for treating carried interest as ordinary income in his recent corporate tax reform proposal). So what's the point of delaying the inevitable? Like with the tax return situation, it just seems that Romney is causing himself an unnecessary headache.
Below is the entire CNBC interview with Romney: