Gamechanger? ABC News Reports on Romney's extensive holdings in Cayman Islands. [View all]

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Last edited Wed Jan 18, 2012, 10:04 PM - Edit history (1)

What will happen to the Republican primary campaign when Newt Gingrich gets his hands on this report just filed by ABC News?

Romney doesn't just have extraordinary wealth in which he pays low taxes but uses accounts in the Cayman Islands to further lower his tax rate. Even without the tax records there exists enough facts in the public record to raise substantial questions about Romney's financial largess and Bain Capital holding 138 'secretive' investment accounts in the Cayman Islands. How will this play in Peoria, or South Carolina?

Edited to add

Down thread thelordofhell asks if the Mormon Church will be upset that they will not get their share. It turns out that Romney used donations of stock to get a double dip benefit to further reduce his tax liability. Article below.

Romney Parks Millions in Cayman Islands

ABC Report with video (very effective)

http://abcnews.go.com/Blotter/romney-parks-millions-offshore-tax-haven/story?id=15378566#.TxdHq10WXQ6

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.

. . .


But 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.

. . .


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."

Romney's campaign has responded with "everything Romney has done is legal" which sounds like a non-denial response to the facts. The experts cited explain that even though the rates on income will be the same as the US, Romney may be using other aspects of the Cayman Islands to further reduce tax liabilities, even though it may be legal.


Edited to add that Romney also used stock donations to the Mormon Church to further reduce tax liability

In Bain deals, Romney gave stock to Mormon church


http://www.reuters.com/article/2012/01/19/us-usa-campaign-romney-donations-idUSTRE80H28B20120119?feedType=RSS&feedName=topNews&rpc=71


(Reuters) - Using a practice that made him eligible for large tax deductions, Mitt Romney gave the Mormon church substantial stock holdings that he obtained through his private equity firm, according to documents filed with the government and to Romney associates.

The tactic used by Romney to help meet his Mormon obligation of "tithing" - in which members donate 10 percent of their income to the church - is a common way for wealthy Americans to make large donations to charities, tax specialists say.

But against the backdrop of a Republican presidential campaign in which Romney is being pressured to reveal his tax returns and further details on his vast wealth, the donations shed light on the tax strategies of Romney and others at Bain Capital, the private equity firm he co-founded in 1984.

The analysts said that if Romney and others at Bain got a stock cheap and eventually donated it to a church or charity without cashing in the stock, then they could get two tax benefits. First, they would not have to pay capital gains tax on the appreciated value of the stock, which they would have to do if they sold the stock and either pocketed or donated the proceeds. Second, they might be able to deduct all, or at least part of, the value of the donated stock from their taxable income.