As published on commondreams.org, Wednesday 28 September, 2022.
Research published Wednesday details how a handful of U.S. states that are "subservient to the trust industry" are helping oligarchs and money launderers from around the globe evade taxes and hide their wealth within the nation's borders.
Titled Billionaire Enabler States: How U.S. States Captured by the Trust Industry Help the World's Wealthy Hide Their Fortunes, the new report from the Institute for Policy Studies (IPS) estimates that the United States is host to $5.6 trillion in trust and estate assets belonging to super-wealthy elites, both foreign and domestic.
"The concept of the 'offshore' tax haven has very much washed ashore," says the report, which exposes how 13 U.S. states "shield the fortunes of the world's richest people."
According to a summary of the report:
"Thirteen U.S. states are in a race to the bottom to weaken trust oversight and manipulate the rules to attract billionaire tax dodgers and money launderers," Kalena Thomhave, co-author of the report and researcher at the Program on Inequality and the Common Good at IPS, said in a statement. "The wealth of nations is hidden in states like Wyoming, Delaware, Nevada, and South Dakota."
"The clandestine world of financial secrecy stretches around the world, all the way back to the United States," says the report, which comes one year after the groundbreaking Pandora Papers investigation revealed how the U.S. has become a major player in the international wealth-hiding system—on par with Switzerland, Panama, the Cayman Islands, and other well-known tax havens.
"Trusts are key to this story," states IPS. These financial vehicles make it possible to camouflage ill-gotten gains, enabling a small number of billionaires to elude public scrutiny and taxation, with negative consequences for billions of people worldwide.
By providing a place to park illicit wealth abroad, roughly a dozen U.S. states are helping kleptocrats from around the world "avoid accountability at home," the report explains. They are also enabling ultra-rich Americans to dodge federal taxes, "cheating the U.S. out of revenue with which it could combat poverty or invest in infrastructure."
Other key findings from IPS include:
"The wealth managers and tax attorneys serving the ultra-wealthy will claim they are just aiding their clients to obey the law," said Chuck Collins, co-author of the report and director of the Program on Inequality and the Common Good at IPS.
"But our report reveals how they are actively writing the laws and lobbying for changes in certain U.S. states to shield hidden wealth from accountability," Collins added.
As IPS research has consistently shown, billionaire wealth has soared over the past several years, especially during the Covid-19 pandemic. Since the coronavirus crisis emerged in the U.S. in March 2020, the known net worth of the world's billionaires has grown by more than 50%, reaching nearly $5 trillion.
"Trillions more are probably secretly sequestered in trusts," the report notes. "This swelling tide of wealth is not lifting all boats. As wages continue to stagnate and everyday Americans still face health and economic harms from the pandemic, wealth inequality is a yawning chasm."
With states "engaged in a rapid race to the bottom... federal action is needed," the authors add. "States may see a few jobs created by the trust industry and determine that is worth the detrimental effect of trusts on the rest of the country. It is in the federal government's interest, therefore, to curb state laws that enable illicit wealth hiding and tax avoidance."
To crack down on this worsening problem, IPS urges congressional lawmakers to take the following steps:
"The same states that morph their trust laws to help billionaires are often the same states that have the most regressive tax systems that overtax working people," said Collins. "It's past time to curb wealth hiding in these states and enact policies to hold billionaires and their bureaucratic enablers accountable."