The Wealth Hoarders. Chuck Collins
the industry. And we meet “turncoats” like C. Dalton Thompson, a Philadelphia-based trust attorney, who has worked for decades as a professional “wealth defender.” Now he’s helping to expose the Money River and dismantle some of the secret provisions he helped design.
In Chapter 3, “Tools in the Wealth-Hiding Toolbox,” we provide an overview of the tools that the WDI deploys to sequester trillions of dollars. This includes an overview of the interacting role between offshore tax havens and the use of shell corporations and opaque trusts to shift wealth around the world, beyond the reach of accountability and tax authorities.
In Chapter 4, “All in the Family Office,” we will explore the secretive world of family offices. Since I visited Dee’s family office in 1983, the world of family offices has exploded. There are now an estimated 10,000 family offices around the world, with over 1,000 in London alone. These offices manage the assets of families with wealth starting at $250 million and up. Many family offices are engaged in traditional wealth-management practices, such as investing, tax, and estate planning, and charitable activities. But inherent in their reason for being is multi-generational wealth preservation – and with that comes an institutional bias toward both sequestering wealth and fracking every possible loophole, tax break, and trust creation that is available to their clients. Family offices have now become pools of unregulated capital – and highly sought after by companies seeking venture capital.
In Chapter 5, “The Wealth Hiding in Your Neighborhood,” we explore how the Wealth Defense Industry has turned the United States into the premiere destination for kleptocratic capital. We will examine why this problem of hidden wealth goes beyond the losses in tax revenue. These great pools of capital are not basking on the beach of some island tax haven, quietly earning interest; this anonymous wealth is touching down in our communities, disrupting local housing markets, and fueling displacement of non-wealthy residents. The owners and managers of these anonymous pools of capital are buying up land, buildings, and luxury housing. For the super-rich, these properties are not often homes. They are wealth storage units, places to park their money in a volatile global economy. This chapter will argue that the hidden-wealth problem matters, that one negative impact is the worsening affordable housing crisis in many global cities.
In Chapter 6, “Smokescreens: The Justifications of the Wealth Defense Industry,” we explore the justifications used by the industry for their aggressive wealth sequestering practices. The Wealth Defense Industry says, “We are doing nothing illegal. We are just obeying the rules.” But, as we will see, segments of the WDI are actively involved in writing and engineering the rule-writing process. “We are helping families.” “Governments are overtaxing my clients.” This chapter will explore the stories and narratives that members of the WDI industry tell themselves and the world to justify their practices.
In Chapter 7, “Solutions to Wealth Hiding,” we look at the movements and legislative initiatives underway that are pressing for reforms. We will briefly discuss the possibilities of directly engaging with the Wealth Defense Industry and their associations. But engaging wealth managers to change their practices voluntarily has obvious limits. Meaningful change will require rewriting the fundamental rules governing global finance, banking, corporate transparency, and reporting. This chapter describes seven areas for rule changes and reform to close down the hidden-wealth system.
The book concludes with a clarion call for the UK and US to use their tremendous power to reform this system. I describe an emerging citizen’s alliance of tax justice and transparency groups in our two countries to press our governments for global treaties and leadership in instituting fundamental reforms. In the Epilogue, “Grads: Don’t Work for the Wealth Defense Industry,” I urge younger people to find more meaningful work than helping the already rich get richer.
This book will argue that the professional wealth managers and consulting groups are not capable of policing themselves, though they should take a deep look at the culture and norms of their professions. Ultimately, lawmakers must set the rules of the road and require corporate transparency, disclosure of beneficial ownership, and timely country-by-country reporting on tax payments; and professional enablers must be held personally responsible for their accomplice roles. We need to turn these professional wealth escape artists into “compliance officers.” Only when their orientation shifts from tax dodging to tax compliance will we be more assured that the world’s wealthy are not hiding the shared treasure of our societies and national patrimonies.
Notes
1 1. Luke Harding, Foreword to Bastian Obermayer and Frederik Obermaier, The Panama Papers: Breaking the Story of How the Rich and Powerful Hide Their Money (Oneworld, 2017), p. vii.
2 2. Tom Keatinge, “The Luanda Leaks Reveals the Misery Inflicted by the Theft of National Wealth,” Guardian, January 23, 2020. https://www.theguardian.com/commentisfree/2020/jan/23/luanda-leaks-revolution-theft-national-wealth-illicit-finance
3 3. Gabriel Zucman, The Hidden Wealth of Nations: The Scourge of Tax Havens (University of Chicago Press, 2016). See discussion pp. 34–35.
4 4. Anthony Shorrocks, Jim Davies, and Rodrigo Lluberas, Global Wealth Report 2019 (Credit Suisse Research Institute, October 2019). https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html
5 5. James Henry, “Taxing Tax Havens,” Foreign Affairs, April 12, 2016. https://www.foreignaffairs.com/articles/panama/2016-04-12/taxing-tax-havens
6 6. John Christensen and James Henry, “The Offshore Trillions,” New York Review of Books Letter to the Editor, January 14, 2016. https://www.nybooks.com/articles/2016/03/10/the-offshore-trillions/
7 7. Jannick Damgaard, Thomas Elkjaer, and Niels Johannesen, “The Rise of Phantom Investments,” International Monetary Fund: Finance and Development, 56 (3) (September 2019). https://www.imf.org/external/pubs/ft/fandd/2019/09/pdf/fd0919.pdf
8 8. https://www.brainyquote.com/quotes/everett_dirksen_201172
9 9. Madeline Bilis, “One Dalton’s $40 million Penthouse Could Break Boston Price Records,” Boston Magazine, August 28, 2017. https://www.bostonmagazine.com/property/2017/08/28/one-dalton-penthouse-price-record/ Also see Bruce Mohl, “The view from $10m up,” Commonwealth Magazine, April 10, 2017. https://commonwealthmagazine.org/economy/the-view-from-10m-up/
10 10. If you want a more overreaching primer, I recommend Nicholas Shaxson’s, The Finance Curse.
11 11. See resources at Inequality.org
12 12. See Collins, “The Perils of Billionaire Philanthropy,” The Nation, September 11, 2019. https://www.thenation.com/article/archive/philanthropy-charity-inequality-taxes/ and “Gilded Giving” reports published by The Institute for Policy Studies.
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