Romney helped found his company, just like Gates started Microsoft and Jobs started Apple.

A percentage of the stock of a new company with less than a dozen employees and almost no income is worth considerably less than when it becomes a multi-million dollar public company. Companies back in the day often handed out stock instead of decent wages. I’ve dealt with this in my own business life. I’ve paid taxes on founder’s stock. It’s income.

Ronald Wayne, another founder at Apple, sold ten percent of that company for $800. It would be worth $22 billion today.

Is any of this sinking in?

If Mitt obeyed the law just like the rest of us, why did his IRA grow by a factor of 10,000%? Why doesn’t everyone who invests $60,000 over ten years end up with close to $100 million?

There simply is no way to spin this that doesn’t look bad for Mitt.

Or for the wealthy in general. It reinforces the belief that once you pass a certain threshold of wealth, you join the club and and gain a Midas touch, and from then on everything you touch automatically turns to gold, regardless of effort or merit. That the rich get richer simply because they’re already rich.

“I’m dying to know how he got all that cash into it when you are only supposed to be able to add $6000.00/year.”

The answer given in the article was that it is likely he invested stock at a very low price and it appreciated.

It’s not uncommon–I’ve done it myself (with a Roth), except the company founder’s stock I invested never appreciated. That’s part of the risk.

IRA income is not “hidden.” The IRS knows quite well where everyone’s IRA money is. Taxes on IRAs are deferred, not eliminated.

I don’t know why Romney went this route. In a few years, the law says he will have to start withdrawing a given percentage of the IRA money every year, and pay taxes on it at the ordinary (not capital gains) rate. I figure from online calculators that the annual tax hit will be something like $1.3 million, every year for almost 30 years.

A Roth IRA might have been a better deal. As I understand it (I’m no tax expert) you pay normal taxes on what you put into it, but any increase in value while it’s in the account is not taxed if you wait until retirement to take it out. A good deal for things like stock and real estate.