Romney Parks Millions in Cayman Islands

[HumblePie]

It's a bit biased towards pro-offshoring but it attempts to be somewhat fair in explaining there are definitely those that offshore for the wrong reason.

Same with Switzerland there are families that have accounts that they haven't declared in decades.

Like I was saying there are reasons to offshore and it can be beneficial for tax avoidance but in this day and age outright evasion is not the primary objective.

Yes, which is why I haven't pointed the finger at him.

Yet, by the same token, I look at it like this. There are several "pipe" shops around here. Specifically the types used mostly to smoke weed in. They typically sell items associated with users who want an altered mind state to have more fun with. There are perfectly legit reasons why someone would want those item and not be a pothead. But when the majority of the clientele are potheads and you are seen walking in there, a lot of assumptions about you being a pothead as well are going to be made. No big deal if you are flipping burgers for a living while still living in your parents home. It's a huge deal when perception of your reputation effects your livelihood. This is the reason military members are banned from entering those shops usually.

Mitt can have perfectly legal and acceptable reasons for Cayman holdings. No big deal. But quite a few people use those same holdings for tax evasion. It is the little unspoken "rule" about those accounts like those shops. If you are running for office or in a high authority position it is generally not a good idea to be seen doing the same actions that criminals do to lead up to committing crimes even if those actions are perfectly legal up until the crime happens. Not that I really care one way or another about Mitt or his reputation, but some do. Hence the release of this information to potentially smear him.

 

[The-Noid]

Yes, which is why I haven't pointed the finger at him.

Yet, by the same token, I look at it like this. There are several "pipe" shops around here. Specifically the types used mostly to smoke weed in. They typically sell items associated with users who want an altered mind state to have more fun with. There are perfectly legit reasons why someone would want those item and not be a pothead. But when the majority of the clientele are potheads and you are seen walking in there, a lot of assumptions about you being a pothead as well are going to be made. No big deal if you are flipping burgers for a living while still living in your parents home. It's a huge deal when perception of your reputation effects your livelihood. This is the reason military members are banned from entering those shops usually.

Mitt can have perfectly legal and acceptable reasons for Cayman holdings. No big deal. But quite a few people use those same holdings for tax evasion. It is the little unspoken "rule" about those accounts like those shops. If you are running for office or in a high authority position it is generally not a good idea to be seen doing the same actions that criminals do to lead up to committing crimes even if those actions are perfectly legal up until the crime happens. Not that I really care one way or another about Mitt or his reputation, but some do. Hence the release of this information to potentially smear him.

I fully agree, Cayman Islands by default is going to have a negative behavioral connotation to the average American.

 

[Fern]

So what you're saying is that the Cayman accounts launder/ conceal money for Mitt's investors, right?

A guy like Romney wouldn't even realize that was happening, would he?

And there's obviously nothing shady about using laundered foreign money to enrich yourself while looting American companies, is there?

I'm not sure it would be fair to say that with any certainty, but your own remarks lend themselves to such conclusions...

I've noticed you have a habit of distorting and misstating things when promoting your party line here. I suppose stating your objective honestly and accurately just lacks the zip you feel necessary.

Here, you are misusing the term "launder money". For it to be laundered money it must originate from illegal means/sources, like drug smuggling profits. What evidence do have of that? Or do you just like to throw bombastic terms around?

You've also managed to insert "looting companies" as well. Bravo, you've managed to slip two highly negative distortions in just a few sentences.

In a prior thread you referred to Romney's/Bain's equity investments as a "quick buck' type scheme. Of course, the weren't anything like a "quick buck'. The money was invested for a period of years in each project, so it's not close to a "quick buck' thing.

Fern

 

[Fern]

Romney is only at a disadvantage wrt foreign investors.

The other aspect of foreign business entities is that Uncle Sam can't audit them- so income can be disbursed to principals in a variety of ways that aren't necessarily reflected in the tax returns of American principals. And so long as that money stays offshore in various business accounts under banking secrecy statutes, Uncle will never know. It's still their money, under their control.

What?

Where the hell do you get this stuff?

Of course the IRS can audit foreign business, at least those that do business in the USA. Otherwise, the IRS has no jurisdiction.

Moreover, there's nothing secret about Cayman islands bank accountants and hasn't been for many years now.

The Cayman/US Tax Information Exchange Agreement

In November, 2002 the Cayman Islands also signed a Tax Information Exchange Agreement with the US (see below).

The agreement specifies that the Cayman Islands will share tax information to help the US government trace financial criminals. Former IRS Commissioner Donald Alexander told the US media that the treaty will enable the IRS to overcome the secrecy surrounding the accounts of financial institutions in the Cayman Islands to allow it to launch audits for tax evasion and money-laundering.

The agreement covers information relating to "the administration and enforcement of the domestic laws of the parties concerning the taxes and the tax matters covered by this Agreement, including information that may be relevant to the determination, assessment, verification, enforcement or collection of tax claims with respect to persons subject to such taxes, or to the investigation or prosecution of criminal tax evasion in relation to such persons".

http://www.lowtax.net/lowtax/html/jca2tax.html

The Caymans have also joined the OECD which requires open sharing of information.

GRAND CAYMAN, Cayman Islands, April 3 /PRNewswire/ -- We are pleased to see that the decision by the Organization for Economic Cooperation and Development (OECD) to place the Cayman Islands on a list of jurisdictions that have committed to "internationally agreed tax standard" recognizes the significant cooperation by the Cayman Islands over the years with several governments and other organizations like the OECD. For example, the Cayman Islands have entered into twenty tax information exchange commitments, both bilateral and unilateral, the largest number of any offshore financial centre, and have implemented the automatic information-sharing with all EU states under the EU Savings Directive.

http://www.groco.com/readingroom/intl_cayman_transparent.aspx

Fern

 

[Fern]

This is in fact correct. All you have stated is factual.

But it also fails to mention one thing. There are ways to move cash obtained in the US, before it gets taxed, over to the cayman islands where it will no longer be taxed. And later moved back if needed without ever being taxed.

The problem we have here is we don't know HOW Mitt moved his assets over to the Caymans. Was it done legally after all taxes were collected? I have no problem with people offshoring money elsewhere. I mean it is their money.

But when we now are looking at Mitt's admitted history of only a 15% tax rate for his income. Calling earned income of 370K for just showing up places as "not that much" and his other bullshit such as the fact that he now has millions in assets sitting in offshore accounts makes people think it probably is not there in the "legal" way.

Again, I have NO PROBLEM with people wanting to put their assets in accounts outside the US. So long as those assets were properly taxed before and/or after if they should have been subject to taxes.

Personally, I think Romney is, and has long been (being a former gov) too high profile to engage in tax fraud that requires tens of millions of $'s being mover around (through banks) overseas. It's just too easy to see/find by the authorities. There are well known cases of uber rich doing this, but in such cases the money is not hidden. The IRS knows about it. It's too easy to find at that scale. Also, the rich person running from the IRS chooses a location that has no treaty/agreement of info sharing etc with the USA.

But probably most significantly, in every case I've seen in trying to subvert US taxation the ploy depends upon secrecy because upon disclosure you're screwed. In this case, the fact that Romney and Bain's foreign accounts have been disclosed all but proves it's upfront.

Fern

 

[Fern]

First associated conceal with laundering. Then go to full on money laundering by the end of your rant. Congrats you have transformed what is a legitimate business deal by foreign investors trying to invest in this country and get around their oppressive govts into a criminal activity such as money laundering.

Thanks.

It's nice to see somebody else notices this guy's dishonest and slanderous spin. It seems he just has to sprinkle prejudicial terms into his posts insinuating, if not outright claiming without evidence, all sorts of illegal and unethical behavior.

Fern

 

[Fern]

Basically as I just read it from a few google tax experts about cayman islands is that companies or people will setup "foreign" companies. At one time the there was a Cayman Islands address that was home to 187,000 companies that were actually all US based. Earnings made on American soil were considered FOREIGN earned money and the Us had laws that allowed minimal to no taxes on those.

That's completely incorrect.

US law regarding the "source" of income, and thus what country gets the tax, cannot be manipulated or even influenced by the location of a bank account.

It's either US source income under tax law or it isn't, no matter bank account it runs through.

Especially if they could show those earnings were for a special category, such as a religious organization. Money is then moved to a Cayman's Island account from which the IRS couldn't get info from. At which point the company uses other agencies to funnel the money back into the US if they need it or other places in the world. It is all tax evasion.

You must be looking at terribly old stuff. In my post somewhere above I've shown that the US and Cayman islands have long had bank account and tax info sharing agreements.

There is simply a lot of misinformation about this topic floating around.

Fern

 

[Fern]

Because who really needs to spend $2T at a time?

You bring it back in as needed through methods that avoid further taxation. It's also easier to move smaller amounts back in then larger amounts.


As Mitt has stated, he made quite a bit in earned income tax. Over $370K. Never payed a penny on it. Instead the only thing he paid taxes on was capital gains in US investments that he couldn't avoid which is at the 15% mark.

Do you really think all that earned income just disappeared?

Where in the hell do you get that Romney didn't pay tax on the $370K of earned income from speeches?

That's crazy.

BTW: Somebody above said Romney didn't pay social security tax. That would be false since he paid the maximum.

Fern

 

[JS80]

Basically as I just read it from a few google tax experts about cayman islands is that companies or people will setup "foreign" companies. At one time the there was a Cayman Islands address that was home to 187,000 companies that were actually all US based. Earnings made on American soil were considered FOREIGN earned money and the Us had laws that allowed minimal to no taxes on those. Especially if they could show those earnings were for a special category, such as a religious organization. Money is then moved to a Cayman's Island account from which the IRS couldn't get info from. At which point the company uses other agencies to funnel the money back into the US if they need it or other places in the world. It is all tax evasion.

Except in Romney's case he elects on his tax form to get taxed as if he made all his money in the US making your point moot. He's not sitting on overseas profits and punting on repatriating back to US. He proactively ELECTS to pay at the FULL US rate whether he made money in the US or overseas.

I feel dirty for defending RINO Romney, but for God's sake stop spreading misinformation.

 

[The-Noid]

Where in the hell do you get that Romney didn't pay tax on the $370K of earned income from speeches?

That's crazy.

BTW: Somebody above said Romney didn't pay social security tax. That would be false since he paid the maximum.

Fern

Romney would not pay Social Security tax on the dividend income, carried interest or from capital gains. He may have had ordinary income from other sources but he sure didn't pay it because of his investment account. Same goes for medicare obviously.

 

[dmcowen674]

I've noticed you have a habit of distorting and misstating things when promoting your party line here. I suppose stating your objective honestly and accurately just lacks the zip you feel necessary.

Here, you are misusing the term "launder money". For it to be laundered money it must originate from illegal means/sources, like drug smuggling profits. What evidence do have of that? Or do you just like to throw bombastic terms around?

You've also managed to insert "looting companies" as well. Bravo, you've managed to slip two highly negative distortions in just a few sentences.

In a prior thread you referred to Romney's/Bain's equity investments as a "quick buck' type scheme. Of course, the weren't anything like a "quick buck'. The money was invested for a period of years in each project, so it's not close to a "quick buck' thing.

All that gibberish and the bottom line is come on, there is no real legitimate reason for him to have sacked that money into the Cayman Islands.

 

[The-Noid]

All that gibberish and the bottom line is come on, there is no real legitimate reason for him to have sacked that money into the Cayman Islands.

I think if you read my posts, there are many legitimate reasons.

What your post was meant to say was "in my opinion, I believe there is no reason to have put money in the Cayman Islands, however noting that, I am not a good candidate for offshoring money and have done very little research on the legitimate reasons for offshoring."

You are poor at differentiating fact from opinion.

 

[Fern]

Romney would not pay Social Security tax on the dividend income, carried interest or from capital gains. He may have had ordinary income from other sources but he sure didn't pay it because of his investment account. Same goes for medicare obviously.

The $370K of speaking fees is earned income from self-employment. So, he would pay the max for SS.

IMO, quite likely he has been doing speaking appearances for many years.

Fern

 

[HumblePie]

Where in the hell do you get that Romney didn't pay tax on the $370K of earned income from speeches?

That's crazy.

BTW: Somebody above said Romney didn't pay social security tax. That would be false since he paid the maximum.

Fern

Couple of things. Cayman Islands WERE that way. As your post stated, they've since entered into a legal agreement with the US IRS to release info of everything after 2008 I think? Anyhow, up until that point the Cayman accounts were being used for tax evasion by several groups. Now those people have moved to other places. Still the stigma of a tax evasion hideout is attached to Cayman accounts. Which is WHAT I HAD STATED MANY MANY MANY TIMES.

I never said he didn't pay taxes on that $370K. I said he someone had effective tax rate of 15%, which he admitted, despite having an earned income of at LEAST $370K from speeches of which he stated he didn't think was very much money. All which smells just a bit fishy.

 

[The-Noid]

The $370K of speaking fees is earned income from self-employment. So, he would pay the max for SS.

IMO, quite likely he has been doing speaking appearances for many years.

Fern

As I said "earned income." He's still not paying Medicare on the investment account which will garner negative pub.

I haven't seen Mitt's taxes, nor do I really care to (or any candidate for that matter). It also becomes possible, Mitt takes all the salary as a distribution from an S-Corp, keeps the passthru status and pays no Social Security nor Medicare. Until you see the actual return it is impossible to know. <--My colleague here at work informs me that John Edwards did this.

Having said that Mitt appears to be quite well off and he is going to have a heck of an uphill battle as class warfare has become the new "it" thing in the US.

 

[Fern]

Couple of things. Cayman Islands WERE that way. As your post stated, they've since entered into a legal agreement with the US IRS to release info of everything after 2008 I think?

2002. That means it was pretty well known in the mid-to-late 90's and you better get the heck away from the Caymans if you're doing something illegal there.

Also, once the agreement is in place info prior to 2002 is available for sharing.

I never said he didn't pay taxes on that $370K. I said he someone had effective tax rate of 15%, which he admitted, despite having an earned income of at LEAST $370K from speeches of which he stated he didn't think was very much money. All which smells just a bit fishy.

Well, my bad. It sure looked that way to me.

And as I thought, your point about his effective, which he only estimated btw, indicates you don't think he paid tax on it because his effective rate should be higher given that earned income. Right?

IIRC, the $370K was earned over two years? If so, it would have reduced impact on raising his effect tax rate.

At this time,. we don't know how much investment type income he had. It could be so high that even if the entire $370K was taxed in one it may not raise the effective tax rate that much. Remember, that earned is going to get the benefit of the lower brackets too.

Then there's always itemized and other deductions that would reduce his taxes, thus his overall effective rate.

Fern

 

[Fern]

-snip-
I haven't seen Mitt's taxes, nor do I really care to (or any candidate for that matter). It also becomes possible, Mitt takes all the salary as a distribution from an S-Corp, keeps the passthru status and pays no Social Security nor Medicare. Until you see the actual return it is impossible to know. <--My colleague here at work informs me that John Edwards did this.

I'm not sure what you're getting at here. But if you're saying that Romney took his speaking fees as pass through income (similar to dividends) from an S-corp that would be in violation of tax rules.

While people may try to turn earned income into passive or investment type income by passing it through an S corp that would be indefensible upon audit. The rules don't work that way.

--------------

BTW: I'm curious about John Edwards' situation. Do you have a link, or any more info so I can find one myself?

TIA

Fern

 

[NeoV]

ok, let's forget the speaking income, it has nothing to do with this

I have yet, however, to see a good answer to - why does he have money there in the first place?

 

[HumblePie]

ok, let's forget the speaking income, it has nothing to do with this

I have yet, however, to see a good answer to - why does he have money there in the first place?

I don't care why he has it there now. I care as to how LONG it's been there. Was it there prior to the IRS agreement? If so there was a higher chance it was there for possible tax evasion. Not that he did, but it could have been the case.

 

[The-Noid]

I'm not sure what you're getting at here. But if you're saying that Romney took his speaking fees as pass through income (similar to dividends) from an S-corp that would be in violation of tax rules.

While people may try to turn earned income into passive or investment type income by passing it through an S corp that would be indefensible upon audit. The rules don't work that way.

--------------

BTW: I'm curious about John Edwards' situation. Do you have a link, or any more info so I can find one myself?

TIA

Fern

http://www.rothcpa.com/archives/000873.php
http://www.settlemytax.com/blog/s-corp-and-fica-taxes-what-is-“reasonable-compensation”/

Edwards had the S-Corp paid as the speaker and took a nominal salary, while taking the rest as pass-through income. Not really uncommon and actually fairly defensible. The IRS has never really clarified what a reasonable salary is. In the case of realtors, lawyers, dentists, medical, even your local self owned hair salon, it generally gets very abused.

 

[The-Noid]

ok, let's forget the speaking income, it has nothing to do with this

I have yet, however, to see a good answer to - why does he have money there in the first place?

Did you read this thread or did you post without reading?

 

[NeoV]

ok wise-ass, let me re-phrase the question - how exactly is Romney putting money in a bank in the Cayman Islands supposed to attract foreign investment in any way, shape, or form?

 

[The-Noid]

ok wise-ass, let me re-phrase the question - how exactly is Romney putting money in a bank in the Cayman Islands supposed to attract foreign investment in any way, shape, or form?

It attracts capital that won't invest in the US because of our horrible source/residence jurisdiction issues. Having the money in the Caymans attracts investors that would otherwise balk at the double taxation regime of the US.

Withholding rates for foreign investment is generally 30% paid to the US, that may or may not be reclaimable when bringing the capital home. The 0% for the Caymans definitely decreases the investments hurdle rate and brings in investment that would otherwise not invest in the project. i.e if my required rate of return is 10%, I need to earn 10%/(1- my residence rate) in the Cayman Islands, I need to earn 10%/(1-my residence rate)*(1-my source rate). Assuming 30% in both, I need to earn 14.28% in my Cayman Islands investment or earn 20.40% in the USA. 14.28% may be doable on a lot of of PE projects, 20.4% would be too high.

Also, as discussed many of these participants will also not invest without the partners or high ups investing.

So in summary, lower hurdle rate, more investors from abroad and partner/executive has to invest. That is why a lot of funds have Cayman Island equivalents. It's a much bigger deal for those outside the US, than those in the US.

 

[dmcowen674]

I think if you read my posts, there are many legitimate reasons.

What your post was meant to say was "in my opinion, I believe there is no reason to have put money in the Cayman Islands, however noting that, I am not a good candidate for offshoring money and have done very little research on the legitimate reasons for offshoring."

You are poor at differentiating fact from opinion.

The article says he has up to $32 million socked away on the Islands.

Do you have "Factual" data to support that he has paid taxes on that $32 million?

I bet not and that I am sure is a fact.

 

[JS80]

It attracts capital that won't invest in the US because of our horrible source/residence jurisdiction issues. Having the money in the Caymans attracts investors that would otherwise balk at the double taxation regime of the US.

Withholding rates for foreign investment is generally 30% paid to the US, that may or may not be reclaimable when bringing the capital home. The 0% for the Caymans definitely decreases the investments hurdle rate and brings in investment that would otherwise not invest in the project. i.e if my required rate of return is 10%, I need to earn 10%/(1- my residence rate) in the Cayman Islands, I need to earn 10%/(1-my residence rate)*(1-my source rate). Assuming 30% in both, I need to earn 14.28% in my Cayman Islands investment or earn 20.40% in the USA. 14.28% may be doable on a lot of of PE projects, 20.4% would be too high.

Also, as discussed many of these participants will also not invest without the partners or high ups investing.

So in summary, lower hurdle rate, more investors from abroad and partner/executive has to invest. That is why a lot of funds have Cayman Island equivalents. It's a much bigger deal for those outside the US, than those in the US.

You think these idiot ideologues have any idea what you wrote here?