Republican presidential candidate Mitt Romney has disclosed that he has millions of dollars worth of investment funds set up in the Caribbean tax haven of the Cayman Islands. Romney, who has an estimated personal wealth of $250 million, has been paying a much lower tax percentage than most U.S. citizens: approximately 15% of his yearly income. He has previously kept his tax returns private, but financial transparency is now an expectation of presidential candidates.
Romney has a minimum of twelve investment funds containing as much as $8 million which are listed on the registry of the Cayman Islands, together with another investment on the securities records which he says has a worth of between five and twenty five million dollars which is also housed in the Caymans. Offshore banking and taxation authority, Washington lawyer Jack Blum has stated that Romney’s finances are an illustration of the faults of the tax system in the United States, calling them, “a poster child”.
However, Romney campaign officials insist that he follows full U.S. tax legislation and that wherever the investment funds were based he would still be paying the same amount. They maintain that the major reason for locating the investment funds offshore in the Cayman Islands was to attract foreign investors who would pay less tax, but that Romney himself has paid full U.S. taxes on the income that he received from the investment funds.
Rebecca J. Wilkins who is an expert on tax policy said that there is an estimated loss to the treasury of $100 billion each year as a result of investment funds situated in tax havens. However, she also added that the setting up of such offshore investment funds was neither illegal nor improper.
- A Candidate’s Offshore Tax Havens (2009tax.org)
- Effective Tax Rate: Not As Simple As It Seems (2010tax.org)