Guess which
former governor made his state number one in the country in tax shelters for corporate America? Not George Bush!
Howard Dean is fond of criticizing politicians who provide tax breaks to "large corporate interests," and one of his favorite campaign lines is a blast at the Bush administration for doling out tax cuts to top executives of Enron Corp.
But during Dean's 11 years as Vermont governor, he enacted tax breaks that attracted to the state a "Who's Who" of corporate America -- including Enron -- to set up insurance businesses. Indeed, Dean said in 2001 that he wanted Vermont to "overtake Bermuda" as the "world's largest" haven for a segment of the insurance industry known as "captives," which refers to firms that help insure their parent companies.
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But while the nearly 500 captive insurance companies have been a windfall for Vermont -- providing 2 percent of the state's general funds from tax on the $7 billion worth of premiums that go through Vermont annually -- the industry also is highly controversial. Some analysts believe that while Vermont profits, other states lose corporate tax revenues because of the way a company's taxable income may be reduced if it uses captives.
"Dean apparently has no problems with tax havens as long as they are in the state of Vermont," said University of Connecticut Law School professor Richard Pomp, author of the textbook "State and Local Taxation." "He can't have it both ways, because Vermont is acting like a little Bermuda."
In fact, Dean has often complained about Bermuda's tax haven status, saying that the United States needs a president "who doesn't think that big corporations who get tax cuts ought to be able to move their headquarters to Bermuda."
Dean spokesman Jay Carson said there is no contradiction between Dean's complaints about President Bush's corporate tax breaks and the former governor's own efforts to help the captive insurance industry. "This is a legitimate industry, perfectly legal. It helped the economy here, and Governor Dean is going to make no apologies for that," Carson said.
As governor, Dean saw his competitor for this business as Bermuda, which hosts nearly three times as many captives as Vermont. "We consider our competition to be Bermuda or the Cayman Islands," Dean said in a 2001 article published by the A.M. Best Co. "We feel pretty good about what we are doing, but it is competitive. Our goal is to overtake Bermuda as the world's largest captive domicile." Carson, the Dean spokesman, said yesterday the governor was referring at the time to his desire to "bring jobs and revenue back to the United States."
Uh-huh. All of the other Democratic presidential candidates should jump on this. This goes especially well with John Kerry's new "Dean says one thing but does another" line of attack, though at this point it probably too late for Kerry to benefit.
