Only Mitt Romney Can Reform the Tax Code

Mitt Romney's dance of the seven veils with his tax returns probably isn't helping his presidential quest. Yet whatever happens Nov. 6, the slow reveal may end up performing a valuable public service by exposing hidden nooks and crannies of the U.S. tax code and could even lend momentum to a future overhaul.

A Bloomberg News article by Jesse Drucker this morning offers a fascinating glimpse of one of the tax-avoidance strategies that are available to high-net-worth individuals such as Romney. Drucker obtained previously unreported securities filings showing that in January 1999, a generation-skipping “intentionally defective grantor trust” Romney had set up for his children and grandchildren reaped a 1,000 percent return on the sale of shares in the Internet advertising company DoubleClick Inc. Because the shares were placed in this type of trust -- known to initiates as an "I Dig It" -- Romney was able to avoid paying gift or estate taxes, both of which carried rates of up to 55 percent in the 1990s.