Hate group leader Mat Staver loaths Southern Poverty Law Center. The latest missive from Mr. Staver bears the subject line: “SPLC Sends Millions of Cash to Tax Haven Accounts.”
In short, uh uh. SPLC has a large endowment and the assets are
professionally managed. Some of the assets are invested in equity
partnerships. Some of those are based in the Cayman Islands.
Southern Poverty Law Center designates Mat Staver’s Liberty Counsel a hate group. The ability to process the designation eludes Mr. Staver. Staver’s indignation and frustrations are further inflamed by the civil RICO suit Jenkins v. Miller (the parental kidnapping case). This case was initiated by SPLC on behalf of the plaintiff, Janet Jenkins. Staver is a defendant in the case individually and as agent of Liberty Counsel and Liberty University. He finds himself fighting not only to keep all of his assets but possibly to retain his law license. He has had to hire outside Vermont counsel who, based on the docket, is racking up significant billable hours. Staver is in a full-froth rage.
Profits from these investments are taxable to SPLC. The reason that these are located in the Cayman Islands is because they are free of local taxes (CI provides a passthrough). This makes no difference to SPLC which pays federal income tax on the gains. However this does not impose a tax burden on investors from other countries that have different tax laws.
Someone got hold of SPLC’s 990-T. For the year ended October 3, 2016. The 990-T reports taxable income. SPLC reported a loss of $3.5 thousand from 14 ventures. One or more are headquarted in the Cayman Islands. The largest gain among the 14 was $123 thousand. The largest loss, $127 thousand. Aside from the fact that this is not a material amount, Staver gives the impression that SPLC is doing something nefarious with a “tax haven account.” It’s nonsense.
The Cayman Islands is a tax haven but not to the benefit of SPLC. The tax “haven” benefit applies to corporations establishing a subsidiary in the Cayman Islands. By routing profits through the subsidiary the corporation can avoid US corporate taxes (the Cayman Islands does not levy a corporate tax). The bottom line is that any profits from these partnerships that benefit SPLC would be taxable to SPLC at the prevailing corporate tax rate.
Actually the bottom line is that this is all just incoherent noise. Staver is a rube. He has absolutely no idea what this all means.
Furthermore, on its tax return Liberty Counsel shows three taxable entities. In this case (and unlike SPLC) Liberty Counsel is the direct controlling entity. Perhaps I should obtain a copy of their 990-T filing.