Barack Obama has never minced words about the Cayman Islands. As an Illinois senator, Obama co-sponsored legislation to crack down on wealthy American individuals and corporations using offshore investments and tax shelters to avoid and to minimize what they would owe the U.S. in taxes.
As a presidential candidate, speaking of Ugland House in the Cayman islands — which, according to a 2008 investigation by the U.S. Government Accountability Office, served as the registered office for 18,857 entities (nearly half of which had U. S. billing addresses) — Barack Obama spoke bluntly: “You’ve got a building in the Cayman Islands that supposedly houses 12,000 corporations. That’s either the biggest building or the biggest tax scam on record.”
During the 2012 campaign, Republican nominee Mitt Romney — having lacked the wit or the imagination during his six-year quest to divest himself of the political liability of his offshore holdings — became a punching bag for the Obama campaign. Recall Romney’s unsuccessful London visit for the Olympics? All the time Romney was overseas, the Obama camp was running an attack ad that began with the president, on camera, stating, “I approve this message,” which told the viewer that Mitt Romney “had millions in a Swiss bank account” and “tax havens like Bermuda and the Cayman Islands.”
The argument has understandable appeal. Investments and wealth in these offshore tax havens, which have no corporate taxes and no taxes on capital gains, are shrouded in secrecy. As Romney told Robert Costa of the National Review, while explaining why, as a presidential candidate, he had kept his own island accounts, “The so-called offshore account in the Cayman Islands, for instance, is an account established by a U.S. firm to allow foreign investors to invest in U.S. enterprises and not be subject to taxes outside of their own jurisdiction.” That’s pretty straightforward: The offshore account’s purpose is to enable the investor to avoid paying taxes he could otherwise owe to the U.S. Treasury.
Of course, our neighborhood dry cleaner, barber or bakery has neither the deep pockets nor the high-priced accountants necessary to minimize or avoid the taxes they owe by setting up a dummy corporation in the Cayman Islands.
But hold on. It turns out that Barack Obama is outraged by wealthy individuals profiting from Cayman Islands accounts only if those wealthy individuals are card-carrying Republicans.
First, it was revealed that Jack Lew, whom President Obama nominated and whom the Senate eventually confirmed as secretary of the treasury, had, as an executive of Citigroup, a Cayman Islands account worth the pocket-change amount of $56,000 located at the aforementioned Ugland House — “either the largest building in the world or the largest tax scam in the world” — on the Cayman Islands. Citigroup, let the record show, had only 121 such accounts.
Next came Penny Pritzker, Chicago billionaire and hotel executive, whom Obama nominated to be secretary of commerce. Her disclosure report revealed that she had received some $53.6 million last year from an offshore trust in the Bahamas. That’s a whole lot more than millionaire Mitt Romney earned from his offshore accounts.
Most recently, President Obama chose his Harvard Law School classmate and friend, Michael Froman, his longtime economic advisor, to be the U.S. Trade Representative. Thanks to The New York Times’ Jonathan Weisman, we find that Froman, another alumnus of Citigroup, held $490,845 in a fund managed by his employer and housed — you guessed it — at Ugland House.
Three presidential nominees, all with serious offshore holdings, demand some serious explaining from the White House. Are offshore investments only evil when Republicans make them and somehow insignificant when they enrich Democrats?