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Each state and territory has its own laws and regulations about financial transactions used for tax evasion or money laundering. (Photo: Flickr/cc)

The United States of Tax Havens

Like our billionaires at home, foreign oligarchs and despots are sheltering untold sums from taxation across our country.

William Minter

 by OtherWords

There are many ways in which the United States is not one country.

I'm not referring to red states versus blue states, or racial or ethnic divisions. What I mean is that the United States, where countless corrupt billionaires and dictators have stashed their loot, is not a single tax haven, but many separate tax havens.

The effects of these mechanisms to hide assets from taxation and siphon money to the rich are felt at all levels.

The Pandora Papers, released in October, show that the United States is second only to the Cayman Islands in facilitating illicit financial flows. But it's not a simple picture.

Each state and territory has its own laws and regulations about financial transactions used for tax evasion or money laundering. And both red states and blue states are destinations for those who seek to hide their money from tax collectors and public scrutiny.

President Biden's home state of Delaware has long been renowned for its use as a tax haven, beginning in the late 19th century. Reliably Democratic in national politics, Delaware still ranks at the top among U.S. states providing secrecy for corporations and ultra-high-wealth individuals, both domestic and foreign.

But the Pandora Papers cite ruby-red South Dakota as an attractive destination for billionaires and others seeking to avoid estate taxes.

The International Consortium of Investigative Journalists (ICIJ), which led the Pandora Papers investigation, obtained access to the records of the Sioux Falls office of Trident Trust. Among its clients were the family of Carlos Morales Troncoso, former president of Central Romana, the largest sugar plantation in the Dominican Republic—which is notorious for its exploitation of Haitian workers.

South Dakota led the way in providing such trusts, as reported in detail even before the current revelations. But other states, including Alaska, Florida, Delaware, Texas, and Nevada, have followed suit.

The Pandora Papers also document the luxury real estate holdings of Jordan's King Abdullah. Like many other politicians and oligarchs around the world, King Abdullah owns real estate in many places outside his country. The ICIJ found records of his purchases in London and Washington, D.C., among other cities, as well as three side-by-side mansions in a luxury enclave in Malibu, California.

Bottom line: those seeking to track down the hidden wealth that dictators, criminals, or jet-setting billionaires have lodged in the United States must not limit their efforts to supporting changes in national legislation in Washington, D.C. They must also turn the spotlight on state and local communities around the country.

In February 2017, for example, the Washington Post called attention to the fact that U.S. relations with Gambia and Equatorial Guinea were not just "foreign policy" but also a local story in Potomac, Maryland.

Ousted Gambian dictator Yahya Jammeh lived at 9908 Bentcross Drive in the D.C. suburb. His counterpart Teodoro Obiang Nguema, who has ruled Equatorial Guinea since his successful coup in 1979, still owns the house at nearby 9909 Bentcross Drive.

The effects of these mechanisms to hide assets from taxation and siphon money to the rich are felt at all levels—from the failure to address global crises such as climate change and the pandemic to gross inequality in housing and other essential needs.

Exposing those mechanisms and building the political will to curb illicit financial flows requires action not only in national capitals and global institutions, but also in all the jurisdictions where wealth is hidden. Nowhere is this more true than for the United States.

In Washington, this message from the Panama Papers is beginning to be heard if not yet followed.

A recent Washington Post editorial read "States must stop letting the ultrawealthy dodge taxes—and the law." Despite the limited progress on national legislation, that fight can begin in states across the country—probably including yours.


This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.

William Minter

William Minter is the editor of AfricaFocus Bulletin

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