Offshore tax havens fuel South Florida real estate boom

Think of that lovely blue-gray (“waterfall,” Crayola calls this particular hue) super yacht moored on the Intracoastal as our glimpse of paradise.

Or rather Paradise Papers, the trove of 13.4 million documents that, according to the International Consortium of Investigative Journalists, reveal tax havens and other “offshore secrets of politicians, celebrities, billionaires and companies whose brands are household names.”

Leonid Mikhelson, who owns the Pacific, a fabulous 280-ft. vessel docked at Pier 66 that you might have mistaken for a cruise ship, was mentioned in the leaked papers under the billionaire category.

The Paradise Papers documented how a wealth management firm in Bermuda and a bank in Utah enabled Mikhelson to surreptitiously register his $65 million Gulfstream jet in the U.S., never mind Federal Aviation Administration rules about aircraft owned by foreign nationals.

Mikhelson, a close buddy of Vladimir Putin, and whose gas company is under United States sanctions, is either the richest or second richest oligarch in Russia, depending on who’s doing the counting.

Mikhelson is hardly an outlier among the super rich. According to the investigative consortium, Appleby, the Bermuda-based law firm that set up the Mikhelson’s trust, does a smashing worldwide business obscuring the ownership of private jets, luxury condos, yachts, seaside mansions. But mostly the firm helps corporations and the super rich stash their money, by the bushel, in offshore tax havens.

Queen Elizabeths and Bono were among the familiar names who’ve apparently parked assets in Appleby-engineered trusts, according reporters sifting through the Paradise Papers.

Some 31,000 American clients, described as “ultra-high-net-worth individuals.” employ Appleby’s services to avoid the tax rates that us less-than-high-net-worth chumps will face come April 15.

All of this is quite legal, mind you.

But the Paradise Papers has stirred up considerable outrage among us folks unable to secret our assets in the Cayman Islands or the Isle of Man or Mauritius or the British Virgin Islands. And among those of us who couldn’t find the Seychelles on a map, much less set up a secret bank account on the Indian Ocean archipelago.

Gabriel Zucman, the University of California economist and author of Hidden Wealth of Nations, the Scourge of Tax Havens, estimates that about four percent of U.S. wealth has been hidden away in offshore tax havens.

That’s just a trifle compared to Latin America, where Zucman says 20% of financial wealth has skedaddled.

Even larger percentages have been spirited out of Africa and Russia.

Do I find this outrageous?

Oh, I might, if I lived in Des Moines or Kansas City. But I live in South Florida, where towns like Miami, Fort Lauderdale, Sunny IslesPalm Beach, Boca Raton, Coral Gables, Lighthouse Point, Manalapan, Wellington have prospered by catering to the wants of global elites. Without worrying much about the origins of their splendid wealth.

Shadowy offshore shell companies have invested billions in South Florida’s luxurious high rise condos and waterfront mansions.

Last year, the Miami Herald reported that 90% of Miami-Dade County’s new residential construction — mostly those glittering high-rise condominiums along the beachfront or in downtown Miami — had been purchased in cash transactions.

And good luck figuring out the names behind the shell companies listed on the deeds.

These properties are less about sheltering people than sheltering taxes. Which works out swimmingly for South Florida.

Phantom buyers pay real estate taxes based on the full value of their multi-million dollar properties, without adding much to local traffic or the infrastructure woes.

Of course, if the phantoms, mostly from South America or Russia, occasionally visit their South Florida digs, we’re happy to cater to their luxurious wants.

Better still, if they fly here in their private jets. Or sail into town on super yachts like the Pacific. 

According to SuperYachtFan.com, Leonid Mikhelson’s $150 million boat requires a crew of 28, which, payroll wise, is the equivalent of a small factory. Except these workers have better tans.

Reportedly, mega yacht owners can expect to spend 10 percent of their boat’s value each year on crew, fuel and maintenance.

We’ll take the money. No questions asked.

Besides, South Florida has a long history of welcoming dodgy characters. Meyer Lansky and Lucky Luciano were able to run their 26 casinos in south Broward as long as they spread the cash around.

Local authorities hardly bothered Al Capone back when he was living the good life in his Palm Island mansion on Miami Beach.

Al, come to think of it, could have used an offshore tax shelter.

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