By Cliff Montgomery – Jan. 19th, 2012
It’s rather well known that an individual running for a U.S. political office must release a financial disclosure form.
The official delusion is that these wealthy and well-connected people – and they’re almost all very wealthy and immensely well connected – will honestly reveal how they amass their vast fortunes while doing precious little work.
But perhaps few honest Americans are surprised that Mitt Romney has stashed a sizable chunk of his fortune in the Cayman Islands, a controversial Caribbean tax haven. Or that these investments are not immediately clear on his financial disclosure form.
Romney’s Cayman millions are tied up in investment funds.
“His personal finances are a poster child of what’s wrong with the American tax system,” declared Jack Blum, a D.C.-based legal expert on offshore banking and tax enforcement, to ABC News.
Romney in the last few days has begun the spin machine on how he manages all those millions.
“I can tell you we follow the tax laws,” he recently stated when spinning the issue in New Hampshire.
“And if there’s an opportunity to save taxes, we like anybody else in this country will follow that opportunity,” he added.
What makes those statements spin? Two matters:
- The issue was never about Romney breaking U.S. tax laws, but over whether those laws are simply unjust as they reward wealth rather than work.
- Romney may tell us, ‘Everyone else would follow this opportunity if they could’, but that’s precisely the point – most Americans can’t benefit from such loopholes in the tax code, as they are designed to favor the millionaires and billionaires who buy our lawmakers.
Blum told as much to ABC News, adding that offshore investment vehicles allow an investor to “avoid a whole series of small traps in the tax code that ordinary people would face if they paid tax on an onshore basis.”
Romney employs a number of methods in managing his estimated fortune of $250 million.
“In addition to paying the lower tax rate on his investment income,” states ABC News, “Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry.”
“Another investment, which Romney reports as being worth between $5 million and $25 million,” according to the network news source, “shows up on securities records as having been domiciled in the Caymans.”
And that‘s not all. Documents accessed by ABC News revealed “that Bain Capital, the private equity partnership Romney once ran, has set up some 138 secretive offshore funds in the Caymans.”
The Romney campaign was quick to provide the network news source with a simple talking point for the Cayman funds issue: It just doesn’t matter.
“The tax consequences to the Romneys are the very same whether the fund is domiciled here or another country,” stated a campaign official to reporters.
While “tax experts agree that Romney remains subject to American taxes,” according to ABC News, those same experts also point out that “the offshore accounts have provided him- and Bain [Capital] – with other potential financial benefits,” which include “higher management fees and greater foreign interest, all at the expense of the U.S. Treasury.”
It’s a very expensive point. Rebecca Wilkins, an expert in tax policy who works with Citizens for Tax Justice – a tax watchdog group – told ABC News “the federal government loses an estimated $100 billion a year because of tax havens.”
