Dutch Source Confirms – Romney Paid ZERO Taxes
New documents released by the newspaper Volkskrant from the Netherlands yesterday detail how Mitt Romney took advantage, through his former firm, of a 9-figure tax loophole. When he retired in 1999, his golden parachute enabled him to operate as a company manager and executive, for purposes of investment, for 10 years. And so began Romney’s direct use of the “Double Irish With a Dutch Sandwich” tax avoidance scheme, which the New York Times illustrated with this handy graphical representation:
The documents released by Volkskrant detail out the Bain Capital Fund VIII, a fund in which Mr. Romney holds considerable interest, based in the Cayman Islands. The way the fund is set up is, there are two forms of investors, general investors and the partners. While the general investors put up the majority for the $3.5 billion needed to set up the fund, the partners, such as Mitt Romney and family, only had to put in 0.1% of the funding, yet have ownership over 30% of the fund. Sweet deal if you ask me.
The documents can be seen here:
Now comes the Irish angle. In 2004, Bain, along with a consortium of other firms, created the firm, Warner Chilcott, which absorbed the Irish pharmaceutical fIrm, Galen. Bain then offloaded the debt it had accrued from the aquisition on to the new firm. The Bain shares of the firm are held by Bain Capital Fund VIII. Originally this firm was headquartered in Bermuda, taking advantage of the nation’s tax laws and the transferred debt to avoid paying taxes on any profits raised.
When the Obama administration announced its intention to close the original loophole of using Bermuda, Warner Chilcott announced its intention to change its headquarters to Ireland. During this change, its shares were then lumped with a Dutch firm, Alter Domus, creating yet another loophole. Due to a piece of Dutch law, the participation exemption allows for Dutch firms operating in Ireland to avoid paying all taxes on money earned from those shares. By lumping the two firms together, Alter Domus could claim to be such a firm, allowing it to absorb any profits through the loophole.
With Warner Chilcott holding onto $2.8 billion of Bain Capital debt, its dividends can avoid a majority of taxes. Add in the ability to issue special dividends, such as the $4 per share issued this year alone. This directly fed Mitt Romney an estimated $2 million for 2010 and 2011, all tax free. On Mitt Romney’s 2011 tax return he avoided using his full deductions to raise his tax rate, and kept much of this tax avoidance scheme under wraps. A cross-reference of it with the Bain Capital documents above, however, reveals the tie and tax avoidance system.
Romney’s 2008 financial disclosure reveals that he holds over a million dollars in the fund. With his ability to launder money through this scheme, along with his use of a charity as a tax dodge, it is easy to see how Harry Reid was right after all.