July 11, 2012

The Offshore Candidate: Romney and the Cayman Islands

After the American Century

Perhaps Romney should run for president of the Cayman Islands. He has millions of dollars invested there. How many millions we cannot know because he refuses to release his financial records. Does he tithe more money each year to the Mormon Church than he pays to the US government in taxes? Again, we have no idea. 

Candidates usually are open about their taxes, because they want to convince the public that they have nothing to hide. Later on, if elected, they may become less open, as a measure of secrecy comes with high office.  But it disturbs me that Romney is secretive and evasive about his wealth.

What do we know at this point?

1. Romney has kept large sums of money in off-shore accounts, including Switzerland and the Cayman Islands.

2. Bain Capital, that Romney long worked for and that still is paying him, has 138 investment funds organized in the Cayman Islands, where Romney also has millions of dollars, how much we do not know, much of it in 12 of these Bain investments.

3. Money deposited in the Cayman Islands, or invested in funds located there, avoids US taxation. This is apparently legal, but it is not the behavior voters expect of a president.

4. Romney has released only his 2010 tax return, and even that raises questions. In contrast, all recent Republican candidates have released a plethora of information, including all recent tax returns.

5. Romney claims to have deposited much of his wealth in blind trusts, either in his name or his wife's name. But it turns out one of these "blind" trusts has invested in their son's company, and the trust itself is run by one of Romney's close friends. How blind is that?

What do we (know that we do) not know about Romney's finances?

1. The full extent of his fortune, rumored to be about $250 million.

2. The extent of his wife's fortune - much of it transferred from Romney to her.

3. Romney's annual income and the tax rate he has been paying, apparently about 15%, which is a much lower rate than that of the middle class.

4. Any financial  relationships between Romney and the Mormon Church, for which he served as a missionary and is now a Bishop. Does he tithe 10% of his income to the Mormon Church, which it asks of all its members?  Does Bishop Romney pay more money each year to the Mormon Church than to the US government in taxes? We have no way of knowing. Without financial disclosure, we cannot judge Romney's priorities. Does he put is money where his mouth is?

5. To what extent has Romney's wealth increased due to the illegal interest rate-fixing scam that is now coming to light? Mr. Diamond, who was running Barclay's Bank and has had to resign in disgrace, has organized contributions to the Romney campaign, and it seems there may be complex financial ties between some of the banks who illegally manipulated loan rates, Bain Capital, and Romney. Again, full disclosure would clear this up.

Paul Krugman put the larger question this way; "Has there ever before been a major presidential candidate who had a multimillion-dollar Swiss bank account, plus tens of millions invested in the Cayman Islands, famed as a tax haven?" Is an extremely rich man who takes millions of dollars out of the country to avoid taxes the sort of fellow we want running the federal budget, appointing Supreme Court justices, and deciding who ought to be on the Federal Reserve Board?