The New York Times brings another article on Mitt Romney’s investments. Although it is a more thorough analysis than before, it still fails to understand the basic tenants of US tax policy: worldwide taxation on individuals, and deferred taxation on active businesses. Investing abroad – whether it is in Paris or in Cayman – doesn’t save a US citizen taxes. US businesses, on the other hand, can defer payment of tax until they send the money home.
Take the International Herald Tribune, for example. It’s been published in Paris since 1887, and the Times has been an owner for over forty years. Surely the Times is aware that income from this venture is not taxable until it is returned to the US. We can’t say whether the Herald-Trib earns a profit, but if it does, it’s not taxed in the US until repatriated. Doesn’t that make it at a tax shelter under the standard imposed on Mitt Romney? If not, why should income from Cayman be any different than income from Paris? Both are deferred under US tax law.
But you don’t read Times reporters complaining that the Times is sheltering its profits in the City of Light. They know the newspaper is based there because it’s a convenient place for journalists to cover the news for American ex-pats and tourists, while enjoying its fine museums, cuisine and high fashion. But Cayman has some things Paris doesn’t have, too. Our “Seven Mile Beach” is more beautiful than the Champs-Élysées. Plus we would rather scuba dive here than in the Seine. Regardless of where you prefer to vacation, both should be treated the same for US tax purposes.
As the US Presidential campaign continues, we will try to keep the politics from obscuring the facts. If you want to know more about Cayman, please come visit us. Our fruits de mer is fresher.