Leaked Documents Show Mittens Used ‘Blockers’ to Avoid Taxes

More than 900 pages of private audit and finance records that were recently leaked reveal that Mitt Romney’s private equity firm, Bain Capital, used Cayman Islands based funds to avoid paying U.S. taxes. The documents were posted on the website Gawker.

Some of the financial statements contained the creation of ‘blocker’ funds, noting that it ‘intends to conduct its operations so it will not be subject to United States federal income tax or withholding tax.’ A blocker is a paper company that serves as a buffer between the investor and the fund holding the investments. That means the investment income can be counted as a dividend and in some cases avoid income tax. Critics have long pointed to Romney’s alleged use of investments in offshore funds as an example of how America’s super rich avoid paying taxes.

‘The only reason they structure it that way is to avoid tax,’ said Rebecca Wilkins, senior counsel with the group Citizens for Tax Justice to ABC News.

‘It just confirms what everyone already believes about the tax system — that it’s rigged. That the rules are rigged to favor the well off.’

Repeatedly asked about his tax history, Romney says he has never paid less than 13 percent tax and called the fixation on his wealth ‘small-minded’.

‘I just have to say given the challenges that America faces — 23 million people out of work, Iran about to become nuclear, one out of six Americans in poverty — the fascination with taxes I paid I find to be very small minded compared to the broad issues we face,’ he said in June.

‘But I did go back and look at my taxes and over the past 10 years I never paid less than 13 percent. I think the most recent year is 13.6 or something like that.’

The confidential records also provided financial statements and investor information on 18 Bain investment funds and three hedge funds in which Romney, his wife, Ann, and his children have invested. Some of the assets listed included loans to companies ranging from health care firms to a casino owned by major GOP donor Sheldon Adelson. In several of the funds, the family owns more than $1 million each in holdings.

 

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