“Let me tell you about the very rich,” wrote F. Scott Fitzgerald, whose book about the very rich, The Great Gatsby, is about to be adapted into another movie. “They are different from you and me.”
Indeed they are. But they’re not so different from one another. Take Penny Pritzker, the Hyatt Hotel heiress and Commerce Secretary nominee. Pritzker is worth an estimated $1.85 billion. In 2008, when Pritzker’s name was first mentioned for a cabinet position, The New York Times asked her a few questions about her finances. Here’s one answer.
Q. Is your wealth still primarily held in offshore trusts? Do you think it is ethical to use such arrangements to evade paying U.S. taxes, even if it is legal to do so because of the grandfathering in?
A. The vast majority of wealth that is publicly attributed to me is held in trusts for my benefit and the benefit of my family. Most of those trusts are based in the United States of America. I am a beneficiary of some non-U.S. situs trusts which were established about 50 years ago (when I was a child) and are administered by a non-U.S.-based financial institution, as trustee. I do not control how those trust assets are administered.
Here’s what Mitt Romney, Obama’s opponent in the 2012 presidential election, told the National Review, when asked why Bain Capital, the investment firm he founded, invested money in the Cayman Islands, which does not tax profits, capital gains or income, or levy withholding taxes on foreign investors.
The so-called offshore account in the Cayman Islands…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.
The world of finance is not as simple as some would have you believe. Sometimes a foreign entity is formed to allow foreign investors to invest in the United States, which may well be the case with the entities that Democrats are describing as foreign accounts.
And here was his explanation when he was asked, while running for president, whether his money was still invested overseas.
“Any investments I have are managed by a blind trust. I don’t make investments in Bain or anywhere else. That’s done by a trustee.”
Obama’s famous “America the Beautiful” ad attacked Romney
“He had millions in a Swiss bank account,” the ad proclaimed. “Tax havens like Bermuda…And the Cayman Islands.”
The difference, of course, is that Pritzker didn’t spend her money to take Obama’s job away. As finance chair of Obama’s 2008 presidential campaign, and one of his most generous donors, she spent it to help him get his job. That’s an acceptable use of offshore profits.