Wednesday, October 03, 2012

How Romney (and Bain) benefitted immensely from foreign tax shelters

By Michael J.W. Stickings

Time to talk about Romney's taxes again -- and about how he and Bain Capital made so much money.

This is from a New York Times article from Monday:

Buried deep in the tax returns released by Mitt Romney's presidential campaign are references to dozens of offshore holdings with names like Ursa Funding (Luxembourg) S.à.r.l. and Sankaty Credit Opportunities Investors (Offshore) IV, based in the Cayman Islands.

Mr. Romney, responding to opponents' barbs about his use of overseas tax havens, has offered a narrow defense, saying only that the investments, many made through the private equity firm he founded, Bain Capital, have yielded him "not one dollar of reduction in taxes."

A review of thousands of pages of financial documents and interviews with tax lawyers found that in some cases, the offshore arrangements enabled his individual retirement account to avoid taxes on its investments and may well have reduced Mr. Romney's personal income tax bills.

But perhaps a more significant impact of Mr. Romney's offshore investments has been on the profit side of the ledger — in the way Bain's tax-avoidance strategies have enhanced his income.

Some of the offshore entities enabled Bain-owned companies to sidestep certain taxes, increasing returns for Mr. Romney and other investors. Others helped Bain attract foreign investors and nonprofit institutions by insulating them from taxes, again augmenting Mr. Romney's bottom line, since he shared in management fees based on the size of each Bain fund.

Make sure to read the whole thing, if you haven't already.

Whatever you think of these "offshore holdings" in principle, efforts by the very wealthy to circumvent U.S. law, it exposes Romney, once more, as a blatant liar.

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  • The main thing here are the direct Romney effects. As we have seen, he games the societal norm expectations. And the media mostly let him. His response to the Bain tax avoidance would be, "Those aren't my taxes."

    Of course, you are right: the problem is the system itself. Why is it that journalists have to consult with tax lawyers?

    I think it ought to be self-evident that Mitt Romney is morally unqualified to be President. But for most people, I guess, morality is limited to blowjobs in the Oval Office.

    By Anonymous Frankly Curious, at 12:23 PM  

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