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Mitt Romney faces more questions about tax havens

Presumptive Republican presidential nominee, former Massachusetts Gov. Mitt Romney, speaks at a Victory rally at the Long Family Orchard Farm and Cider Mill in Commerce, Mich. 

Image of Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens
Author: Nicholas Shaxson
Publisher: Palgrave Macmillan (2012)
Binding: Paperback, 272 pages

Tess Vigeland: It may not be your vision of a fabulous Friday, but plenty of tax experts and other interested parties spent the day poring over 950 pages of tax documents -- all related to Republican presidential candidate Mitt Romney and his former company Bain Capital. The paperwork was posted yesterday by the news and gossip blog Gawker as part of its investigation into Gov. Romney's income and tax payments.

Many of the questions arising from those taxes stem from offshore accounts. So we're going to talk with Nicholas Shaxson. He wrote a book called "Treasure Island: Uncovering the Damage of Offshore Banking and Tax Havens." Welcome to the program.

Nicholas Shaxson: Hi. Nice to talk to you.

Vigeland: What do you make of this news surrounding Gov. Romney and the pages and pages of documents that were published yesterday?

Shaxson: I certainly have looked at all those -- there's an awful lot of stuff there. One of the things that struck me -- the complexity of the things that Bain is involved in and that Romney has been involved in is absolutely staggering. People in the financial sector are kind of used to this level of complexity, but for the ordinary person on this street this stuff is really, really strange.

Vigeland: But if it's strange, that certainly doesn't mean that there's anything wrong with it?

Shaxson: Not necessarily. They don't seem to have produced any major smoking guns. A couple of interesting things have come up. One, there does seem to be confirmation of the use of offshore blocker corporations. This is something that for some time the Romney camp has refused to answer questions about. It seems likely that Romney has been using the tax havens to reduce his tax bill, but we haven't had confirmation of this.

Vigeland: Is that illegal?

Shaxson: No, no, it's not illegal. It's not breaking the law. But the Romney camp has said in the past that Romney has paid his taxes by investing through these offshore blockers -- he pays just as much tax, the very same amount of tax as if he had invested directly in the Untied States. If these Gawker documents do reveal that his investments have been rooted through these blockers, then that will reveal that to be untrue.

Vigeland: Gov. Romney said today that a lot of large companies make a regular practice of using these low-tax havens to save money. How easy is it for multinationals, wealthy individuals, to move their assets overseas in these tax havens?

Shaxson: It's very easy indeed and it's getting ever-more rampant. This is not about moving plant and equipment, this is just about shuffling numbers really.

Vigeland: What is the problem with offshore banking? I mean, if it's legal, why not do it?

Shaxson: The offshore system of tax havens is bigger and badder than almost anybody realizes. Recently the Tax Justice Network put out a study estimating that there's up to $30 trillion offshore. A lot of this activity is not strictly illegal, but a lot of it is abusive. This whole system is profoundly danerous, profoundly harmful to democracy because it effectively provides escape routes from tax, disclosure, criminal laws from the wealthiest elites -- who are the ones who can afford to use tax havens -- and leaving everybody else to kind of pick up the tab.

Vigeland: If it's that appalling, how is it allowed?

Shaxson: That's always the question that comes back. Essentially, there have been numerous attempts by governments to rein this thing in and the lobbying power of particularly the financial sector -- the offshore system is, the popular imagination, it's a kind of exotic side show to the global economy where a few celebrity tax cheats and mafioso and stuff roam. But today, no, these days it's all about the financial sector. This is about Wall Street and Wall Street loves tax havens. We've seen the power of Wall Street in eviscerating reforms. And essentially I think that's probably the most important reason.

Vigeland: Nicholas Shaxson is the author of "Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens." Thank you so much for joining us.

Shaxson: Thanks very much.


Vigeland: And for an explainer of what matters in the Romney tax documents and what doesn't, check out a blog post by our New York bureau chief Heidi Moore -- Explainer: The Romney Tax Documents, Part I.

About the author

Tess Vigeland is the host of Marketplace Money, where she takes a deep dive into why we do what we do with our money.
Image of Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens
Author: Nicholas Shaxson
Publisher: Palgrave Macmillan (2012)
Binding: Paperback, 272 pages
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Ask not what you can do for your country. Ask what your country can do for you.

It may not be illegal, but it isn't very "American" for a wannabe POTUS to AVOID paying American taxes. Or NO taxes, at all!

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