The Hypocrisy Of Trump’s Tax Reforms As Evidenced By His Elite Cabinet

Anita Gooding
Posted on February 05, 2018, 5:33 pm
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On the road to the White House: during the run up to the 2016 elections,  Donald Trump promised to introduce a tax reform that would bring large American companies back to the country and recover billions of US companies now stashed abroad.

Recently Trump repeated his seriousness towards that.

“Finally, our plan will bring back trillions of dollars from offshore … that will come pouring back into our country that will be put to work and will be spent by our companies that could never get the money back for many years. Bring the money back. We’re rebuilding America.”

Trump is, however, surrounded by wealthy people who either legally shelter their investments or enact policies that make the company’s profits to be derived from tax havens

GARY COHN:

Trump’s chief economic adviser, who is the driving force behind the White House tax reform effort, is no stranger to offshore finance. The leaked documents reveal that for various periods between 2002 and 2006, Cohn was president or vice-president of 22 separate entities in Bermuda for Goldman Sachs.

The Bermuda companies specialized in real estate, and though all were based on the island, they also had registered addresses at 85 Broad Street in New York City, the headquarters until 2009 of Goldman Sachs.

Cohn, who did not respond to requests for comment, stood down from the Bermuda companies in 2006, around the time that he took up the position of president at Goldman Sachs.

RANDAL QUARLES:

The Trump administration’s most senior banking watchdog appears in the Paradise Papers in connection with an offshore bank that is under investigation by US authorities for possible tax evasion.

Quarles, Trump’s vice-chairman for supervision at the Federal Reserve, is named in the files as an officer of two firms incorporated in the Cayman Islands by the Carlyle Group, the private equity giant where Quarles was a partner until 2013.

The files detail transactions between one of Quarles’s offshore vehicles and Butterfield, a Bermuda-based bank in which Carlyle had led a $550m investment in 2010. That stake was one of several in distressed banks bought up by a new specialist team at Carlyle, including Quarles, following the 2008 financial crisis.

Quarles told ethics regulators this year that he held assets worth between $5m and $25m in a Carlyle fund that held a stake in Butterfield. He said he intended to sell his holdings in that and most other Carlyle funds.

CARL ICAHN:

Icahn, a friend and former adviser to Trump, owns a $250m mining company spread across three tax havens and structured in a way that limits the information it must disclose to US authorities.

The leaks detail how Icahn holds a controlling stake in Ferrous Resources, a Brazilian mining company officially based on the Isle of Man. It in turn owns a pair of holding companies in Luxembourg and Malta, which operate iron mines in Brazil.

All three jurisdictions offer low- or zero-tax regimes for corporations, making them destinations of choice for foreign businesses seeking to legally lower their tax bills. A report in 2015 by Citizens for Tax Justice said Icahn operated 20 subsidiaries in offshore tax havens.

Icahn was a special adviser to the president until August and has a net worth of about $16.6bn, according to Forbes.

An email unearthed in the Paradise Papers said the structure of Ferrous Resources meant it escaped some disclosure requirements under an Obama-era law aimed at preventing offshore tax avoidance. The structure of Ferrous Resources was in place when Icahn bought the company.

Icahn was separately identified in the documents as having been a director for 11 years of Scientia Health Group, an investment company based in Bermuda in which he and his wife, Gail, held a stake. The firm’s investors also included the celebrity chef and lifestyle guru Martha Stewart and the disgraced film mogul Harvey Weinstein.

TOM BARRACK:

The chairman of Trump’s inaugural committee leads a $58bn real estate investment trust that channels some of its profits to the low- or no-tax jurisdictions of Luxembourg, the Cayman Islands and Lebanon.

Barrack, who has described himself as one of the president’s “closest friends for 40 years”, appears in the Paradise Papers through offshore subsidiaries of Colony North Star, of which he is CEO.

In 2011, Appleby helped devise a rolling credit facility linking Barrack’s US-based investment funds with a pair of Cayman-Islands-based subsidiaries dealing in troubled real estate, which the lawyers asked him personally to approve.

A confidential chart in the leaked documents suggested money would flow from the funds in Delaware to a Cayman Islands entity, Colony Distressed Credit Fund II Feeder A, which was “exempted”, meaning it paid no local taxes. The chart suggested the money would then be repatriated in a complex web to a separate Delaware subsidiary closer to the parent company.

Barrack was an early endorser of Trump for president, co-founding the Rebuilding America Now Super Pac, which pumped $23m into the 2016 race. He was rewarded by being invited to deliver a keynote address at the Republican national convention.

Barrack declined to clarify whether he was aware that Colony was passing money through a subsidiary in the Cayman Islands or whether the feeder funds were set up to reduce tax payments. The firm said: “Colony North Star is in strict compliance with the letter and spirit of all applicable rules for cross-border business, as we have been for more than 25 years.”

 

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Anita Gooding
Political Analyst

My name is Anita, and I'm a UC Berkeley alumna and currently based in Minnesota but from the United Kingdom. I have been actively involved in political reportage since the days of Bill Clinton in the White House and have always kept tabs on political events in the United Kingdom and the European Union at large. I take special delight in covering the activities of frontline politicians in the US and EU I joined the Herald Reporter’s team of correspondents in October 2017 out of my passion for journalism to cover US and EU evolving and trending political news.