Jim Durbin does his best to explain Missouri Senator Claire McCaskill's Bermuda tax shelters.
At odds are several statements Claire McCaskill has made about her holdings in Bermuda.1) In the debate with Jim Talent in 2006, McCaskill said "There is absolutely no tax sheltering that is occurring that is not part of a tax code that Senator Talent embraces.” (Kansas City Star, October 18, 2006). This is a pretty straightforward admission that tax sheltering is occurring.
2) In this KY3 video from this year, McCaskill says the reinsurance company is located in Bermuda because most reinsurance companies are located there in order to sell insurance to all 50 states on the secondary market. In that video, she also claims that her investments are not a tax shelter, and have never been a tax shelter. Now, that contradicts what she said in 2006, but this video is important, because it suggests a high degree of familiarity with how reinsurance works. It's not true that most reinsurance companies are in Bermuda, but there are quite a few, and some of the biggest incorporate there. I'll expain why later. It's not the reason McCaskill gives.
3) The company at question is the Rural Reinsurance Company International LTD. The name comes from McCaskill's 2008 financial disclosure, available here at Legistorm.com. Curious, I went back and looked at the 2007 disclosure, and saw something curious. In the 2007 filing, there is no Rural Reinsurance Company International. There is an entry for the Rural Housing Re-Insurance Co Of America, LTD. Now, I'm not a tax lawyer, but it does seem that the company is different. It now seems to brand itself as selling internationally, as oppposed to selling just in the US. It could be the same company, but official name changes and DBA's matter. The investment has also increased in value, moving from the $250-500k bracket to the $500K-$1,000,000 bracket. Dividend income remains the same $0-$201 a year (which sounds like a pretty poor investment if you're planning on living off those dividends). The lack of dividend income is a sure sign of tax advantages. Those files have a lot of dividends that pay $0-$201.
That's just the set-up. If you're interested in details of how Senator McCaskill is using "loopholes" to pay as little in taxes as possible, read the whole thing. It doesn't seem that she's doing anything illegal, but her tax manipulations appear unsavory for a Democrat in these days of evil corporations and greedy "speculators".
(But hey, maybe she's angling for a Cabinet post!)
