April 15th, the day almost everybody loves to hate in America, came and went this year without any mention by Ohio media about whether Ohio Gov. John R. Kasich or his Democratic challenger Ed FitzGerald had filed their 2012 individual tax returns.
Kasich quiet on tax filing
Back in April, when Kasich press secretary Rob Nichols was asked by CGE if there was any announcement by the state's executive branch leader that he had filed his 2012 federal tax return, the response was curious.
"What kind of tax mssgs? I don't understand," Nichols wrote via email on April 17. Helping Nichols understand the question better, CGE wrote back, "Obama and other politicos release their returns, then reporters report on them."
"The governor, his cabinet and the senior members of his administration are required by Ohio law to disclose information on their personal finances every year, and those reports are available to the public at the [Ohio] Ethics Commission. If the law is changed to require more or different disclosure they'll comply with that as well," Nichols replied.
On April 18, in a discussion with Gov. Kasich himself in the Statehouse Rotunda, CGE asked him directly if he had filed his 2012 taxes. "I always file an extension," he said in the presence of Columbus Dispatch reporter Joe Hallett, an ear witness to the conversation.
According to the Internal Revenue Service, "If you are not able to file your federal individual income tax return by the due date, you may be able to get an automatic 6-month extension of time to file. To do so, you must file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return by the due date for filing your calendar year return (usually April 15) or fiscal year return."
If Gov. Kasich used the full six months allowed to file an extension for his 2012 individual federal tax return, he would have until October to do so.
CGE asked Nichols to explain why the governor said he always files an extension? Nichols declined to respond with anything more than what he provided in his official statement regarding what state law prescribes for financial disclosure information collected and housed by the Ohio Ethics Commission.
FitzGerald to reveal tax returns in time
When CGE asked the same question of Kasich's all-but nominated Democratic challenger, Ed FitzGerald, the answer was short but it came quickly. "Yes, Ed has filed his 2012 taxes," FitzGerald's spokesman Meredith Tucker replied via email.
On a conference call with reporters, FitzGerald said tax return disclosure will come, but at a later date. "I have no problem releasing my returns whatsoever. We just haven’t set a timeline. I will be a completely open book when it comes to any of my financial matters, and my wife’s for that matter and any trusts or anything. Although I can tell you my investment portfolio is not going to be in the same league as Gov. Kasich’s with his Wall Street background."
Taxes and tax returns played a role in last year's presidential contest between President Barack Obama and his Republican challenger, Mitt Romney. Romney, son of George Romney, the millionaire president of American Motors who later was elected Governor of Michigan, was hounded by calls for him to release his tax returns.
Is Kasich Romney?
The Romneys told media in stern terms that releasing their tax returns, as Romney's father had done when he mounted a short-lived campaign for president in 1968, would only give Democrats more ammunition to fire back at them. Ann Romney made it clear they would not release any tax returns other than the one year they did release. That single tax return showed Romney had earned over $20 million that year.
Later on the campaign trail, one reporter asked Romney was he thought his federal tax rate was, to which he answered about 14 percent, a rate about half the rate applied to common wages earned. Because most of Romney's income came from tax treatments favorable to him, including accounts with Swiss banks and in the Cayman Islands, the capital gains tax allowed the private equity maven and former one-term Governor of Massachusetts to pay such a low rate on so much income.
During his successful 2010 campaign, a report in the Dayton Daily News noted that citizen Kasich took the unprecedented step of only permitting reporters to see, but not photocopy, a summary of his 2008 income tax return and portions of the actual return. Kasich and Romney have shrouded their returns in secrecy.
"John Kasich fully released his own tax returns when it suited him during his first race for Congress, but hypocritically refused disclosure in 2010 when those same returns may have shown he profited off the demise of Lehman Brothers," wrote Ohio Democratic Party Chairman Chris Redfern at the time. "We know Mitt Romney’s a hypocrite, too, since he gave John McCain’s campaign 23 years’ worth of returns when he auditioned to be his running mate in 2008, but now can’t seem to find more than one year’s return."
In the 2010 contest between then-Gov. Ted Strickland and John Kasich, Democrats tried to frame Kasich as a water boy for Wall Street bankers, and because Kasich openly declared himself a "Wall Street banker," the effort was based in fact but failed to gain any traction outside of Democratic circles. John Kasich won, but by only two percentage points or about 77,000 votes statewide, which means he became governor with only 23.5 percent of registered voters voting for him.
Gov. Strickland released 10 years of federal returns.
No assets no experience?
As Republicans and Democrats gear up for an expected bruising campaign next year, GOP operatives at the Ohio Republican Party are trying to turn the tables on FitzGerald and Democrats. The new attack by Matt Borges at the ORP is to say that Ohioans voted for John Kasich because they wanted someone with business experience who had accumulated investments. Their slam on FitzGerald is that the former FBI special agent and Mayor Lakewood has little in investments or savings to brag about.
"Ohio voters wanted a governor with real-world private sector experience, and the Democrats are attacking him with a candidate who has no investments and no experience creating jobs," Chris Schrimpf, ORP's new spokesman, recently told the Associated Press. Running in the background of this story is the long list of actions by Gov. Kasich that have been prone to secrecy instead of transparency.
FitzGerald alleges that Gov. Kasich and people he's appointed to his pet non-profit development agency JobsOhio have engaged in conflict of interest actions that are prohibited by Ohio law. Team Kasich has argued the governor has no influence on JobsOhio or its board members, even though the operation was his idea and that he's the appointing authority to a majority of its board members.
Explaining why Kasich isn't party to conflict of interest charges, Nichols told CGE via email, "Decisions about which companies are awarded incentives are not made by the board members of JobsOhio. In fact, those decisions are not even made by JobsOhio. They are made by a completely separate state entity – the state Tax Credit Authority – which is separate by design to provide oversight and serve as a check on JobsOhio’s recommendations. The fact that he doesn’t know this shows he is nowhere near ready for primetime."
So what's the big deal with making his individual tax returns public? Based on information filed on his 2013 Financial Disclosure Statement with the OEC, Gov. Kasich listed the following sources of income:
State of Ohio, Salary, income tax refund
Delaware County Bank, Savings, checking and CD interest
Wesbanco Bank, Inc., Time Deposits
Northwestern Mutual Investment Services (in the name of John Kasich Family Trust), Investments
The Resilience Fund II, Investments
Goldfarb & Associates, Book Author (donated to charity)
City of Columbus, Income Tax Refund
Worthington Industries Inc., Final deferred comp payout
Alliance Bernstein Holding LP (Investment within Northwestern Mutual, but K-1 issued), Investments
Northwestern Mutual Investment Services - taxable income from 2010 IRA conversion, Roth IRA conversion (last year)
Not listed as sources of income are Gov. Kasich's state employee retirement fund—he served four years in the Ohio Senate—or his congressional retirement fund—he served 18 years in Congress.
In answer to question 8 on the FDS—Investments over $1,000—Gov.Kasich, who following a short-lived run for President of the United States in 2000, listed 44 sources.
In contrast, after one Northeast Ohio Media Group reviewed Gov. Kasich's 2014 challenger Ed FitzGerald's personal financial disclosure forms for 2012, they found the Cuyahoga County Executive had listed no investment worth more than $1,000.
On question nine on the FDA form—Fiduciary Responsibilities—Gov. Kasich listed nine items labeled "TTEE for Elizabeth Johanna Kyah Krenzke Rechel College Trust."
Do crowds matter?
Gov. Kasich listed on his 2013 OEC FDS that he or his spouse and his two teenage daughters were owners of CrowdsMatter.com, LLC. When Nichols was asked to explain this business filing, he declined to respond. A check of business records at the Ohio Secretary of State's office, the state's chief record keeper, found little information other than it is "active" and its agent, CWS Agency Corporation [Chester, Wilcox & Saxbe, an influential law and lobbying firm] located in Columbus, Ohio, filed papers on November 2, 2007.
Gov. Kasich, as he did in 2010, is expected to keep his tax returns secret. FitzGerald, on the other hand, said he will, at the appropriate time, release his tax returns but he would like Kasich to do the same and would seek that as the campaign moves forward.
But Gov. Kasich wasn't always so secretive about his tax returns. In his first bid for Congress in 1982 against incumbent Columbus Democrat Bob Shamansky, then State Senator Kasich made tax returns a campaign issue and released his tax returns. He asked Shamansky, a wealthy real estate developer, to do the same. After five months, Shamansky released his returns.
ODP's Redfern took on Kasich and his hidden wealth. "When it comes to hiding tax returns and financial details, like information about offshore bank accounts, John Kasich and Mitt Romney are two peas in a pod. By bucking decades of precedent and refusing to publicly release his tax returns during the 2010 governor race, Kasich managed to hide how he may have financially benefited from the economic collapse while working on Wall Street."
Gov. Kasich prides himself as a reform, a leader who enjoys breaking with tradition. But sometimes breaking with tradition means concealing what previous political candidates have done in Ohio. It was reported in 2010 that Gov. Kasich became only the second gubernatorial candidate in Ohio in nearly the past 30 years to refuse to release his tax returns. Mitt Romney, it turns out, was in sync with Kasich when he became the first nominee since Ronald Reagan ran for president more than 30 years ago to release only one full year of tax returns.
In the year preceding his win over Strickland, Kasich considered releasing one year of tax returns to refute speculation that he profited from the shuttering of Lehman Brothers, an Ohio newspaper reported. The Columbus Dispatch reported at the time that Kasich may have made up to $4 million at Lehman Brothers. "Although Kasich refused to discuss his compensation, his campaign indicated that he was paid much less," the story said. Team Kasich said it would release records to show that Kasich received no bonus or "golden parachute" in the weeks before the firm failed. "I lost stock and options, just like all other Lehman Brothers employees," Kasich told The Dispatch on November 1, 2009.
Reports subsequently surfaced that John Kasich received $28,000 in "short stint" at Barclays—which purchased much of Lehman Brothers after the firm’s collapse—while 20,000 other Lehman employees lost their jobs.
It's been reported that the median household income in Ohio in 2008 was $47,988. The $432,000 bonus Kasich received from Lehman Brothers was over nine times that amount, according to published reports in April of 2010.
FitzGerald can use Kasich's campaign tactic in 1982 against his Democratic candidate then against the sitting governor now. Democrats will try again to paint Kasich, as they did Romney last year, as a pawn of and enabler for Wall Street. "By refusing to publicly release his tax returns, much like John Kasich refused in 2010, Mitt Romney is raising more questions every day about why he left his corporate buyout firm. Could Romney’s tax returns show there is more about his time at Bain that he wants to keep people in the dark about? Until Romney fully releases more years of his tax returns, we just won’t know whether he invested in offshore tax havens like Bermuda and the Cayman Islands to intentionally avoid his fair share of U.S. taxes," Redfern, ODP's chairman, said.
Look for similar rhetoric going forward to attack Kasich and an equally hostile barrage of accusations from Ohio Republicans that will attempt to undress FitzGerald as an amateur in the business world who doesn't move at the "speed of business," as Kasich has claimed he can from his first days on the campaign trail in 2009.
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