Published on
by

The Wealth Hiding in Your Neighborhood

From country farmland to big city skyscrapers, absentee billionaires may be hiding wealth in your town — and driving up your cost of living

In New York City, dozens of luxury towers have been connected to global money laundering. (Photo: Bally Scanlon/Photodisc/Getty Images)

In New York City, dozens of luxury towers have been connected to global money laundering. (Photo: Bally Scanlon/Photodisc/Getty Images)

The rich are hiding trillions in wealth.

You’ve probably heard about their offshore bank accounts, shell corporations, and fancy trusts. But this wealth isn't all sitting in the Cayman Islands or Panama. Much of it's hiding in plain view: maybe even in your town.

America's big cities are increasingly dotted with luxury skyscrapers and mansions. These multi-million dollar condos are wealth storage lockers, with the ownership often obscured by shell companies.

In Boston, where I live, there's a luxury building boom. According to a study I just co-authored, out of 1,805 luxury units — with an average price of over $3 million — more than two-thirds are owned by people who don't live here.

In Boston, where I live, there's a luxury building boom. According to a study I just co-authored, out of 1,805 luxury units — with an average price of over $3 million — more than two-thirds are owned by people who don't live here.

One-third are owned by shell companies and trusts that mask their ownership. And of these units, 40 percent are limited liability companies (LLCs) organized in Delaware.

Why Delaware?

Criminals around the world set up their shell companies in Delaware, the premiere secrecy jurisdiction in the United States — where you don’t have to disclose who the real owners are. As a result, human traffickers, drug smugglers, and tax evaders all enjoy the anonymous cover of a Delaware company.

And many of these companies use illicit funds to purchase real estate in North American cities to launder their ill-gotten money.

The U.S. is now the world’s second-biggest tax haven and secrecy jurisdiction, after Switzerland.

In New York City, dozens of luxury towers have been connected to global money laundering. In Vancouver, Chinese investors disrupted the city’s housing market so badly that the province of British Columbia established a foreign investor tax and a tax on vacant properties.

With European countries now insisting on more transparency, illicit cash is now cascading into the United States. In fact, the U.S. is now the world’s second-biggest tax haven and secrecy jurisdiction, after Switzerland.

The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has increased its scrutiny over real estate markets in Miami, New York, and parts of California, Texas, and Hawaii.

But that just makes the rest of the country more attractive for secret cash — even far from big cities. In a small Vermont town, I met a Russian investor who lives in Dubai. He was buying up thousands of acres of Green Mountain farmland.

Our communities are being fundamentally transformed by land grabs and luxury building booms. These drive up the cost of land in central neighborhoods, with ripple impacts throughout a community. And this worsens the already grotesque inequalities of income, wealth, and opportunity.

Our communities are being fundamentally transformed by land grabs and luxury building booms. These drive up the cost of land in central neighborhoods, with ripple impacts throughout a community. And this worsens the already grotesque inequalities of income, wealth, and opportunity.

Our communities should defend themselves.

Property ownership should have to pass the “fishing license” or “library card” test. In most communities, to get a library card or a fishing license, you need to prove who you are and where you actually live.

Here in Boston, they're pretty strict. You need to show a utility bill with your name on it. Cities should require the same for real estate purchases.

At a national level, bi-partisan legislation from Senators Marco Rubio and Sheldon Whitehouse would require real estate owners to be disclosed when buyers use shell corporations and pay millions in cash. That would be a welcome development. 

Better still, cities should tax luxury real estate transactions on properties selling for over $2 million to fund local services. Such a tax in San Francisco generated $44 million last year that's been used to fund free community college and help the city’s neglected trees.

Communities could discourage high-end vacant properties by taxing buildings that sit empty for more than six months a year. Cities like Vancouver have created incentives to house people, not wealth.

We need to defend our communities for the people who live in them, not just store their wealth there.

This is the world we live in. This is the world we cover.

Because of people like you, another world is possible. There are many battles to be won, but we will battle them together—all of us. Common Dreams is not your normal news site. We don't survive on clicks. We don't want advertising dollars. We want the world to be a better place. But we can't do it alone. It doesn't work that way. We need you. If you can help today—because every gift of every size matters—please do.

Chuck Collins

Chuck Collins

Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org, and is author of the new book, Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good.  He is cofounder of Wealth for the Common Good, recently merged with the Patriotic Millionaires. He is co-author of 99 to 1: The Moral Measure of the Economy and, with Bill Gates Sr., of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

Share This Article