Bloomberg - Cayman Island Tax Cheat

The Wikileaks source who has handed over the names of 2,000 individuals and institutions who have used the Cayman Islands as a venue to avoid paying taxes said the following today:

"Working in the Cayman Islands I realized that something was wrong... I want to let our society know what I do know because it's damaging our society in a way that money is moved away by financial institutions, multinational conglomerates and high-net-worth individuals, money is hidden in offshore ventures."

Guess who likes to use the Cayman Islands to avoid paying taxes on his philanthropic foundation?

Mike Bloomberg's idea of charity still stops at U.S. taxpayers. The latest filings for the mega-foundation run by New York's richest resident shows that he pumped a whopping $420 million last year into his do-gooder operation - cue the cheers! -- while parking $75 million in offshore tax havens -- Hiss! Boo!

You don't have to be a card-carrying Bloomberg Basher to think this is the bigger part of the story. Even the mayor's own Bloomberg News carries the Associated Press's story today by Sarah Kugler Frazier with a lede emphasizing the tax dodge:

"Mayor Michael Bloomberg's money managers invested more than $75 million of his money in offshore tax havens in 2009, according to his philanthropic foundation's latest tax forms, continuing an activity seemingly at odds with his public statements about the economy."

The response from City Hall spokesman Stu Loeser is that this is all designed for the public good: The mayor "pays an enormous amount in taxes, but his foundation's investment strategy, like those of many other large foundations, is designed to maximize the amount of money going to charity," Loeser told the AP.

Ah, yes - a foundation strategy to avoid paying federal, state and city taxes or, as we used to call this kind of thing back in the day, a foundation strategy to cheat on their taxes.

Bloomberg's excuse?

Hey, all the cool foundations do it!

Indeed they do.

And they are engaging in tax fraud.

Can't wait to see the names of the individuals and institutions Wikileaks divulges from the Cayman Islands tax cheat disks.

I'm not saying Bloomberg or his foundation are going to be on that list, but you can bet some of those foundations Bloomberg's spokesman Stu Loesser referred to in his "All the cool foundations are cheating on their taxes!" statement will be.

And regardless, Bloomberg uses all the usual tax dodges to cheat on his taxes:

According to an extensive review of the mayor’s financial records by The Observer, even as Mr. Bloomberg was trying to counter the loss of taxes and other income from the richest New Yorkers, the foundation he controls was in the process of shuttling hundreds of millions of dollars out of the city and into controversial offshore tax havens that would produce nothing at all for the city in terms of tax revenue.

By the end of 2008, the Bloomberg Family Foundation had transferred almost $300 million into various offshore destinations—some of them notorious tax-dodge hideouts. The Caymans and Cyprus. Bermuda and Brazil. Even Mauritius, a speck of an island in the Indian Ocean, off the coast of Madagascar. Other investments were spread around disparate locations, from Japan to Luxembourg to Romania.

...

BEYOND THE U.S. BORDER, in places like the Caymans, the climate for charities is much more inviting. Nonprofits like the Bloomberg Family Foundation are tax-exempt, but some investments that aren’t related to an organization’s core mission can be subject to a levy called the Unrelated Business Income Tax (UBIT, for short). So to avoid more than 40 percent in federal and local taxes on unrelated businesses, nonprofits use a legal loophole, routing investments through offshore tax havens.

“It cleanses the unrelated business taint from the total return,” Harvey Dale, of the N.Y.U. School of Law, told The Observer. “You invest in the same thing through an offshore entity. You are making the same investment; you are just putting an intermediary entity in the middle. Instead of investing directly in the hedge fund, you invest in the foreign entity, which, in turn, invests in the hedge fund.”

“Is (using the loophole) allowable under the law? Yes,” said tax expert Dean Zerbe, a former staffer at the Senate Finance Committee. “Is it something that is a best practice, particularly by an elected official? I think they should look very hard when they are engaging in this kind of activity. What does it say to the average New Yorker?”

The foundation’s tax returns indicate that Mr. Rattner’s team migrated much of its money to large hedge funds with ostensible island charters, including several in the Caymans, two of which list an address at P.O. Box 309 of the Ugland House, a building that “houses” an estimated 12,000 to 18,000 foreign businesses.

...

But tax havens—despite the protestations of the president, a slew of senators and at least one district attorney—remain legal. “I made a lot of effort to shut down that loophole,” former district attorney Robert Morgenthau told The Observer.

Mr. Morgenthau said he’d spoken generally about offshore loopholes to four U.S. secretaries of the Treasury, twice to the commissioner of the general revenue and, as it happens, to Mr. Bloomberg himself. The mayor seemed uninterested in the offshore issue, he said. “I’ve talked to the mayor about it, and the budget director,” Mr.

Morgenthau said. “We did get help from the State Division of Taxation and Finance. But nothing from the city.”

Gee - I can't imagine why Bloomberg wouldn't want to help Morgenthau close the tax dodge with 12,000-18,000 businesses "housed" in it.

Oh, right - because his foundation has a P.O. Box there.

Bloomberg is a tax cheat and a crook.

In addition, as he screams about falling tax revenue and the need for budget cuts and layoffs, he is a hypocrite.

Were he to close the tax loophole that allows companies based in NYC to skirt tax laws by using Ugland House in the Caymans, maybe the city wouldn't need to cut the budget so much or lay any employees off.

But that would mean ending a tax dodge he and his Wall Street and corporate criminal friends have been enjoying for years and there is NO way Bloomberg is going to do that.

So instead we have to wait and see who is on the Wikileaks: Cayman Islands Edition list and shame the crooked bastards into paying their taxes.

Because how much you wanna make a bet that Barack Obama's government is NOT going to go after any of the tax cheats named on the Wikileaks list?

How much you wanna bet they go after Wikileaks instead?