Romney Senior could teach son a lesson
ONCE UPON a time a rich man named Romney ran for president. He could claim, with considerable justice, that his wealth was well-earned, that he had in fact done a lot to create good jobs for American workers. Nonetheless, the public understandably wanted to know how he had grown so rich and what he had done with his wealth; he obliged by releasing extensive information about his financial history.
But that was 44 years ago. And the contrast between George Romney and his son Mitt – a contrast both in their business careers and in their willingness to come clean about their financial affairs – dramatically illustrates how the US has changed.
Right now there’s a lot of buzz about an investigative report in the magazine Vanity Fair highlighting the “grey areas” in the younger Romney’s finances. More about that in a minute. First, however, let’s talk about what it meant to get rich in George Romney’s US, and how it compares with the situation today.
What did George Romney do for a living? The answer was straightforward: he ran an auto company, American Motors. And he ran it very well indeed. At a time when the Big Three were still fixated on big cars and ignoring the rising tide of imports, Romney shifted to a highly successful focus on compacts that restored the company’s fortunes, not to mention saving the jobs of many American workers.
It also made him personally rich. We know this because, during his run for president, he released not one, not two, but 12 years’ worth of tax returns, explaining that any one year might just be a fluke. From those returns we learn that in his best year, 1960, he made more than $660,000 – the equivalent, adjusted for inflation, of about $5 million (€4.1 million) today.
Those returns also reveal that he paid a lot of taxes – 36 per cent of his income in 1960, 37 per cent over the whole period. This was in part because, as one report at the time put it, he “seldom took advantage of loopholes to escape his tax obligations”. But it was also because taxes on the rich were much higher in the 1950s and 1960s than they are now. In fact, once you include the indirect effects of taxes on corporate profits, taxes on the very rich were about twice current levels.
Now fast-forward to Romney the Younger, who made even more money during his business career at Bain Capital. Unlike his father, however, Romney didn’t get rich by producing things people wanted to buy; he made his fortune through financial engineering that seems in many cases to have left workers worse off, and in some cases driven companies into bankruptcy.