The Real Problem With Romney’s Offshore Investments
The Real Problem With Romney’s Offshore Investments
Similarly, a Romney campaign spokeswoman told Mother Jones that Romney’s foreign investments “are taxed in the very same way they would be if the shares were held in the US rather than through a Cayman fund. No taxes are avoided or reduced. These funds are registered with the IRS and report all income to investors and the IRS, just like domestic funds.”
Romney’s assertion that his offshore investments have not reduced his tax bill has been met with skepticism by tax experts. But assuming he’s telling the truth, his involvement in the offshore system and that of the company he started, Bain Capital, is still no less significant. That’s because while Romney may have done everything by the book with his offshore accounts, Bain’s other offshore investors may not have.
“The Cayman Islands jurisdiction for the Bain funds primarily makes it easy for their investors to cheat on their taxes.”
Bain’s has had investment funds located in the Cayman Islands since at least the 1990s, when Romney was still in charge. And the company has made clear that many of its funds there are designed to avoid US taxes. According to documents released by Gawker in August, one fund in which Romney still has money invested notes in a financial statement that it “intends to conduct its operations so it will…not be subject to United States federal income or withholding tax.”
“The Cayman Islands jurisdiction for the Bain funds primarily makes it easy for their investors to cheat on their taxes,” says Rebecca Wilkins, the senior counsel for federal tax policy at the nonprofit Citizens for Tax Justice. “Because of that they can attract more investors and they can earn bigger management fees. “
Because of the secrecy laws in the Caymans and other offshore tax havens, Bain investors are hidden from tax authorities like the IRS. Unless they choose to report their holdings and income, as Romney has, there is no way for tax officials in the US or other countries to know that such holdings exist, much less find a way to tax them.