Romney's Offshore Tax Haven Biz Needs Sunlight!

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http://www.australia-offshore.com/offshore-banking-and-tax-havens-have-become-the-heart-of-global-economy/

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AMY GOODMAN: I wanted to go to U.S. presidential politics. One of the leading Republican presidential contenders, Mitt Romney, has a history profiting from offshore tax havens. In 2008, the Los Angeles Times exposed how Romney, as head of Bain Capital, utilized shell companies and two offshore tax havens in Bermuda and the Cayman Islands to help eligible investors avoid paying U.S. taxes. The tax-friendly jurisdictions helped attract billions of investment dollars to Bain Capital. Los Angeles Times reporter Bob Drogin spoke to us about this in 2008.

BOB DROGIN: A side light of that was Bain Capital, which today has assets of about $60 billion—that’s their—the number that they officially say—and about a third of that comes from these offshore operations that Romney set up when he was still there, in particular, companies that are set up—really, they’re just mail drops, they’re mailboxes; they don’t have any staff, they don’t have any operations. The one on Grand Cayman Island is a Post Office Box 60D, I think, on Grand Cayman Island, and the ones in Bermuda are also at a lawyer’s office. But they’ve got them in other places as well. And they bring in somewhere above $25 billion a year.

And again, it’s—these are companies—these are operations set up through various systems. They’re blocker corporations. They are investment—or rather, equity groups that are set up to attract, for the large part, foreign capital. And the reason these are set up overseas is so that foreign investors in these private companies can avoid paying U.S. taxes. Mitt Romney and his colleagues don’t get that advantage. So it’s not like they’re avoiding taxes through this. It’s simply—what happens is, they’re helping other people avoid paying U.S. taxes, and as a result they make enormous profits.

AMY GOODMAN: That’s Los Angeles Times reporter Bob Drogin speaking to us in 2008. Nicholas Shaxson, your response?

NICHOLAS SHAXSON: Yeah, this is—I mean, there are two things I would respond to this. First of all, there is—a lot of this business is legal. It is. There are two terms: tax avoidance and tax evasion. Avoidance is, by definition, not doing anything illegal, but also, by definition, getting around the spirit of the law; this is not what legislators intended when they set up the legislation. Tax evasion, on the other hand, is, by definition, criminal. It is—you’re breaking the law. But in between these two poles of evasion and avoidance is a huge gray area, and often you don’t find out which side of the law a company is until there’s been, you know, a challenge by the IRS or a court case or something like that. A British—former British Chancellor Denis Healey once said, “The difference between avoidance and evasion is the thickness of a prison wall.”

But also, the example of Mitt Romney—I imagine what he was doing was on the avoidance, not on the evasion side—is this issue of intermediaries, people who help others. And we’re talking here particularly about accountancy firms, law firms and banks, and also company formation agents. These intermediaries have, for such a long time, seen a very simple calculus. They get—I saw a statistic yesterday that, for the big four accountancy firms on certain kinds of business, the average profit for a client was something like $360. The maximum fine for infringement for assisting a client to do things that have gone wrong is $10,000. So it’s a very simple calculation. You know, if you get caught, well, you pay a bit of money, but it will only be a fraction of your profits. And as a result of these kinds of incentives, you’ve had the complete corruption of the culture of these industries, saying, “We’re just going to, you know, help these people. We don’t care if they’re breaking the law or avoiding taxes or whatever. We’ll just help them do what they want to do.” And it’s a terrible—this corruption of the culture is one of the biggest problems of the whole—the whole issue.