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Sanjay Sanghoee Headshot

Romney's 'Bermuda-Gate': Why His Offshore Bank Accounts Really Matter

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This week has been all about taxes, with President Obama supporting tax cuts for the middle class but not for the wealthy and his Republican challenger crying foul. So far it has all been predictable, but when you throw in the recent revelation of Mitt Romney's offshore bank accounts, the picture changes a little. To put it simply, it becomes easier to understand why Romney gets so worked up about the issue of higher taxes for the wealthy -- or rather the closing of tax loopholes to ensure that the rich pay the same rates as everyone else -- he takes it personally.

Having worked on Wall Street, I am not surprised that Romney has bank accounts in places like Bermuda and the Cayman Islands, which are well-known tax havens; in some cases, money is kept offshore to facilitate foreign investments, but the overwhelming reason is to save on taxes. After all, it is perfectly legal and if the U.S. tax code allows it, then why should a businessman not take advantage of it?

But it does cast doubt on Romney's objectivity. Are his views on taxes really a matter of principle or driven by his status as a wealthy man? As more details surface about his blind trust kept in offshore accounts, his use of the controversial blocker corporation -- which is used to shield investments in an IRA from taxes, and his reluctance to reveal his financial dealings, I am beginning to suspect that there may be more than a touch of the personal in his campaign platform.

The Bermuda-Gate debacle also brings into question Romney's core beliefs. It is disturbing to think that a potential president of the United States would consider it acceptable to siphon money into offshore bank accounts in order to shield that money from taxes. Taxation, unpleasant as it might be, is the primary funding mechanism for our nation; without it we would be reduced to a wasteland of crumbling infrastructure, non-existent public services, and anarchy. Taxes fund most of our crucial public functions from road repair and public transport to the police force, welfare, and even trash collection. Why then would a highly educated, politically conscious, and ostensibly patriotic Romney go out of his way to minimize his own share of taxes?

At best it shows a greedy mentality, and at worst demonstrates a disregard for the welfare of his country. According to a 2011 report from the California Public Interest Research Group, offshore tax havens cost the US government roughly $100 billion every year.

The Republican party is big on patriotism. The platform that Romney is running on for president is steeped in classic Americana -- mom and apple pie, the flag, guns, Christian values, and a lot of other things that evoke pride in and ask for devotion to the United States of America. But devotion to one's country also requires personal sacrifice for the larger good, and for Romney to preach the Republican gospel from the top of a mountain while privately amassing a fortune by evading taxes is deeply hypocritical.

It is true that we live in cynical times and that notions of patriotism or personal sacrifice are no longer fashionable -- more a charming holdover from a bygone era than a practical blueprint for our future -- but the president of the United States cannot be a cynic. He must not only practice what he preaches, but be an example to all Americans of the possibilities inherent in our great democracy. In order for that to happen, a candidate running for president must exhibit self-restraint and selflessness, neither of which Romney has demonstrated in his past. In addition, his campaign rhetoric makes it clear that he is unwilling to reconsider his extreme vision of capitalism, which makes him either clueless or arrogant.

The presidential election is not about morality -- no one is questioning Romney's right to create wealth through private equity or by putting his money into offshore bank accounts - but it is about personal beliefs and judgment. Romney's success as a businessman may be a source of pride for him, but the way he made that money is fair game for debate when electing the leader of our nation. If Romney is going to stand on a platform of patriotism and love of country, then he needs to show that love himself, and siphoning off his wealth from American shores to save on taxes which the United States desperately needs is no way to do that.

In case readers are curious about how offshore bank accounts and the tax game really works, my novel "Merger" (available from Amazon on the link below) includes a fictional but detailed account of the process of moving money through dummy corporations and faceless entities scattered throughout the globe.