Dan Shaviro (via TaxProf Blog) makes three points:
1) We know from the 2010 tax return, in which he had a net capital loss carryforward from 2009, that he zeroed out his net capital gains - including from carried interest Bain income - in 2009.So it is possible that Romney had a high income, but an even lower tax rate in 2009 than 2010--maybe even zero. The other possibility is that he got caught up in having an undeclared offshore account and took the IRS amnesty in 2009.
2) 2009 was the last year in which he received certain Bain payments as the playout of his "retroactive retirement."
3) It's been hard to understand what benefit he thought he was getting from the Swiss bank account, and there was an IRS amnesty program in 2009 for fraudulent nondisclosure of offshore income. If he had to come clean in 2009, this might be embarrassing, especially given that there was an iron fist inside the IRS leniency offer (i.e., if you held out, they might get you without any amnesty).
Matthew Yglesias also thinks the IRS amnesty program could be the answer:
Failing to apply for the amnesty and then getting charged by the IRS would have been both financially and politically disastrous. So amnesty it was. But even though the amnesty would eliminate any legal or financial liability for past acts, it would hardly eliminate political liabilityWouldn't it be great if we knew which Swiss bank Romney's money had been hidden in? As you may know, the IRS nailed Union Bank of Switzerland (UBS) for helping Americans commit tax evasion (the illegal kind, as opposed to legal tax avoidance). As a result, UBS coughed up the names of more than 4400 Americans (out of 52,000 originally sought by the IRS) who had accounts there. This was the backdrop to the IRS amnesty: for the first time, the U.S. had breached Swiss banking secrecy and Americans with Swiss bank accounts could no longer be sure that their secret was safe.
In fact, we do know which bank held $3 million of Ann Romney's blind trust. It was UBS.
How do we know? Brad Malt, the Romneys' trustee, said so. Not only that, when Romney released his 2010 tax return in January of this year, he had to amend two previously filed disclosure forms, for 2007 and 2011. In 2007, he had not specified that the UBS account was in Switzerland, not the U.S., according to ABC News (UBS has branches in the U.S.).
Let's review the bidding: Ambiguous disclosure in 2007. UBS income on 2010 tax return. Retroactive revision of 2007 disclosure. IRS amnesty for undisclosed foreign accounts in 2009 powered by UBS prosecution. Refusal to release 2009 tax return. Yes, 2009 could be a big problem.
Also, as Linda Beale points out, it would be great to see 1999-2002 to help sort out the Bain claims and counter-claims.
The entire tax return saga is emblematic of a much larger issue: How there is one set of rules for the 1%, and a different one for the rest of us. If the consequences of releasing his returns would be so much worse than the sustained onslaught Romney is already absorbing, I have to question whether Romney can even finish the race.