IF you had a billion dollars in the bank and lived a jet-set lifestyle out of a string of luxury homes filled with valuable artworks, your taxes would be pretty hefty, right?
Well not entirely, according to a Senate probe that has examined hundreds of documents and issued 74 subpoenas as it turns a spotlight on the murky tax dealings of some of America's richest citizens.
The Senate's subcommittee on investigations has spent a year tracking the finances of several billionaires and discovered they funnelled hundreds of millions of dollars to tiny Caribbean islands and the Isle of Man.
Named in a subcommittee report are Robert Wood Johnson IV, the owner of the New York Jets American football team, Haim Saban, the billionaire behind the Mighty Morphin Power Rangers TV show, Texan tycoons Charles and Sam Wyly and telecoms entrepreneur Walter Anderson.
"Our investigation blows the lid off tax haven abuses that use sham trusts, shell corporations and fake economic transactions to hide the fact that US citizens are controlling offshore assets ... and dodging taxes," Senator Carl Levin fumed as the panel released its findings last week.
Investigators claim Johnson and Saban used a strategy to shield billions of dollars out of sight of the Internal Revenue Service (IRS), while the Wyly brothers allegedly have not paid tax on over 100 million dollars in stock options compensation held offshore.
The billionaires engaged "an army of attorneys, brokers and other professionals" to set up their offshore corporations and trusts, according to investigators.
Vast amounts of cash were transferred to the offshore corporations or trusts, which sometimes traded among themselves or granted huge "loans" back to some of the billionaires and their families in the United States.
Between 1999 and 2004, about 85 million dollars in "offshore dollars" was credited to US accounts and used by the Wylys to buy and outfit luxury homes in Aspen, Dallas and Malibu, according to the report.
One five-million-dollar "loan" was made to a "trust" for the purchase of an iconic Norman Rockwell painting, "Rosie the Riveter."
Because the entities were based in such places as the Isle of Man, the Cayman Islands and the British Virgin Islands, and not registered in the United States, the billionaires avoided filing onerous tax returns to the IRS.
However, lawmakers claim many of the complex deals were designed to hoodwink the US taxman.
The offshore deals, the report said, enabled Johnson and Saban to "shelter" hundreds of million of dollars through an opaque deal called POINT, or "Personally Optimised INvestment Transaction."
Saban blamed his tax advisers for the transactions, telling Senate investigators, "You have a very disappointed person, who feels misled, lied to, cheated."
Lawmakers estimate that such transactions cost the US taxpayer up to 70 billion dollars a year and they are demanding a radical reform of the law.
Levin, a Democrat, said cash stashed by an American in an offshore haven should be taxed as it would be domestically.
Republican lawmakers also criticised tax advisers, financial brokers and prestigious law firms, including the New York firm of Cravath, Swaine and Moore, for designing and marketing the schemes.
IRS commissioner Mark Everson told lawmakers that "offshore tax shelters are robbing the American treasury of billions of dollars," and vowed to prosecute their improper use.
Johnson may face a 17-million-dollar tax bill, Saban is in negotiations with the IRS, the Justice Department is investigating the Wylys, and Anderson, who shipped over 450 million offshore, is awaiting trial.