Cross-posted from the California Accountability Project blog.
According to documents filed with the Internal Revenue Service, in 2007 Meg Whitman’s charitable foundation invested $4 million offshore, in Hedge Funds based in Bermuda and the Cayman Islands.
Is Meg Whitman still shifting her millions into offshore tax havens to avoid having to pay her fair share?
And how can we know for sure that she’s put a stop to the practice – if, in fact, she HAS put a stop to the practice – without a look at her tax returns?
California’s voters expect and deserve to know if Whitman is continuing to engage in tax avoidance schemes.
Meg Whitman – with an estimated worth of $1.4 billion – must do as other wealthy candidates for California Governor have done, and release her personal income tax returns.
The Sacramento Bee noted on Tuesday (2/23):
“Arnold Schwarzenegger released his tax returns when he ran for governor. So did other rich candidates of recent years: Steve Westly, Phil Angelides, Bill Simon, Jane Harman and Al Checchi. What about the 2010 crop? A campaign spokeswoman said Meg Whitman plans to release only financial info required by law (not tax returns).”
The release of tax returns by wealthy candidates for governor is a well-established precedent in the State of California.
Steve Poizner, Whitman’s GOP Primary opponent, has agreed to release his income tax returns, according to the San Francisco Chronicle’s Carla Marinucci (on 2/22).
“GOP gubernatorial candidate Steve Poizner, saying he is a ‘firm believer in transparency,'’ became the first in the 2010 California governor's race to say he'll release his tax returns.”
While these are compelling arguments for Ms. Whitman to release such crucial information, equally important is the fact that Meg Whitman has a documented history of utilizing tax avoidance schemes.
In 2007, Meg Whitman’s charitable foundation sent several million dollars offshore, to Hedge Funds based in Bermuda and the Cayman Islands.
“The Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation in 2007…also invested $3 million in hedge funds based in the Cayman Islands — a Caribbean tax haven that's been the subject of political controversy…. ‘When you're a billionaire, you will do things with money that don't look so good when you're a political candidate,’ said John Pitney, a government and politics professor at Claremont McKenna College. ‘Even if they're totally ethical and lawful, they can still be embarrassing.’’”[Mercury News, 11/18/09]
“The foundation's tax returns also show $3 million invested in Cayman Island hedge funds and $1 million in another fund in Ireland. ‘If I were her investment adviser, I would have told her to avoid the offshore investment until she had figured out her political future,’ said Morris, the accountant….The Caymans have been a target of politicians in recent years. U.S. Sen. Carl Levin, D-Mich., and Rep. Lloyd Doggett, D-Texas, recently introduced legislation seeking to rein in tax shelters in places such as the Caymans.”– [Mercury News, 11/6/09]
The filings can be found at: http://dynamodata.fdncenter.org/990pf_pdf_archive/208/208033091/208033091_200712_990PF.pdf
Here’s what they reveal:
In 2007 alone,Meg Whitman’s foundation invested $4 Million in Caribbean Tax Havens
$1 MILLION INVESTED IN ARCHIPELAGO HOLDINGS (Based in Bermuda)
According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $1 million to Bermuda-based Archipelago Holdings, Ltd. on 9/28/07.
$1 MILLION INVESTED IN MASON CAPITAL, LTD. (Based In Cayman Islands)
According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $1 million to Cayman Islands-based Mason Capital, Ltd. on 9/28/07.
$2 MILLION INVESTED IN TPG-AXON PARTNERS (OFFSHORE), LTD
According to information provided to the IRS by the Griffith R. Harsh IV and Margaret C. Whitman Charitable Foundation, the foundation transferred $2 million to Cayman Islands-based TPG-Axon Partners (Offshore) Ltd. on 5/1/07.
In 2007, the Pittsburgh Post-Gazette (7/6/07) discussed Offshore Hedge Funds Archipelago and Mason Capital, reporting:
“Between Sept. 28 and Sept. 30, 2004, the University of Pittsburgh Medical Center transferred $55 million to investment funds in the Caribbean, more than half of the money destined for a Cayman Islands office building known as the Safehaven Corporate Centre.
“The transfers were part of $204.5 million sent by UPMC to sun-soaked, tax-friendly locations in the Caymans, the Virgin Islands or Bermuda during the fiscal year beginning July 2004 and ending June 2005, according to Internal Revenue Service records. Many of the funds were set up by private investment syndicates looking to avoid U.S. taxes.
“….In fact, nonprofit health-care providers, colleges and philanthropies with major endowments have spent the last decade or so steering large chunks of their portfolio away from the volatile U.S. stock market and into less traditional investments — particularly private equity and hedge funds, thousands of which are registered hundreds of miles south of Miami, in the Caribbean. Thanks to a loophole in the tax code, which is now under examination by Congress and soon could be eliminated, there are tax benefits to the offshore strategy…”
“Investing in a U.S.-based hedge fund — which typically borrows against the investors' kitty, using the original investment plus the leveraged money to play for big short-term gains — normally would subject a nonprofit to something called the ‘unrelated business income tax.’
“….But by investing offshore, nonprofits are able to escape that tax — for now. The U.S. Senate Finance Committee is considering a proposal that would tax the dividends from offshore hedge fund investments, which, if implemented, would significantly lower the nonprofits' hedge fund returns.‘It's troubling that some nonprofits are part of that game,’ Sen. Charles Grassely [sic] of Iowa, the senior Republican on the committee, said recently.
“….In its most recent filing, [Pitt] reported, among other transfers, having sent $3 million to Archipelago Holdingsin Bermuda, $3.5 million to Beacon International in Bermuda, $3.5 million to Bermuda's March International, and $12.5 million to Mason Capital Ltd. in the Caymans.” [Pittsburgh Post-Gazette, July 6, 2007]
The Associated Press reported on 2/18/10:
“Thousands of international companies and hedge funds have traditionally been incorporated in offshore financial centers in the Caribbean and elsewhere, drawn by low tax rates and banking rules and legal systems that make it easy to move capital around the globe. But U.S. and European lawmakers and regulators are weighing a number of proposals aimed at cracking down on abuses and collecting more tax revenue from multinational operations…. The Cayman Islands, which lie 150 miles (240 kilometers) south of Cuba, does not directly tax any of the roughly 80,000 companies registered there, and has no income tax or capital gains tax. Its offshore financial services sector accounts for about half of the islands' economy.”
Meg Whitman must release her income tax returns and prove to the people of this state that she is not trying to dodge paying her fair share in taxes by continuing to stash her millions in places offshore, like Bermuda and the Cayman Islands.