March 20, 2021
Pearl River One of the largest paradoxes of the pandemic has been the whopping acceleration of inequity. As twenty million are unemployed after a year and families are shut-in and desperate, even forcing Congress to act, the wealthy have had a heyday. Stock market, real estate, and other asset categories have exploded in value, fattening the balance sheets of the wealthy and widening the wealth cap even greater. All of which made it timely to talk on Wade’s World to Chuck Collins who has spent a career on the issues of equity and recently wrote a book,
Collins focuses on what he calls the “wealth defense industry.” That’s not for everyone, but it is absolutely for the the superrich, not even the one-percent but the one-hundredth of a percent. It’s a battalion of lawyers, accountants, lobbyists, and general functionaries whose whole purpose is protecting the wealth of the very, very wealthy. A lot of that means hiding their assets in tax havens, limited-liability corporations, trusts, and foundations, often dressed up to go out to the ball, but whose real purpose is not paying what turns out to be about a half-trillion in taxes in the US and what Collins reports is in the thirteen to fourteen trillion range globally.
Everyone got a whiff of this when the Panama Papers were exposed by some well-intentioned whistleblower, but there is more to it than even came to our eyes then. Thanks to some hard pushing on the Swiss to force disclosure of money laundering by the Obama administration, the classic Swiss bank account of Hollywood heist fame is now passe. The US itself, led by Delaware, is ranked now by many experts as the #2 tax haven in the world. Besides the ease of creating LLCs and trusts in Delaware without identifying the principals, the other place where it is rich-gone-wild is in real estate. London is finally taking action to force ownership disclosure and a new piece of legislation passed at the end of 2020 also is forcing disclosure of a lot of LLC ownership in the US, but Collins points out that the legislation didn’t go far enough and still leaves too many loopholes in other instruments for wealth hoarding.
From chapter to chapter, Collins lays out a powerful case, whether in discussing the retainers and enablers, the toothless regulators, the family offices and faux philanthropies, that allow for this level of inequity and tax avoidance in mysterious trusts and LLCs. He argued that we need restoration of estate taxes. We need a wealth tax, as Senator Elizabeth Warren has proposed that hits those with more than $30 million in income and takes a wee percentage of the billions. Unfortunately, Collins entire book argues that no matter how aggressive the reform, the wealth defense industry will force open some cracks and loopholes. Going after the wealth hoarders is a whack-a-mole exercise, but worth the work trying to claw back the taxes for all of the difference it would make to the least of us and the rest of us.