monster. we killed a lot of trees today, and did it reveal anything? and the re-election campaign of president obama starts tonight. we are counting down to the state of the union. >> the death toll continues the climb off of the cruise ship crash off of the coast of italy. we have video of the search and rescue of the divers. let's go there tonight, "outfront." well, good evening, everyone, i'm erin burnett and out front crunching the numbers in mitt romney's tax returns. here they are. we have flags in here, because i will admit that as we said, i'm not sure that anybody has read all 500 pages here, but this is two years' worth of mitt romney's tax returns released todayment the romney camp yeeling to the pressure on the campaign trail. here is the breakdown. the presidential candidate earned 42.7 million in the last two years. he paid 6.2 million in taxes. and an effective rate of just under 14%. now the reasons that romney made his money, pretty much all of it from investments which are taxed at 15%, but there is so much more in these 500 pages which is b by the way, we should note is longer that on the book that romney wrote at 416. we went through it all along with the "outfront" strike team which we set up yesterday for this purpose, because we did seriously want to go through this. an elite group of former tax experts, irs attorneys and professors and you see them here and they all responded to the specific questions. they say that mitt's tax return is typical for the politician with his income. i didn't know that there were politicianings with that income, but here is the point. first, there are some red flags, and the first is carried interest. we sounded the alarm and predicted that when we would see it we would see massive carried interest. what's carried interest? that is when you invest other people's money and get a cut of the profit and pay the 15% capital gains rate. check out the blog to see how it works. carried interest is how mitt romney made $12.9 million in two yea years. he paid $1.9 million in taxes. had it been taxed at 35%, the regular income level he would have owed double, $4.5 million and again, he paid the legal rate. another point for the strike tax team, his off shore accounts. these are the funds in cayman island, and bermuda and a swiss account he closed in 2010. shady or not, tax expert dan shapiro says i was surprised that he has so many off shore accounts that produce so many little taxable income, and why bother with these. and there seems to be something else to it, because that is an obviously question out there. and the third point was blind trusts. a lot of mitt romney's trusts are in these trusts. so it means that somebody else, other than romney makes decision of where to invest the money, and that allows the politicians to avoid conflicts of interests. there are no tax liabilities there, but when romney was running against ted kennedy, he had this to say about blind trusts. >> the blind trust is a ainge-old ruse to tell the blind trust what it can and cannot do and you give it rules. >> yeah, all right. that might be a problem. but now the tax strike team says that from their analysis romney has paid every tax dollar he has owed a and this is the bottom line. steven moore and john avalon, a cnn contribute to, and yeah? >> the blind trust issue is a big problem after what he said, no question. but you look at the 500-page document and what screams out from this, erin, is can we please have tax reform, and simplicity in the tax system, and by the way, this 500 page, and the one thing as an addendum to what you said, don't forget the companies that mitt romney owns, because you are right, he gets most of the income from the investments of companies and those companies pay taxes, and their tax forms are four-feet high, and don't forget they pay a 35% rate. that is what i object to in this discussion is that we leave out the fact that those companies paid a tax on the profit before mitt romney or warren buffett got a pepny of the nny of the m >> and john avalon, one thing i wanted to highlight with you, $7 million in charity in the past two years for mitt and ann romney is 16% of the income, and comparison of someone like joe biden gave 1%, and not compa comparison of what is to give, but by all accounts, they were generous. >> that is an important point the make, this is an extraordinarily generous family. and everything they did is perfectly legal. but politics is perception, and the problem that romney runs into whether it is now or nomination in the general is that this kind of return could make him a symbol and not the growing gap between the rich and the poor, but the growing gap of the super rich and the working wealthy. it is not socialistic to talk about the growing gap, because it has people frustrated in the economic periods, but the constructive response is exactly as steven said, we should have a constructive debate about the tax reform and simplificatiosim and a closer fairer system, and close loopholes like carried interests, and the only people who have carried interests are people who benefit from carried interests. >> and i'm for the lowest tax rates possible as we know, but it is hard to justify that lower rate for carried interests because as you said, you are not gambling with your own money, but someone else's money. >> that has to be the frustration for someone like you that, you know, he didn't do anything wrong, but as a principle when we talk about the tax policy from america, people are benefiting from that and all who are benefiting from that is incredibly wealthy and gives a bad name to shn if you are trying to make a argument for the dividends to have a lower rate, it gives the concept a bad name. >> the only political way out for mitt romney if he is the republican candidate, and who knows at this point, but if he wins, look, barack obama tonight is going to talk about the buffett rule, and this idea that every rich people should have to pay at least a higher rate than the middle income people, and they probably already do, but the only the way out for mitt romney is to say, blow up the tax system and have a flat tax and you worked on that when you were with rudy giuliani, and there is a real pop liulist for that. >> and he could say i want to prevent this from happening and john, as an argument, look i paid more in charity in the last two years than i did in taxes. >> but to argue against the self-interests. and this is a fascinating nixon and china moment to say, i have benefitted from it, but given the deficits and the debts as a nation, it does not make sense and that is the way to pivot on it politically, because the broader issue is that we are not talking about the democrats may paint him as mr. 1%, but it is mr. 0.1%, and bloomberg said that the 1% is $380,000 aer yooshgs but he makes that a week off of this passive income. so he has to take the offense to take the attention off of that. >> the one thing that disturbs me, erin, about the whole conversaticon v v versation of bain capital is the idea that someone who makes a lot of money is dedemonizing we creation. and there are thousands of americans who benefitted from the activities and if i were mitt romney i would have said i paid $30 million in taxes over the last ten years and that is a big tax bill on top of the fact that he gave at least that amount of money in charitable contributions. >> put up the screen, because it makes the point of the carried interest broadly, and newt gingrich and barack obama are wealthy guys as well, but you can look at the effective rates. barack obama with $1.7 million, and he got book royal i the, but newt gingrich with 31.6% and mitt romney 13.9%, and it is the perception. >> it is a flatter and fairer tax system which requires closing the loopholes, and we look at the impassioned debates of the bush tax rates sunnetting and for households with a $250,000 combined income and then you is this example of millions and millions of dollars of passive income taxed at 14% that rightly strikes people as unfair and frustrating. the result is not a demagogue to deal with it, but play offense with real proposals to create the flatter and fairer tax. >> spersing to be aggressive, because he has a plan out there if you make under $200,000 as a couple, i will tax you zero helping retirees and anything over that 15%. barack obama has the lowest rate with coming in around 20%, but he could go a lot further to be more progressive. >> for someone whos ha worked for tax reform for 20 years, because i think that the tax system is an albatross around the neck of the economy and we can do more from a competitive standpoint. what is reform? broaden the base and get rid of the loopholes and keep the rates as low as possible. >> and throw the irs code in the toilet. >> yes, and bury it and pour the salt on the soil so it won't grow up. with tax reform is higher rates which makes america less competitive in a global situation. >> and thank you to both of you and let us know what you think, everyone. we have been "outfront "/" "on issue, and you can go to our blog to comment more on this. obama's state of the union speech starts in less than two hours. we will get a preview of the message and taxes are part of it. three months after the death of gadhafi and looks like libya's government is losing control. is it possible that gadhafi loyalists could be taking over again? william cohen is out front. and brand new video from the cruise ship. did wealthy businessmen buy their way on to the lifeboats? we get the facts "outfront." next. try alka-seltzer. it kills heartburn fast. yeehaw! forty years ago, he wasn't looking for financial advice. back then he had something more important to do. he wasn't focused on his future. but fortunately, somebody else was. at usaa we provide retirement planning for our military, veterans and their families. now 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threatening to tear the country apart and raises fresh doubts to the u.s.'s response to the conflict. many people thought that when moammar gadhafi was dead, everything was over and it would work fine, but it is not. we are out front with former defense secretary william cohen, and good to have you here. >> good to be here. >> this outcome does not surprise you and people looking for the quick fix and he is gone, and this is the largest oil reserves in africa and not getting what they thought. >> well, we tried to point out that once the euphoria dissip e dissipated and we knew it would dissipate quickly, the hard part would start, how to put together a government that is inclusive. libya happened to be the most clan clannish and tribal of all of the countries. we have 140 clans in libya. most of them supported by gadhafi. and that is how he contained control is by using the iron fist. so now you have a country who has not enjoyed in the past half century any form of institutional government, and so now putting the pieces together is going to take time, and you are bound to have gadhafi loyalists trying to seize the power again, and this is going to take time and we have to watch it closely and work with the current government, and continue to have the international community involved and try to establish as much control as possible. >> obviously, the u.s. when it got involved and nato that the argument was humanitarian. but, there is, the harsh reality that the libya is an oil supplier and not as significant now as it will be as i said the largest oil reserves in africa, but do you see a scenario for the u.s. military for that reason if things completely just fall apart here will be involved? >> well, i can't envision any circumstance that the united states would send its military in to try to control the oil supply. if it dish mean, there's an old african proverb when an elephant fights, it is the grass that suffers. if the libyan people continue to wage war against each other, the only ones who are going to suffer primarily are the libyans, themselves, and that is their major force of revenue to feed the families and it is not a tourist spot to begin with. so under these circumstances, the libyan people have to understand that at some point they have to reach a reconciliation of the united states, nato, and other european countries and nato countries in the gulf who have an interest of seeing libya get through the period of time. it is going to be difficult and not easy. >> it should be a tourist destination, and that is gadhafi's thing, it would be one of the largest tourist destination in the middle east, because they have some of the most beautiful gulf coast, and ruins. >> yes, and as long as this continues, it won't be. >> what happens with the other question here, the chemical weapons reserve that gadhafi said he had and international inspectors say he had and the rocket-propelled grenades and the fact that guarding the st k stockpiles are crucial, and that if they come out on the market, there could be threats to the united states or others and does that force the u.s. to act? >> well, we have known about gadhafi having stockpiles and chemical weapons. when i served on the senate intelligence committee in the 1980s, we followed what gadhafi was doing carefully what he was doing with the chemical productions, but since that time, gadhafi disclose hdesed h chemical weapon, so it is not a surprise. the national transitional council made disclosures they have found chemical weapons, so the real issue now is what can be international committee do with the transitional government to make sure that that mustard gas and sulfur don't get loose and into the general community or into the hands of terrorists. so maintaining control over that is going to be important. i think that the international community is working close oly to make sure it doesn't get into the hands of terrorist groups. >> secretary cohen, thank you so much. we appreciate it. >> good to be with you. the death toll continues to climb in the cruise ship disaster. they recovered a 16th victim today from the capsized concordia. 16 people are still missing including an american couple. authorities released video of the search and rescue effort. you can see it there. and more video of the night when the ship ran aground, and this is amid reports that prosecutors are looking into allegations that a few wealthy russians bought their way on to lifeboats ahead of women and children. dan rivers has been covering the story in italy from the beginning, and he has the latest for us. dan, good to see you. a lot of americans have seen in the newspaper today stories that people on the ship saying that wealthy russians were literally giving cash to the lifeboat op rayers to and getting on before children and women. do you have any sense as to whether that happened? >> well, i mean, it is certainly a great piece of copy, erin. it has been picked up by the "huffington post" and the "wall street journal" and both credible titles, but if you read quickly, they quote the german ne media who are quoting the german tabloid "the bilt" who is saying that well-dressed russian men and women were coming off before women and children which gives rise to the story that perhaps the well-dressed russian men and women were bought their way off first. there is no credible sourcing here. there is some suggestion that the italian pros ecutors have testimony from passengers on board who are corroborating this, but no one else we have spoken to has confirmed this, and the prosecutors are not talking to it either. >> let me ask you about the search and rescue mission started again and i know that you were covering that and a woman was recovered. do you know any sense as to how much longer that i will keep look and whether they think that anyone might be alive? >> they are saying that they can carry on doing both, salvage and search and rescue, at the same time now. realistically, there is no chance now of finding anyone else alive. this is now a search for bodies, sadly. the search underwater has been hampered by movements of the ship. they have sensitive equipment now trained on the ship checking on how much it is moving, and they are confident it is safe to get the divers in again. so that's been continuing. >> dan rivers thank you very much reporting from italy tonight. all right. it is called the buffett rule, and president obama says it will require the wealthy to pay more taxes. how will it play in tonight's state of the union? and nine films nominated for best pictures going into the oscars this year, but that is just one of the numbers that matter tonight. helping generations achieve dreams. buy homes. put their kids through college. retire how they want to. ameriprise. the strength of america's largest financial planning company. the heart of 10,000 advisors working with you, one-to-one. together, for your future. ♪ 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