Calling BS on Reid’s Bain tax claims

August 1, 2012, 1:07 AM UTC

FORTUNE — Senator Harry Reid (D-NV) made political waves today by claiming that a Bain Capital investor told him that Mitt Romney didn’t pay any taxes for a 10-year period.

One of two things has happened: (1) Reid is simply making the whole thing up, in order to pressure Romney into releasing tax returns for years prior to 2010, or (2) Reid’s investor pal lied, and the Senator didn’t bother to conduct even a mild vetting before sharing the accusation with reporters. Either way, shame on gossipy gentleman from Nevada.

Let me make this crystal clear: Investors in private equity funds do not receive, nor are they entitled to request, personal tax returns for fund managers. Not just at Bain Capital, but everywhere. For example, ask the person managing your 401(k) for their personal tax returns. See how far you get.

What makes this particular claim even sillier, of course, is that Romney hasn’t even been managing Bain funds for the past 10 years (no matter when you believe he left the firm). He’s been a silent investor like Harvard and MIT. Think the guy managing private equity for Harvard can get the personal tax returns of the guy managing private equity for MIT? Yes, that’s another rhetorical question.

And just to close the circle, it also isn’t possible that Reid’s source was someone within Bain because partner tax returns are not prepared or reviewed in the firm’s offices. Instead, that’s done at PricewaterhouseCoopers. So no “maybe someone found it on a fax machine” theories. It’s also possible that someone else at Bain didn’t pay taxes for 10 years, but that wouldn’t necessarily mean that Romney did or didn’t (he does have other financial interests).

A Reid spokesman defended his boss to me on the phone, only saying that I’d have to talk to Reid’s original source. But of course he wouldn’t provide the source, or even ask Reid if there had been a follow-up like “How the hell would you know that?”

Whatever the truth about Romney’s tax history, we know that Reid’s “source” is full of it.

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