WASHINGTON -- Sensata Technologies is a healthy manufacturing company that employs nearly 200 workers at a factory in northern Illinois. The company has become the focus of national attention because it has been taken over by Bain Capital, which plans to shut the factory down, lay off the workers, and outsource the production to China before the end of the year.
The workers have pleaded with GOP presidential candidate Mitt Romney, the founder of Bain Capital, to exert his considerable influence to save their jobs. Romney still makes millions each year in income from Bain. So far, he has declined to weigh in, and the factory is scheduled to close by the end of the year.
While the workers and the town may suffer, Romney himself has done well as a result of Bain's work with the company. According to his recently released 2011 tax returns, Romney transferred $701,703 worth of Sensata stock to the Tyler Charitable Foundation, a 501(c)3 tax-exempt nonprofit controlled by Romney. The gift is listed on page 323 of the pdf, on form 8283 (below).
Moving the stock to his nonprofit brings Romney twin benefits. First, he gets to deduct the full value of the stock. At a 35 percent tax rate, that's nearly a $250,000 benefit. At 15 percent, it's just over $100,000.
Second, Romney is able to avoid paying capital gains taxes on the stock price increase. Romney's returns list no cost for the stock, and indicate he obtained them as part of a partnership interest in Bain. Avoiding capital gains taxes on the full increase would save an additional $100,000. In 2010, Romney gifted $170,000 worth of Sensata stock to his charity, saving $25,000 in capital gains taxes that year.
Cheryl Randecker, a Sensata worker facing an imminent layoff, said, "I could pay off my house with that [$25,000], and he doesn't need it anyway."
Randecker received her 60-day layoff notice shortly after Labor Day. She and other Sensata employees have tried in vain to pressure Romney and Bain to keep their jobs in the U.S., going so far as to create a "Bainport" encampment across the street from their plant in Freeport, Ill. Billed as the "home of the Romney economy," the site highlights what some Sensata workers describe as corporate greed squeezing the middle class.
As in many Midwestern towns, Freeport's jobs at Sensata are some of the few well-paying manufacturing jobs that remain in the area. Several Sensata workers have told HuffPost that they're worried that after the layoffs they'll end up in low-paying service-sector positions, if they manage to find jobs at all. Randecker, a 33-year Sensata veteran, said she fears having to start a new career at age 52. Barring something miraculous, she said she will lose her job the day before the presidential election.
"Knowing ... that he's going to profit single-handedly from us losing our jobs here in Freeport is very disturbing," Randecker, a single mother, said. On the subject of Romney's capital gains savings, Randecker continued, "It's very bothersome that he doesn’t pay his fair share of taxes. If he and the rest of the one percent did, we probably wouldn’t be in a deficit here ... The lower and middle class keep getting stepped on."
Rebecca Wilkins, an attorney with Citizens for Tax Justice, said that Romney's move is a prime example of the way that the super-wealthy are able to game the charitable deduction while still holding on to their money.
"During the last crazy weeks of each year, in the middle of the holiday and year-end rush, most of us sit down and write a few checks to our favorite charities. We want to support their work and we appreciate the related tax deduction," Wilkins said. "But higher-income taxpayers can use special arrangements, like charitable trusts and private foundations, to get big deductions now for amounts that won’t go to charities for many years to come -- often not until the taxpayer dies. They can also give gifts of property, like stock, that have gone up in value. They get a deduction for the full fair market value of the stock, but never have to pay the capital gains tax on the appreciation."
The Romney campaign did not immediately respond to a request for comment. But Andrea Saul, a campaign spokeswoman, previously told HuffPost that the candidate "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."
In the end, Romney didn't even need the extra tax benefit he got from transferring the Sensata stock. When Romney released his most recent returns, his trustee explained that he declined to take roughly $2 million in charitable deductions for contributions for which he was eligible. He declined the deductions so that his tax rate wouldn't dip below 13 percent -- a marker he had set earlier when he said that there was no year he'd paid a rate lower than that.
If Romney amends his tax return after the election, he will be eligible to recoup the difference.
Romney also transferred nearly $220,000 worth of stock in Dunkin Donuts, another Bain investment, according to his returns.Mitt Romney 2011 Tax Returns
CORRECTION: An earlier version of this story incorrectly located Freeport in central Illinois, instead of northern Illinois.