Posted by AzBlueMeanie:
As any tax attorney will tell you, that is pure unadulterated bullshit. Tax avoidance is the very reason why Mittens' holdings are in Bermuda and the Cayman Islands.
Romney believes the American people are stupid and he insults your intelligence when he says such utter nonsense.
The New York Times in a front page article on Tuesday reported the obvious, Offshore Tactics Helped Increase Romneys’ Wealth:
Buried deep in the tax returns released by Mitt Romney’s presidential campaign are references to dozens of offshore holdings with names like Ursa Funding (Luxembourg) S.à.r.l. and Sankaty Credit Opportunities Investors (Offshore) IV, based in the Cayman Islands.
Mr. Romney, responding to opponents’ barbs about his use of overseas tax havens, has offered a narrow defense, saying only that the investments, many made through the private equity firm he founded, Bain Capital, have yielded him “not one dollar of reduction in taxes.”
A review of thousands of pages of financial documents and interviews with tax lawyers found that in some cases, the offshore arrangements enabled his individual retirement account to avoid taxes on its investments and may well have reduced Mr. Romney’s personal income tax bills.
But perhaps a more significant impact of Mr. Romney’s offshore investments has been on the profit side of the ledger — in the way Bain’s tax-avoidance strategies have enhanced his income.
Some of the offshore entities enabled Bain-owned companies to sidestep certain taxes, increasing returns for Mr. Romney and other investors. Others helped Bain attract foreign investors and nonprofit institutions by insulating them from taxes, again augmenting Mr. Romney’s bottom line, since he shared in management fees based on the size of each Bain fund.
The documents — which include confidential Bain prospectuses and foreign regulatory filings, many previously unreported — illustrate how these tax-avoidance strategies are woven into the fabric of Bain’s deal making. While hardly a novel concept and not unique to Bain, the inevitable result is that elite investors like Mr. Romney are able to increase their fortunes in ways unavailable to most taxpayers.
* * *
Many of the details of the Romneys’ wealth — estimated at $250 million — remain hidden, partly because Mr. Romney has released only the last two years of his tax returns. Those returns show an effective tax rate of about 14 percent, because most of the earnings came from investments and are taxed at 15 percent, significantly lower than rates on ordinary income.
* * *
A variety of Bain funds in the Romneys’ portfolio have controlling stakes in foreign companies. Had those funds been set up in the United States, the Romneys and other American investors would probably have been subject to certain federal taxes for their ownership of “controlled foreign corporations.” Setting up the funds in the Caymans allowed them to avoid those taxes.
“Bermuda and the Caymans are popular choices for U.S.-based funds because they’re both close by and neither imposes local taxes on the fund or its owners,” said Andrew W. Needham, a partner in the tax department at Cravath, Swaine & Moore L.L.P.
* * *
Bain and other private equity firms use a variety of mechanisms to help investors avoid those taxes, including setting up offshore “blocker” corporations, a practice that has been criticized in some circles and has prompted legislative efforts to curb it. These offshore corporations become a conduit for money for these institutional investors, as well as foreign investors looking to avoid United States taxes.
Individual retirement accounts, as tax-exempt entities, are subject to the “unrelated business income” tax. But people familiar with Mr. Romney’s investments said his I.R.A., which is managed by an independent trustee and is estimated to be worth between $21 million and $102 million, used offshore blockers to avoid the tax. Mr. Romney’s I.R.A., for instance, has millions invested in several Sankaty funds with onshore and offshore investment vehicles. His I.R.A. would have invested through the offshore funds, they said.
In addition, the largest investment — worth up to $25 million — in Mr. Romney’s I.R.A. is in a fund called BCIP Trust Associates III, a Cayman Islands partnership through which Bain employees invested in the firm’s deals. Documents from a German regulatory authority, detailing the Bain funds’ share of a media holding company in that country, refer to holdings by BCIP Trust’s blockers, indicating it used such entities.
* * *
Beyond their tax advantages, however, offshore funds controlled by American money managers can also create new tax problems. Those funds are limited in their ability to make loans without triggering corporate income taxes — an issue for Sankaty funds. Therefore, they usually have a parallel domestic fund that makes the loans, holds them for a period before selling a portion to the offshore fund, a practice known as “season and sell.”
The Sankaty offshore funds feature still another layer of complexity, designed to lower the taxes on profits enjoyed by Bain and Sankaty managing directors, as well as Mr. Romney through his retirement agreement. So-called carried interest, the cut of a fund’s investment gains earned by its managers, enjoys a favorable tax treatment. But under I.R.S. rules, carried interest cannot be derived from a corporation, like the offshore blockers used by Sankaty.
To address that, Sankaty sets up offshore partnerships to work in tandem with the blockers, the documents show. The result is a complex plumbing system. Tax-exempt and foreign investors put their money into blocker corporations to avoid certain taxes. Then the blockers feed their money into the partnerships, which distribute the lightly taxed income to Bain and Sankaty executives.
Most of these and other tax-saving arrangements are embedded in the organizational structure of the funds. It is often hard to drill down on the maneuvers Bain pursued in specific deals. But the 2010 tax returns for Mrs. Romney’s blind trust offer a hint of one, with the mention of Ursa Funding (Luxembourg) S.à.r.l.
Will Jim Lehrer ask Romney about why he provided 23 years of tax returns to John McCain in 2008 for vetting him as a vice presidential nominee, and he himself required 10 years of tax returns from Rep. Paul Ryan for vetting him as a vice presidential nominee, but he steadfastly refuses to disclose his tax returns to the American people so that we can properly vet him as a candidate?