Billionaire cash goes on vacation to Bermuda

Bloomberg, via Buzzflash

In the long list of revealing commentaries BuzzFlash at Truthout has written on the legal and illegal greedy schemes of the rich to get richer – and the failure of the US government to hold them accountable, this is the first time we've ever seen cash sent on vacation to the sun-drenched shores of Bermuda in order to lower tax rates for gluttonous hedge fund millionaires and billionaires.

Bloomberg Businessweek (ironically owned by politician plutocrat and defender of the oligarchy Michael Bloomberg) just reported that "a hedge fund tax dodge uses Bermuda reinsurers" (with a large photo of an idyllic beach above the story, accompanied by the caption "reinsure your taxes away"). But the Bermuda based "reinsurers" are sometimes just little more than mail drops that serve as a vehicle for tax-evasion money laundering, with little concern being expressed by the IRS.

The Bloomberg Businessweek article begins with an example of the apparently legal scheme, given the lack of IRS interest in setting limits on such financial profiteering:

Last year, about $450 million belonging to top executives at billionaire hedge fund manager John Paulson’s New York firm made a quick round trip to Bermuda. In April the executives sent the money to a reinsurance company called PaCRe they’d set up on the island. By June, PaCRe had sent all the cash back to New York, to be invested in Paulson & Co. funds. By recycling the funds through Bermuda, which doesn’t levy a corporate income tax, the Paulson executives are positioned to exploit a little-known loophole, reducing their personal income taxes and delaying paying the bill for years. 

At a time when the Obama administration and congressional leaders are calling for a corporate tax overhaul that would eliminate some loopholes, the tax dodge of using reinsurers—which provide coverage for other insurers rather than the general public—is gaining popularity among hedge funds.

(More here.)