Mitt Romney’s mysterious financial holdings have been the topic of furious discussion this week, after a Vanity Fair investigation detailed how significant amounts of the Republican presidential candidate’s fortune may be parked in offshore bank accounts in low- or no-tax countries, allowing Romney to not only obscure how much he is actually worth but avoid paying the federal taxes he would otherwise owe.
While it’s extremely unusual for someone who wants to be president to abuse offshore tax havens like this, it’s an all too common practice for many major American companies—and is most popular in the financial sector from which Romney comes.
And perhaps not so mysteriously, some of the biggest abusers of offshore tax havens—along with some of the chief facilitators of this practice—seem to have gravitated to Romney’s re-election effort. Of the his campaign’s top eleven contributors, seven are financial firms with significant offshore tax haven activity.
Of the four that do not have extensive tax havens themselves, two are accounting firms that do prolific business in helping set up those havens, and one is a Swiss bank where employees are currently under a federal investigation for helping to facilitate potentially illegal abuse of offshore tax havens.
So while Romney is currently downplaying his use of offshore tax havens, maintaining those evasion structures is no doubt a top priority of the people and industries funding his campaign:
(Note that these companies did not give checks directly to the campaign, which is forbidden, but rather the money comes through the company’s political action committees and employees.)
As you can see, Wall Street is a big contributor to the Romney campaign, and is also heavily invested in the practice of moving money to tax havens. The Vanity Fair piece notes that “one cannot properly understand Wall Street’s size and power without appreciating the central role of offshore tax havens.” With massive inflows and outflows of cash and incentives to avoid paying taxes on it, along with strong legal and public relations incentives to sometimes hide the source of the money, offshore tax havens are invaluable to the financial sector.
Citigroup, the Romney campaign’s sixth-highest contributor, is the worst American abuser of offshore tax havens, according to the Government Accountability Office—with a stunning 1,240 foreign subsidiaries. Morgan Stanley and Bank of America, both top Romney contributors, are also in the top ten offshore tax haven abusers listed in the GAO report, which examined offshore tax haven use by the country’s largest 100 companies.