Posted by AzBlueMeanie:
Aha! Just as I suspected. The über-rich salt their money away in tax havens around the world like the Cayman Islands to hide the extent of their wealth and to avoid paying taxes on their income in the countries in which they live. How patriotic (sarcasm) in these difficult economic times. And sure 'nuf, Willard "Mittens" Romney is among the unpatriotic über-rich.
Bain Capital has 138 offshore tax haven accounts in the Cayman Islands that is nothing more than a post office box (P.O. Box 908) in the Cayman Islands. A dozen accounts belong to "Mittens" Romney.
ABC News Nightline reports Romney Parks Millions in Cayman Islands – ABC News:
Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven.
As the race for the Republican nomination heats up, Mitt Romney is finding it increasingly difficult to maintain a shroud of secrecy around the details about his vast personal wealth, including, as ABC News has discovered, his investment in funds located offshore and his ability to pay a lower tax rate.
"His personal finances are a poster child of what's wrong with the American tax system," said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking.
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tax experts tell ABC News there are other reasons Romney may not want the public viewing his returns. As one of the wealthiest candidates to run for president in recent times, Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune. In addition to paying the lower tax rate on his investment income, 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, shows up on securities records as having been domiciled in the Caymans.
Official documents reviewed by ABC News show that Bain Capital, the private equity partnership Romney once ran, has set up some 138 secretive offshore funds in the Caymans.
Romney campaign officials and those at Bain Capital tell ABC News that the purpose of setting up those accounts in the Cayman Islands is to help attract money from foreign investors, and that the accounts provide no tax advantage to American investors like Romney. Romney, the campaign said, has paid all U.S. taxes on income derived from those investments.
Note: This is where the "carried interest" tax loophole kicks in. That money is parked offshore in the Cayman Islands accruing interest and is only taxed if and when Romney taps interest income from that account. So the Romney campaign is full-o'-crap when they say there is no tax advantage to Romney. If that were true, there would be no reason for offshore tax havens to exist, would there? And this tax loophole exists only for the über-rich. The Romney campaign thinks you are just too stupid to understand this and is willing to lie to your face.
Bain officials called the decision to locate some funds offshore routine, and a benefit only to foreign investors who do not want to be subjected to U.S. taxes.
Tax experts agree that Romney remains subject to American taxes. But they say the offshore accounts have provided him — and Bain — with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.
Blum, the D.C. tax lawyer, said working through an offshore investment vehicle allows the 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."
Wilkins agreed, saying the "primary advantage to setting those funds up in an offshore jurisdiction like the Cayman Islands or Bermuda is it helps the investors avoid tax."
"It helps U.S. investors avoid U.S. tax," said Wilkins, "it helps foreign investors avoid taxes in their home country, so it's not illegal or improper to set those funds up in a foreign jurisdiction, but it makes it more attractive to investors because it helps them avoid paying taxes on that income."
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The so-called "carried interest" rule has been the source of extensive debate in Washington, with opponents criticizing the allowance to tax those earnings at 15 percent a glaring loophole that benefits only the wealthiest Americans. Under the carried interest rule, income that is determined to be capital gains – like the profit reaped by hedge fund managers — is subject to the lower 15 percent rate.
This is the kind of thing that does not show up on candidate financial disclosure forms. It takes an enterprising investigative reporter — in short supply today — to dig deeper into the obscure references in the disclosure forms. Brian Ross of ABC News does just that in this investigative report.
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