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Mitt Romney Avoided Major Tax Hit By Shifting Stock Of Offshoring Firm

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WASHINGTON -- Mitt Romney saved himself hundreds of thousands of dollars in taxes in 2010 by transferring stock in two companies from his personal account to a nonprofit entity he set up. The stock maneuver included $172,397 in shares of Sensata Technologies, a company now under fire for a high-profile effort to offshore central Illinois jobs to China.

Sensata produces sensors, switches and various mechanical controls. The Attleboro, Mass.-based company is owned by Bain Capital, the private equity firm Romney founded, and it already does most of its work in overseas plants. A remaining factory in Freeport, Ill., garnered national attention when remaining workers began pleading with Romney to exercise his influence over Bain Capital to save their jobs.

Romney had received the Sensata stock as part of a Bain payout; he listed no cost for it on his tax return. By transferring that stock to his nonprofit Tyler Charitable Foundation, he avoided roughly $25,000 in capital gains taxes he would have owed. He also shaved an additional $50,000 off his tax bill by deducting the charitable contribution from his income.

Workers laid off when the Freeport plant is shuttered will be entitled to far less than that in unemployment compensation. Freeport Mayor George Gaulrapp suggested that as long as Romney was giving that $172,397 in stock away, he could have given it back to the workers. "There's about a thousand dollars that could go to each of the workers here set to lose their jobs," he told The Huffington Post, noting the 170 people scheduled to lose their jobs in November when the plant finally closes.

Sensata employee Cheryl Randecker, who will be laid off under Bain's offshoring plan for the Freeport plant, criticized Romney in a video interview with HuffPost on Wednesday. "We continue as Americans to move our jobs overseas, thinking about the dollar ... instead of putting people first like this country was based on," Randecker said. "We actually just want Governor Romney to come and sit down and talk to us and explain why he continues to outsource jobs to the Chinese and other countries. And we need the jobs ... not the minimum-wage jobs, but the good-paying jobs that you can actually raise a family on."

Romney no longer runs Bain Capital, but his tax returns show he is a significant Sensata shareholder who stands to profit from any lower labor costs that result from offshoring. Bain declined to comment for this story.

In 2010, Romney also transferred about $1.3 million worth of stock in Domino's Pizza to his nonprofit, which shaved about $600,000 off his tax bill. He reported paying nothing for the pizza shares, having acquired them as part of Bain's takeover of the company.

"Governor Romney donates a substantial amount of money every year to charity. He receives the same charitable deduction for his private giving as does any other American," said Andrea Saul, a spokeswoman for Romney.

Romney's Tyler Charitable Foundation has assets of roughly $10 million, of which it is only required to spend 5 percent per year to maintain its tax-preferred status. According to the foundation's Internal Revenue Service filings, it has distributed on average 7.8 percent annually over the past few years. That figure would be much lower, however, if it weren't for a single $1.8 million donation made to the Church of Jesus Christ of Latter-day Saints in 2008. That year, the Mormon church was engaged in an all-hands-on-deck battle to pass a California ballot proposition banning same-sex marriage. (It passed, but a federal appeals court later ruled the ban unconstitutional.)

Rebecca Wilkins, an attorney with Citizens for Tax Justice, said such nonprofits are a convenient way for the wealthy to earn tax breaks today for donations that might not be doled out for years. "Wealthy taxpayers can front-load their deductions and get huge taxpayers subsidies," she said in an email. "For example, someone who wanted to give $1 million to his church every year could give $10 million to his private foundation and let the foundation give it to the church over the next decade or so. In the meantime, he gets the $10 million deduction in the current year -- saving millions of dollars in income taxes while keeping control of the money through the foundation's trustee."

Gaulrapp, the Freeport mayor, said that Bain brought Chinese workers to town last summer so that the American employees could train their successors. "It's pretty insulting," said Gaulrapp, a Democrat serving in the nonpartisan mayoral job. "It's like being asked to dig your own grave."

Sensata, which declined to comment for this story, has business centers and manufacturing sites in Belgium, Brazil, Bulgaria, China, the Dominican Republic, Japan, South Korea, Malaysia, Mexico, the Netherlands and the United States, according to the company website. It employs 11,400 people, with 38 percent of them in the "Americas."

The Tyler Charitable Foundation serves as a way station for Romney's donations. In 2010, the foundation gave to several groups benefiting the disadvantaged, but also made contributions to politically oriented efforts and to organizations supported by the Romneys, as Mother Jones has reported. Among the foundation's 2010 donations were $100,000 to the George W. Bush library, $5,000 to an abstinence-only program for inner-city youth, $10,000 to Harvard Business School and $10,000 to the U.S. equestrian team.

UPDATE: 8:40 p.m. -- This article was updated to include the comment of Rebecca Wilkins, an attorney with Citizens for Tax Justice.

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