“Mitt Romney should be a billionaire,” Margaret Collins and Richard Rubin stated flatly last month in a detailed Bloomberg News examination of his wealth. Yet, when Boston Magazine listed the 50 wealthiest Bostonians in 2006, Romney, then the governor of Massachusetts, was not even on the list. His Bain partner, Steve Pagliuca, who joined the firm in 1989 (five years after Romney started it) was listed at No. 35, with a net worth of $410 million.
Romney’s net worth of $250 million is an estimate provided to the media by his campaign, and it is in line with the $254 million maximum value of his financial assets found in his June 1 presidential-candidate disclosure form. Yet this form is a masterpiece of obfuscation, in large part because it allows for absurdly wide ranges of value, with little specificity.
Mitt Romney's $250 million net worth is much smaller than that of the other big players in the private-equity and leveraged buyout business, as listed in the latest Forbes 400 list of the richest people in America.
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The form shows that Romney has about $31 million in cash and between $250,000 and $500,000 worth of gold, and that less than a quarter of his financial assets are related to Bain. The form excludes his homes in California, Massachusetts and New Hampshire. It also excludes the (perfectly legal) tax-avoiding trust he established in 1995 for his children and grandchildren that Bloomberg estimates contains $100 million. But it includes his 1996 charitable remainder trust (listed with a value of less than $50,000 in cash), four speaking fees totaling $190,000, and both his and his wife Ann’s blind trusts and individual retirement accounts.
Romney’s IRA, valued between $21 million and $102 million, must contain a portion of his profits — or “carried interest,” in private-equity speak — from myriad Bain deals. He put the carried interest in his IRA when it was valued at a nominal amount and then, through the financial alchemy of leveraged buyouts, watched its value soar.
It would be illuminating to know precisely how many millions Romney still has in Bain’s private-equity funds, in various Goldman Sachs hedge funds and in hedge funds managed by his son Tagg or his former partner David Dominik — rather than the amorphous “greater than $1 million” disclosure.
Well then, what does Romney’s 813-page2011 tax return — covering the Romneys’ individual income and their trusts and estates — reveal about his net worth? His $13.7 million in income last year derived entirely from sources other than wages or salary. Romney lists $3 million in interest income, two-thirds of which came from interest on his government bonds and one-third from other sources. Although the yield on Treasury securities is historically low — a seven-year Treasury yields a little more than 1 percent — let’s be generous and assume that this portfolio yields 2 percent. That would make the underlying nest egg $150 million.
He lists an additional $3.7 million in dividend income, most of which came from his trust funds. The average dividend yield on the S&P 500 index is 1.97 percent. Using that as a proxy, the size of the underlying portfolio that would yield annual dividends of $3.7 million would be $188 million.