Earlier today, we looked at a country-- ours-- slipping into anomie, social cohesion disintegrating. Selfish politicians on the right find it beneficial to their short term career trajectories and society doesn't seem to have any adequate coping mechanisms to deal with it. You know what I left out though? Personal corruption and greed, two of mankind's biggest behavioral motivators. I don't know how I could have left that out since I had just finished reading Luke Savage's Pandora Papers-inspired elucidating interview with The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions author Chuck Collins.
Collins explained that "The Pandora Papers are the result of a massive data leak that unmasks the clandestine shell games and tax dodging schemes of the world’s ultra-wealthy, people with $30 million or more.," you know, the ones who buy the most lobbyists, pay the lowest tax rates and control their own political party and much of the other one, compliments of scumbags like Joe Manchin, Kyrsten Sinema, Josh Gottheimer, Kurt Schrader, Henry Cuellar, Stephanie Murphy, Lou Correa, et al.
"The Pandora leaks," continued Collins, "come from the confidential records of fourteen different offshore wealth service firms in Switzerland, Singapore, Cyprus, Samoa, Vietnam, Hong Kong, as well as firms in well-known tax havens such as Belize, Seychelles, Bahamas, and the British Virgin Islands. These firms help wealthy individuals and corporations to form trusts, foundations, incorporate companies, and establish other entities in low- or no-tax jurisdictions. Some big names caught up in the leaks were King Abdullah II of Jordan, US billionaire Robert Smith, former UK prime minister Tony Blair, and Shakira... [T]hanks to the transnational nature of the global wealth elite-- and the mobility of their capital-- there are more avenues available for the super-wealthy who want to play hide-and-seek with their assets. They can afford to hire sophisticated 'wealth defense industry' professionals-- tax attorneys, wealth managers, accountants-- or form 'family offices' to manage their dynastic family wealth over generations. But many of the basic mechanisms or tools in the wealth hiding toolbox are the same: bank accounts and anonymous shell companies in secrecy jurisdictions (nation states or territories with few requirements for disclosure of real owners), civil law foundations (not to be confused with charitable foundations), and trusts. Trust ownership entities have been morphed and manipulated to put assets into a form of 'ownership limbo,' where it is not clear who owns what-- and what should be taxed (in my book The Wealth Hoarders, I discuss in detail why trusts are such a huge problem). A recent expose by ProPublica revealed how the half of the richest hundred people in the United States deploy a complex trust arrangement called 'Grantor Retained Annuity Trusts' [GRATs] to avoid future estate taxes. This really exposes this system."
Collins explained that "the Pandora leak does not include many of the US superrich. That’s because this trove of leaks originated from offshore wealth advisory firms in twelve countries including Samoa, Cyprus, Belize, and Singapore-- not places where super-wealthy US citizens go for their 'wealth defense' financial services. Unfortunately, no US wealth-advisory firms were part of the leaks... That’s been the missing ingredient to really engaging US politicians. Nonetheless, more than seven hundred companies revealed in the Pandora Papers have ties to real human owners (what they call 'beneficial owners') in the United States. So, stay tuned... [T]he United States has become a major tax haven and global destination for illicit wealth. Earlier leaks, such as the Panama and Paradise Papers, reinforced the misperception that most of these financial shell games take place 'offshore,' in small countries with weak banking laws. We’ve known for a while about the systems that wealthy people use-- but what is new is a leak with identities of 206 owners of trusts that were set up in several US states. So, we can tell stories about real people, many with corrupt biographies, who are using the US system."
Savage wanted to know more about the South Dakota connection-- and Collins was happy to get into it. "The reason billionaires love South Dakota is that they pioneered a tool the wealthy deploy called a 'dynasty trust.' A dynasty trust is a form of trust that is designed to sequester wealth for longer than ordinary trusts-- sometimes for centuries or forever. They are often formed in US states, such as South Dakota, that have suspended or altered their state 'rule against perpetuities,' legislation that previously limited the lifespan of a trust... In the 1980s, South Dakota changed its laws to attract wealthy people looking to park their money in trusts (they did the same thing to attract Citigroup and the credit card industry). A few other states followed suit, such as Wyoming and Alaska. Today, a private trust industry flourishes in South Dakota, helping billionaires hoard their wealth. This trust industry has effectively captured the state’s politicians, including their representatives in Congress. I’m thrilled with all the critical publicity being focused on South Dakota. But other states are part of the 'weak link' in transparency as well. Almost half of US states are now engaged in the interjurisdictional race to the bottom of who will change their laws to help coddle the rich."
Bad news: "It will be hard," said Collins, "to tax the wealthy in the United States (or anywhere) under this current global system, where capital can flee to the shadows and dozens of countries and territories compete as 'secrecy jurisdictions.' There will always be the Cook Islands, willing to sell off their sovereignty and keep lowering their requirements to attract the treasure. But the United States is obviously an economic Goliath that has more responsibility and possibility for fixing the system. Federal legislation could [-- though not while Mitch McConnell, Kevin McCarthy, Joe Manchin, Kyrsten Sinema, Josh Gottheimer, Kurt Schrader have anything to say in the matter--] override weak state laws when it comes to corporate reporting and trust law. It would be a heavy lift within our federalist system with strong state control over incorporation, trust formation, taxes, etc. But it’s not impossible. At the end of 2020, Congress passed the Corporate Transparency Act to require LLCs to disclose their real owners to the law enforcement arm of the Treasury Department. For example, there are things the United States should do to shut down our own internal tax havens and fix our warped trust laws. Lawmakers could act at the federal level to ban or discourage the formation of dynasty trusts and GRATs for the purposes of tax avoidance and dynastic succession. Trusts holding assets over a certain size should be recorded in a public registry and beneficiaries should be disclosed. We could pass a federal 'rule against perpetuities,' banning perpetual trusts and limiting their lifespan... For there to be a 'global corporate minimum income tax'-- something the G20 countries are currently exploring-- there would need to be country-by-country tax reporting. So, Apple would have to disclose what they pay in each country and information about their business dealings (sales, number of employees, etc.). All these are examples of the pressure points for change. The Pandora Papers will shake things up. But it sure would be good to have a couple of leaks from US trust companies to fill out the picture."
This is what Bernie is talking about when he discusses the billionaire class and it's what Manchin, Sinema, Gottheimer and the entire Republican Party are working to preserve. It's the real story behind the "negotiations" over the Build Back Better Act-- whose ox will be gored? Here, watch this Rachel Maddow segment from last night and you're know everything there is to know about this disagreement over taxation and the nature of the richest and greediest in society and why so many people say that crossing the $100 million wealth accumulation frontier should be an instant death sentence:
This is what Manchin got so uptight about yesterday-- and what he's generally uptight about all the time anyway:
Now, Senator Manchin as I understand it talked about today about not wanting to see our country become an entitlement society. Well, I am not exactly sure what he means by that.
Does that mean that we end the $300 direct payments for working class parents which have cut childhood poverty in this country as a result of the American Rescue Plan in half? Is protecting working families and cutting childhood poverty an entitlement? Does Senator Manchin think we should once again have one of the highest levels of childhood poverty of any major country on Earth?
At a time when millions of seniors in Vermont, in West Virginia, all across this country have teeth in their mouths that are rotting, when they can't afford hearing aids in order to communicate with their grandchildren, and when they can't afford a pair of glasses in order to read a newspaper, does Senator Manchin really believe that seniors are not entitled to digest their food and that they're not entitled to hear and see properly? Is that really too much to ask in the richest country on Earth, that elderly people have teeth in their mouth and can see and can hear?
Does Senator Manchin should not believe that we have to end the absurdity of the United States paying by far the highest prices in the world for prescription drugs, sometimes 10 times more for a particular drug than is paid in Canada or other countries around the world? Does Senator Manchin believed that we should be the only major country on Earth not to guarantee paid family and medical leave and that working mothers should not be able to stay home with a child who is sick? Are workers not entitled to be able to do that?
Does Senator Manchin believe that working-class parents in West Virginia and Vermont should not have to pay-- does he believe that they should have to pay 25% or 30% of their incomes on childcare? All over this country, working class families are paying 25% or 30% of their incomes on childcare so that they could go out and do their jobs. Are the children of this country not entitled to high-quality child care and pre-K education?
Does Senator Manchin not believe that working families in this country are entitled, entitled to affordable housing, and that we should not have some 600,000 people in America, including many veterans, sleeping out on the streets?
Does Senator Manchin not believe that at a time when we have a major labor shortage in many parts of this country because our young people lack the skills they need that they are not entitled to at least two years of free community college so they can get the training in order to go out and get the good-paying jobs that are there?
And perhaps most importantly, does Senator Manchin not believe what the scientists are telling us, that we face an existential threat regarding climate change and that it is absolutely imperative that we move boldly to cut carbon emissions? Scientists have told us we're on a red alert. Some of you know the-- a number of scientists received the Nobel Prize for their work on climate change. Does Senator Manchin not believe that our children and grandchildren are entitled to live in a country and a world that is healthy and is habitable?
Senator Manchin has been extremely critical of the $3 and 1/2 trillion proposal that many of us support, in fact, 9 out of 11 members of the Budget Committee support. But the time is long overdue for him to tell us with specificity, not generalities-- we're beyond generalities-- with specificity what he wants and what he does not want and to explain that to the people of West Virginia and America. I look forward to working with Senator Manchin and everyone else in the Senate to pass a strong reconciliation bill as well as a bipartisan infrastructure bill.