Let’s get real here. The relative absence of U.S. billionaires in the Pandora Papers has nothing whatsoever to do with nobility. We’re talking accessibility here. The U.S. super rich have plenty of financial agents — the tax attorneys, accountants, and wealth managers, as my Institute for Policy Studies colleague Chuck Collins puts it, “paid millions to help billionaires sequester trillions” — close to home. They don’t need to partake of the services provided by wealth advisory firms in places like Samoa, Cyprus, and Singapore, or any of the other 11 offshore locales from where the Pandora Papers leaked.
One other dynamic also helps explain why so few U.S. billionaires have been showing up in the Pandora Papers coverage. America’s super rich, as one Pandora Papers report notes, “pay so little in taxes relative to their incomes that hiding money offshore” can turn out to be “mostly unnecessary.” Our contemporary U.S. tax code essentially expects precious little from the super rich at tax time and furnishes convenient, perfectly legal workarounds to the taxes the law does stipulate.
How effective have these workarounds become? This past June, analysts at ProPublica gleaned from a massive leak of IRS data that America’s 25 richest paid taxes on the $401 billion they gained from 2014 to 2018 at an incredibly tiny true tax rate of a mere 3.4 percent.
But don’t take the small U.S. billionaire footprint in the Pandora Papers exposé as any indication of disinterest in tax havens on the part of Americans. Quite the contrary. The Pandora Papers make dramatically clear that the United States has now become a premiere “offshore” tax haven for super rich the world over.
To be more exact: A handful of low-population U.S. states — led by South Dakota — have essentially turned themselves into pimps for global plutocrats. They’ve enacted a series of state laws that let financial agents set up shop within their borders and then go on to service and shield grand foreign fortunes. The “dynasty trusts” these states harbor are helping the super rich worldwide cloak their grand private fortunes in a gloriously lucrative anonymity.
The Pandora Papers abound in the stories of these global rich. A shady former vice president of the Dominican Republic, for instance, had built up a huge fortune as the president of a giant Dominican sugar company notorious for violating the human rights of its workers. In 2019, this deepest of Dominican pockets shifted a major chunk of his ill-gotten wealth into a South Dakota dynasty trust.
South Dakota, note tax analysts Bob Lord and Kalena Thomhave, now safe harbors $500 billion in trust assets, up 36 percent since 2019. In the process, charges journalist Timothy Noah, the state has become a “moral sewer.”
Our U.S. contribution to the global concentration of wealth, the Pandora Papers help us understand, has become frighteningly enormous. We’re not just bending over backwards these days to grow the fortunes of our home-grown super rich. We’re helping grow the fortunes of the super wealthy all over the world. We’re no longer just dominating the world’s billionaire ranks. We’re helping those ranks worldwide become ever more dominant.