(Bangor Daily News) - The Pandora Papers, released in early October, are the product of massive data leaks carefully analyzed by more than 600 journalists from around the world. They unmask the secretive ways that the world’s super-wealthy hide trillions of dollars and dodge taxes — not just on some sandy Caribbean island, but right here in the United States.
Billionaires and crooks from around the globe now regard the United States as an offshore tax haven. They are bringing their treasure to “secrecy jurisdictions” such as South Dakota, Delaware, Nevada and Florida.
My role in the release of the Pandora Papers, acknowledged in many international stories, was to serve as an advance source for foreign reporters to understand the U.S. wealth-hiding system.
The list does not include many of the U.S. super-rich, even though they use the same toolbox of offshore banks, anonymous shell companies, and opaque trusts. That’s because this trove of leaks originated from offshore wealth advisory firms in 12 countries including Samoa, Cyprus, Belize and Singapore — not places where super-wealthy U.S. citizens go for financial services.
First, it allows for the plundering of the wealth of nations, especially hurting the world’s poorest and most vulnerable populations. Some of the shady characters parking their assets in the United States are dictators and politicians who have stolen public funds as well as business owners who have broken laws in their countries. The United States is now an accomplice to these crimes, providing a get-away car in the form of secret trusts and anonymous corporations.
Second, the hidden wealth system leads to tax hikes on the non-rich. When billionaires and global companies dodge and evade their tax responsibilities, they shift the costs of public services onto everyone else. When the wealthy don’t pay, they saddle the rest of us with the bills for pandemic response, caring for veterans and the funding of infrastructure and schools.
Third, the system of secretive finance empowers deadbeats and criminals, allowing them to shuffle funds around in secrecy. U.S. law enforcement officials have been pressing to abolish anonymous shell companies, like those formed in Delaware, that facilitate money laundering, human trafficking and other illicit activities.
Finally, the hidden wealth system contributes to the growing economic inequality. It enables some families to create billion-dollar inherited wealth dynasties while making life for everyone else more economically precarious.
U.S. lawmakers could shut down Tax Haven U.S.A. if they mustered the political will to do so. They could invest in tax enforcement, rebuilding the ability of the Internal Revenue Service to monitor the financial shell games of the super-rich and to enforce existing tax laws. They could regulate or ban trusts and transactions that serve no purpose other than tax dodging.
President Joe Biden is advancing his Build Back Better plan, paid for by increased taxes on the very wealthy and global corporations. But this effort will be undermined if we leave this system of hidden wealth in place.