Secret Cayman Island Funds: Did Mitt Romney’s Candidacy Just Suffer a Mortal Blow?
These days it’s hard to be surprised by anything: Each new day seems to bring news of additional bank malfeasance, a foreclosure scandal, another indicator that our politicians lack a sense of moral decency, and further evidence that no one in the public eye suffers from an old fashioned sense of “shame.” Revelations that in the past would have caused an uproar, and the immediate resignation of a politician or CEO, are now treated with a shrug, as commonplace behavior.
All of the above is a unfortunate commentary on the state of values in America, and the expectations our citizenry has for its leadership. Sadly, we have come to expect the worst, rather than the best, in the people that lead our society. If we hope to regain the sense among our citizens that we are a great nation, and a force throughout the world for moral good, all of this is unacceptable.
But, despite the ongoing stream of disheartening news, today’s revelation is just over the top. As an optimistic cynic, I am shocked that Mitt Romney maintains a portfolio of investments headquartered in the Cayman Islands. As detailed by 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.
There are a host of issues associated with these activities, and none of them are positive:
First, the Romney campaign contends that this is irrelevant. According to ABC News:
A spokesperson for the Romney campaign says Romney follows all tax laws and he would pay the same in taxes regardless of where the funds are based.
But, as experts quoted in the ABC News article noted:
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.”
FYI: I predict that, despite the statements of his campaign, we will ultimately find substantial tax savings for the Romney family through these tax havens.
Second, it is almost impossible for me to believe that any candidate running for President is foolish enough to think the American people don’t care.
There is nothing patriotic about parking money earned by “creating jobs” in offshore funds. It is fundamentally an unpatriotic act. You are knowingly taking your activities outside of the jurisdiction of the United States. How can Romney possibly defend this action?
Third, it seems clear that Romney has indeed been hiding something about his finances.
It is one thing to say I am a predatory–but honest–capitalist. And Romney’s year’s at Bain have sparked a healthy debate on the role of private equity firms in our nation’s economy.
It is another for a Presidential candidate, who has been working for years for this moment, to show such obvious disdain for the American system of Justice, that he removes his assets from it.
Moreover, there is the distinct feeling that the combination of Romney’s refusal to release his tax returns and the lack of disclosure of such accounts in his public filings (although within the law) indicate that Romney knows this is unpatriotic, reprehensible behavior and somehow believed he could be elected President without this coming to light.
Fourth, do we want a President that seems to believe he can successfully hide basic information like this from the American people. We have learned from the The Washington Post that at Bain Romeny’s word was not his bond. So, his honesty is already in question. Now, we are forced to wonder about his basic intelligence, and the intelligence of his advisers (if they knew about this).
In an earlier era, a revelation of this type would have forced Romney to resign from the race. The consequences in our age are, as yet, unknown. However, there is simply no acceptable reason for a Presidential candidate to have his or her money managed in a jurisdiction purposely designed to avoid the laws and reporting requirements of the United States.
We are a better nation than this.
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