During the recent GOP primaries, Newt Gingrich observed, “I don’t know of any American president who has had a Swiss bank account.” Mitt Romney recently had one, along with holdings stashed in tax havens such as Bermuda and the Cayman Islands.
Earlier this year Romney released, after much coercion from his Republican rivals, 550 pages of tax returns for the past two years. His income was $21.7 million in 2010 and $20.9 million last year. Some of that money came from funds based in the Cayman Islands, a notorious tax-free zone. He also had a $3 million Swiss bank account until 2010 when his financial adviser closed it because it might be “politically embarrassing.” You think?
While much of Romney’s wealth and holdings are hidden, news organizations have been digging and are uncovering plenty of embarrassing information. Much of his income sits in tax-advantaged funds that are overseas, complex and largely hidden. If he is elected, it’s safe to assume no president has ever had foreign holdings as vast, complex, and secretive as Romney’s.
An IRA No American Has
The Wall Street Journal was puzzled over how Romney’s IRA could have exploded to be worth as much as $102 million. How can that be when the maximum annual contribution is normally $2,000 per taxpayer? Theories include Bain having put an artificially low value on its shares when Romney originally bought them. No one but Romney and his tax lawyers know for sure.
Creating Jobs — For China
It’s well known that Bain Capital bought and sold American companies and shipped their jobs to other countries. But less known is what an investigator for the Washington Post found: “Mitt Romney’s financial company, Bain Capital, invested in a series of firms that specialized in relocating jobs done by American workers to new facilities in low-wage countries like China and India.”
Bain took over one company that they later merged with another to form Stream International which helped software companies set up overseas operations.
After the Post story, the Daily Kos web site wondered, “If you lost your job to outsourcing in the mid-1990s or thereafter, it’s fair to wonder if it was a Bain company that told your boss how to go about it, or ran the call center that took over your work.”
The Bermuda Angle
The Associated Press found that for 15 years a mysterious Bermuda-based enterprise of Bain called Sankaty HighYield Asset Investors Ltd. “was not listed on any of Romney’s state or federal financial reports. The company [named for a Nantucket lighthouse] is among several Romney holdings that have not been fully disclosed, including one that recently posted a $1.9 million earning — suggesting he could be wealthier than the nearly $250 million estimated by his campaign.”
AP found that quietly “Sankaty was transferred to a newly opened trust owned by Romney’s wife, Ann, one day before he was sworn in as Massachusetts governor in 2003, according to Bermuda records… The Romneys’ ownership of the offshore firm did not appear on any state or federal financial reports during Romney’s two presidential campaigns. Only the Romneys’ 2010 tax records, released under political pressure earlier this year, confirmed their continuing control of the company.”
The Cayman Mystery
In a much-anticipated Vanity Fair article, Nicholas Shaxson delved into Romney’s finances and discovered that “For all Mitt Romney’s touting of his business record, when it comes to his own money the Republican nominee is remarkably shy about disclosing numbers and investments.” He uses loopholes that allow him and other very wealthy people to skirt tax laws.
ABC News found that it is not apparent on his financial disclosure form, but Romney has unknown millions in his personal wealth parked in the Cayman Islands, which has no income tax, capital gains tax, or corporate tax.
The Domino Effect
In a widely reported AP story, Sankaty was shown to be “part of a cluster of similarly named hedge funds run by Bain Capital… The offshore company was used in Bain’s $1 billion takeover of Domino’s Pizza and other multimillion-dollar investment deals more than a decade ago.” Hold the anchovies but could I have extra tax breaks with that?
All In The Family
From a Reuters OpEd by Felix Salmon, we learn “The blind trust that the Romney camp cites to deflect questions about potential conflicts of interest? It invested $10 million in a hedge fund [called Solamere] co-founded by Tagg Romney. The trustee, Romney’s personal lawyer R. Bradford Malt (yes, that’s his actual name), explains his investing philosophy by saying that he ‘liked Solamere because of its diversified approach and because he knew the founders.’”
Conservatives Won’t Like This.
Romney is bellicose about Iran’s nuclear threat and calls Russia “our number one geopolitical foe,” but AP found that his family trusts invested in both Russian and Iranian oil companies as recently as 2010. Similarly, Romney’s blind investments didn’t see trades in companies whose business operations as clashing with Republican and Romney’s conservative orthodoxy on stem cell research, abortion, and the morning-after pill. Romney says the trust is managed “to conform to my positions.” Hmmm.
No Ordinary American
Romney pays a lower tax rate than most Americans — about 14 percent — because most of his income comes from investments rather than wages. If Romney had income like ordinary Americans get in their paychecks, he would have had to pay about 35 percent to the IRS.
Romney and his campaign aides always defend his financial dealings by saying he never broke the rules. If that’s true, we should change the rules. As for the relevance of Romney’s investments, they say a great deal about his attitude toward tax laws, shipping jobs out of the country, and his ever-changing postions on social issues.