From the Citi to the Caymans
Jack Lew rehabilitates what Obama once called a notorious ‘tax scam.’
Review & Outlook
The Wall Street Journal
No matter how Jack Lew performs at his Senate confirmation hearing on Wednesday, his nomination to be Treasury Secretary has already produced one big winner: the Cayman Islands. The Caribbean low-tax haven is getting a political rehabilitation thanks to Mr. Lew’s participation in a Cayman-based fund he invested in while working at Citigroup from 2006-2008.
For years Democrats have denounced the Caymans, which has no corporate income tax, as a refuge for tax cheats. In 2012 President Obama ripped Mitt Romney for investments based there. But now an Obama spokesman suggests that Mr. Lew’s Caymans investment, a Citigroup fund he chose to invest in, was a model of transparency and says that “Jack Lew paid all of his taxes and reported all of the income, gains and losses from the investment on his tax returns.”…
…Our legal sources say that venture-capital funds like Mr. Lew’s will often use a Caymans vehicle so that any non-U.S. investments will more easily avoid being characterized as “controlled foreign corporations” (CFCs). If a venture fund owns more than 50% of a CFC, then U.S. investors might have to report as income some of the CFC’s income, even if it hadn’t been distributed to the fund or its investors.
Speaking of income, Senators may also want to ask about the last paycheck Mr. Lew received from Citigroup…
Read the whole thing at The Wall Street Journal.
…Mind you, I don’t really expect this detail to torpedo the Lew nomination for Treasury Secretary, but Chuck Grassley still plans to have fun with this:
“President Obama has been almost obsessively critical of offshore investments,” Mr. Grassley said. “He called Ugland House ‘either the biggest building or the biggest tax scam on record.’ That makes this Cayman Islands investment of his top official and now Treasury secretary nominee worthy of attention. The irony is thick. Members of the Finance Committee will question Mr. Lew about his foreign investments at the hearing.”
As well they should.
Update: And then, there’s Benghazi: Former Obama Chief of Staff Lew Dodges Benghazi Qs
And he’s going to run our nation’s Treasury?