25 Sep 2012

Romney’s tax return reveals China investment

The Republican presidential candidate’s 2011 tax return shows that his trust invested in Cnooc, a Chinese national oil company with multi-billion dollar links to Iran.

The investments made by Mitt Romney through a blind trust were picked up by the Obama campaign, which accused the Republican candidate of hypocrisy for claiming he would crack down on China “cheaters”.

The revelation follows a change in Romney’s campaign strategy at the beginning of the week to focus on the idea that China is stealing American jobs. An advert was released by the Romney campaign accusing Obama of failing American workers by allowing China to increase its manufacturing sector.

But his tax return shows that Romney’s blind trust invested shares in Cnooc, (China National Offshore Oil Company) and in hedge funds.

“The guy who goes around America saying he’s going to bash China invested in a Chinese state oil company, and who says let’s believe in America put his money in a fund that hedges against American Treasuries,” David Axelrod, Barack Obama campaign strategist told ABC.

The investment may also be problematic for Romney because of Cnooc’s links with Iran. The first investment by Mr Romney’s trust in Cnooc Limited, in October 2009, was made about seven months after the group’s state-owned parent company was reported to have signed a deal with Iran to develop the huge North Pars gasfield for an LNG export project, according to the Financial Times.

In the US, the deal was seen as part of a worrying effort by China to secure energy interests. In addition, Beijing reportedly gave Cnooc permission to sign a deal with Tehran immediately after the US agreed to sell arms to Taiwan.

In response to the accusations, Mr Romney’s campaign has repeated that he had no control over the decisions made by the blind trust that held the investments.

Romney’s tax rate revealed

Barack Obama‘s campaign also drew attention to the fact that Romney stands to profit from his former company Bain Capital’s investment in Uniview Technologies and that he invested in the online-video company, Youku, which it claims is known for pirating US content.

One of the wealthiest Americans to ever seek the White House, Romney has an estimated net worth between $190m and $250m, and the Obama campaign has sought to discredit him over his mass of global share holdings and the tax paid.

Mr Romney made his 2011 tax return public last Friday, but stood firm on refusing to release his returns over the last 20 years. His 2011 tax return showed he paid $1.9m in taxes on more than $13m in income – an effective tax rate of 14.1 per cent.

Romney pays a lower rate of tax than most American wage-earners pay because most of his income coes from investment profits, dividends and interest. Those earnings are taxed at a lower rate than wages, which are taxed at a top rate of 35 per cent.

President Barack Obama, Romney’s foe in the 6 November election, paid a rate of 20.5 per cent in 2011, and Romney’s vice-presidential running mate Paul Ryan paid an effective rate of 20 per cent last year.