Senate voting on Pritzker confirmation today: Billionaire reveals why she needed a loan

WASHINGTON—Chicago billionaire Penny Pritzker, expected to be confirmed on Tuesday to be the next Commerce Secretary, has not yet filed her federal income tax return covering 2012 income, but estimates, in a letter to Sen. Charles Grassley (R-Iowa), that her tax rate will be 39.1 percent.

Pritzker sailed through her confirmation hearing, winning praise from GOP and Democratic senators. Grassley has been her chief and most vocal critic.

Pritzker met with him earlier this month and sent him a two-page letter on Monday in reply to his concerns, a copy of which was provided to the Sun-Times.

“As I said to you during our meeting, the reason I am asking these questions is that President Obama has frequently made offshore investments a centerpiece of his attacks against political opponents. In fact, President Obama’s campaign called it “betting” against America,” Grassley said in his June 17 letter.

Grassley, who has questioned whether Pritzker’s financial empire used “tax avoidance” schemes, wrote Pritzker regarding tax rates paid in 2011, $53.6 million she received from the family Bahamian trust, details on how her compensation was determined and whether the White House, during the vetting process, ever asked her questions about her offshore trusts.

Pritzker declined to disclose to Grassley information about the White House vetting questions to her, asking him to “contact the White House directly” regarding his questions.

Though Pritzker told Grassley about her estimated rate for 2012 income, that may an answer to a question he did not exactly ask.

Grassley asked Pritzker about what effective tax rate “did you pay in 2011”—not what she anticipated paying in 2012, when she was paid $53.6 million from a family trust in the Bahamas, income that was treated as “ordinary income” that could have driven up a tax rate.

Regarding the Bahama trust, Pritzker, in advance of her Senate confirmation hearing before the Commerce Committee—of which Grassley is not a member—disclosed that the $53.6 million payment was for ten years of work when she was “restructuring” the off-shore trust her grandfather created when she was a child.

The Pritzker family fortune was restructured to settle disputes among the Pritzker clan.

Pritzker also earlier has said that as a result of the restructuring, she will take her portion of the trust and relocate it back in the U.S.

Grassley asked Pritzker to provide information about how she was awarded the “consulting” position, how her compensation was calculated and if it was determined by any independent “compensation survey.”

In reply, Pritzker wrote Grassley a very general paragraph about an unnamed “trustee” engaging her services.

As for details, “I am subject to a confidentiality agreement with scores of parties…thus, I am not permitted to provide a copy of the contract and the other materials you provide.”

Pritzker told Grassley in her June 24 letter why one of the richest women in the world needed a loan from a company she controlled for a Colorado residence. In disclosure forms released in May, Pritzker said she took a loan of between $25 million and $50 million — only ranges had to be revealed — for a Colorado home.

The company, PSP Capital Resources, made a short term loan, for which Pritzker is paying interest, “at a time that I needed liquidity for certain expenditures, e.g. construction of my Colorado house. …The lender is relying upon my personal balance sheet and there is no specific collateral pledged to secure the loans,” Pritzker wrote.