Tax the Rich!
The Wealth Hoarders

Tax the Rich!

Chuck Collins, director of the Program on Inequality and the Common Good, details and excoriates the vast industry that conceals the fortunes of the super wealthy and helps them pay minimal, if any, taxes. He suggests reforms to enable a more equitable system.

Chuck Collins – a senior scholar at the Institute for Policy Studies in Washington, DC, where he directs the Program on Inequality and the Common Good – pulls few punches in this harsh takedown of tax-dodging rich people and the experts who enable them. Collins paints the “Wealth Defense Industry” as the enemy of economic fairness and meritocracy. He takes a whirlwind tour of the world’s tax havens – the Cayman Islands, Bermuda, Switzerland and the state of Delaware – to describe the siphoning of wealth away from the masses and toward the greedy. Born into inherited wealth himself, Collins offers remedies that might tilt the economic playing field toward fairness.

The Wealth Defense Industry (WDI)

Isabel dos Santos, the richest woman in Africa, stole from the people of Angola and hid her assets in offshore accounts. Florida fraudster Joseph Rensis scammed working-class victims and sheltered his wealth in trusts in the Cook Islands. Collins cites these examples from the 2016 release of the Panama Papers, which detailed some 214,000 offshore companies in which the rich stash their cash. Researchers estimate the sum hidden in tax shelters to be in the trillions of dollars – some 10% or more of total global wealth.

Most of us, understandably, don’t know the secrets of the Money River, which is why wealth is vanishing from measurement and accountability.Chuck Collins

The WDI aids in the plunder of struggling nations, lets the richest avoid taxes, and enables wealth concentration and economic inequality.

Hidden Wealth

Robert Oesterlund and Sarah Pursglove, for example, owned three dozen internet companies, an airplane, a yacht, mansions in the Bahamas and Florida, and a penthouse in Toronto, all spread across shell companies in the Cayman Islands, Nevis and Delaware. Those companies held funds in financial institutions in Monaco, Luxembourg, Canada and the Bahamas.

The system of wealth hiding is facilitating the plunder of nations and the extraction of vast amounts of natural resources and financial treasures.Chuck Collins

Collins describes Oesterlund as a “super-freeloader” who relies on societal investments in technology, infrastructure and the legal system to create his wealth and shelter his fortune from taxes.

Dynasties

The superrich construct their own oligarchies – dynasties characterized by massive hoards of private riches and aggressive lobbying to protect that wealth. Oligarchic families, with net worths in excess of $25 million, hire accountants and tax attorneys, and they invest in political contributions and lobbying.

In the face of weakened tax laws and aggressive wealth hiding, we see the widespread emergence of wealth dynasties.Chuck Collins

Casino billionaire Sheldon Adelson, for example, had nearly $32 billion and employed a complex trust strategy to grant $7.9 billion to his children without paying more than $2.8 billion in customary taxes. He directed $100 million into conservative campaign contributions during the 2018 midterm elections. Superwealthy families, including the Mars, Walton, Gallo and Koch clans, lobbied for an end to the federal estate tax.

Complex Tax Policy

If levies on wealth were simple and evenly applied, there’d be no need for the WDI. The actual tax rate paid by the wealthiest 400 households in America has plummeted. In 1960, this upper slice paid an effective tax rate of 56%; by 2018, that amount had plunged to 18%.

Making taxes complex and low is the central project of the Wealth Defense Industry.Chuck Collins

In the decades after the US income tax debuted in 1916, the highest rate was high indeed: In 1953, for example, the marginal tax rate on incomes of more than $200,000 – equivalent to $1.9 million in 2019 dollars – was 92%. By 2020, that top rate was 37%. The federal estate tax is the same 40% for multibillionaires as it is for mere millionaires.

Wealth-Protection Specialists

In the United States alone, an estimated 90,000 employees work as tax and estate specialists at law firms, private banks, accounting practices and wealth management firms. Globally, the number of “wealth defenders” could be as high as 250,000. Top accounting firms – Deloitte, PricewaterhouseCoopers, KPMG and Ernst & Young – specialize in helping the rich dodge tax collectors.

Several dynastic families have used their considerable clout, spending millions to save themselves billions.

WDI personnel are concentrated in Jackson Hole, Wyoming, and in Greenwich, Connecticut, as well as in the Cayman Islands, Switzerland, Mauritius, Guernsey and the Cook Islands. These specialists often craft the tax policies that benefit their clients. Wealth defenders know, for example, which nations allow banks to accept deposits with scant details about the identity of the owner or the money’s provenance.

Unequal Economy

The hidden-wealth engine hums along in large part because the thousands of people working in the WDI don’t tell anyone what they know.

The inequality apparatus is lubricated by powerful narratives of meritocracy and deservedness that justify the extreme inequalities we are living through.Chuck Collins

But on occasion, insiders leak documents that provide a glimpse of life inside the machine. The Panama Papers data dump, for example, made such an impression that Netflix released a film version of the story starring Meryl Streep and Antonio Banderas. The WDI responded by attacking its critics. Mossack Fonseca, the Panamanian firm at the heart of the scandal, sued to block the movie’s release.

Shell Game

Anonymous shell companies are the basic building blocks of tax avoidance. If taxing authorities don’t know the identity of the owner of an asset, they can’t pursue anyone for the taxes owed on that asset. Delaware allows shell companies, as do Bermuda, Malta and the British Virgin Islands, among many other nations.

By mixing different ownership layers and multiple transactions between them, it becomes virtually impossible to trace the movement of funds and ownership interests. Chuck Collins

The WDI uses trusts, foundations, anonymously owned assets, secret bank accounts and phony transations to hide its activities.

Reforms

To rein in rampant wealth secrecy, Collins urges governments to strengthen anti-money-laundering rules, enforce the transparency of corporate taxation and governance, disrupt the anonymous ownership of US real estate, broaden identity rules beyond real estate transactions, and close tax loopholes.

A Heartfelt Distaste

Chuck Collins has a great understanding of monetary ebb and flow. His expertise serves him and the reader well, as he writes with barely concealed fury about what he regards as an egregious moral and societal failure. The upper 1% may not enjoy Collins spilling their nefarious secrets, but everyone else, especially activists and those seeking to lessen inequality, will find inspiration in – and experience no small amount of shock at – what Collins reveals and how much he reviles it.

Chuck Collins is also the author of Born on Third Base and, with Bill Gates Sr., he wrote Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

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