{"id":212601,"date":"2021-03-27T15:39:10","date_gmt":"2021-03-27T12:39:10","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/the-shocking-ways-billionaires-profitable-companies-hide-money\/"},"modified":"2021-03-27T15:39:10","modified_gmt":"2021-03-27T12:39:10","slug":"the-shocking-ways-billionaires-profitable-companies-hide-money","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/the-shocking-ways-billionaires-profitable-companies-hide-money\/","title":{"rendered":"#The shocking ways billionaires, profitable companies hide money"},"content":{"rendered":"

“#The shocking ways billionaires, profitable companies hide money<\/strong>”<\/p>\n

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At 60-stories high and 684-feet tall, Boston\u2019s Millennium Tower, a residential luxury high-rise that opened in 2016, is the fourth-tallest building in the city.\u00a0<\/p>\n

It is also a virtual ghost town.\u00a0<\/p>\n

That\u2019s because the Millennium is less of a playground for the rich and more of a tax shelter in the sky, writes Chuck Collins in his new book, \u201cThe Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions<\/a>\u201d (Polity), out next month.\u00a0<\/p>\n

\u201cOver 35 percent of the 443 condominiums are owned by shell companies and trusts, and almost 80 percent of the unit owners do not claim a residential exemption, indicating that the condo is not their primary home,\u201d writes Collins. \u201cWith average condominiums selling for over $4\u2009million, Millennium Tower is not only a wealthy residence for the rich, but also a \u2018wealth storage unit\u2019 for global capital looking to park itself and hold value.\u201d\u00a0<\/p>\n

Collins knows a little something about the ultra-wealthy. A great-grandson of cold-cut magnate Oscar Mayer, Collins inherited $500,000 at age 25 and gave it all away to charitable organizations. Since then, Collins, now 61, has spent his life educating and writing about the impact of wealth inequality.<\/p>\n

\"The
The IRS estimates that America\u2019s top 1\u2009percent fail to report about 21 percent of their income.<\/figcaption>
Getty Images\/iStockphototo<\/span><\/figcaption><\/figure>\n

His new book focuses on what he calls the Wealth Defense Industry (WDI), noting that not only do the ultra-wealthy \u2014 which he defines as the 0.1 percent \u2014 spend time and money ensuring they pay almost no taxes, but that there are over 90,000 professionals around the world whose careers are dedicated to helping them do so.\u00a0<\/p>\n

\u201cThe wealth defenders are a booming sector of the white-collar workforce around the world,\u201d he writes. \u201cThey are the gatekeepers \u2014 the lawyers and accountants with expertise in trusts and estates, tax law, incorporation, and business transactions.\u00a0<\/p>\n

\u201cWhat the industry euphemistically calls \u2018tax efficiency,\u2019 \u201d he adds, is a gentler term \u201cfor legal and illegal tax dodging.\u201d\u00a0<\/p>\n

\"Sheldon
Sheldon Adelson avoided $2.8 billion in taxes by using a GRAT to bestow $7.9 billion to his kids.<\/figcaption>
AFP via Getty Images<\/span><\/figcaption><\/figure>\n

\u201cTens of thousands of people wake up every morning and say, \u2018How can I help this billionaire pass as much money as possible to his children with the lowest taxes?\u2019 That is their mission in life,\u201d Collins tells The Post.\u00a0<\/p>\n

In 2015, the global Tax Justice Network estimated that there was between $24 trillion and $32\u2009trillion in hidden wealth worldwide \u2014 around 10 to 12 percent of the world\u2019s wealth, Collins writes.\u00a0<\/p>\n

The IRS estimates that the top 1\u2009percent of households fail to report about 21 percent of their income, according to a new Wall Street Journal report<\/a>. The \u201ctax gap\u201d \u2014 or the amount \u201cmissing\u201d from IRS coffers due to tax evasion and noncompliance \u2014 from 2013 to 2015 was a stunning $391 billion a year. Collins notes that \u201cnoncompliance is largely the result of the wealth-hiding tricks of the richest one percent, who are responsible for about 70\u2009percent of tax underreporting.\u201d\u00a0<\/p>\n

\"Apple,
App<\/a>le, run by CEO Tim Cook, avoids paying a bundle by filing intellectual-property patents in nations that don\u2019t charge taxes for them, instead of in the US.<\/figcaption>
Getty Images<\/span><\/figcaption><\/figure>\n

Asset protection trusts are one commonly used tool for hiding wealth. While varied and complex in nature, a trust can be used to \u201cconstruct a fiction that they are parting with their property or money while continuing to enjoy the money and property as if they continue to own it (because they sort of do),\u201d Collins writes.\u00a0<\/p>\n

Trusts are often built using \u201cdeliberately opaque rules and legal structures that fog up the question of ownership.\u201d\u00a0<\/p>\n

The late billionaire Sheldon Adelson, for example, used a complicated trust mechanism called a \u201cgrantor retained annuity trust (GRAT)\u201d to \u201cpass on $7.9 billion to his children while avoiding $2.8 billion in gift and estate taxes.\u201d\u00a0<\/p>\n

Another commonly used technique is transfer pricing, which involves \u201cshifting assets between subsidiaries, increasing costs and expenses in high-tax countries in order to reduce taxes, while moving profits and royalty income to low- or no-tax countries.\u201d\u00a0<\/p>\n

\"Billionaires
Billionaires like Oprah and Google\u2019s Sergey Brin use family offices to manage assets.<\/figcaption>
WireImage; Getty Images<\/span><\/figcaption><\/figure>\n

Transfer pricing has allowed companies around the world \u2014 like Apple \u2014 to \u201cdodge about 10 percent of corporate income taxes, roughly $100 billion to $240 billion a year in US taxes,\u201d Collins writes.\u00a0<\/p>\n

\u201cApple has patents for their intellectual property, such as the design of the iPhone, owned by a subsidiary corporation based in a country that has low or no taxes on royalty income from intellectual property, such as Ireland or the Netherlands,\u201d Collins writes.\u00a0<\/p>\n

Family offices \u2014 businesses that manage the dynastic wealth of one or several clans, often seeking out ways to hide their money and diminish their tax burden \u2014 are also a major stronghold for the WDI.\u00a0<\/p>\n

\u201cThousands of families around the world are forming family offices,\u201d Collins writes. \u201cOprah has one, OW Management LLC. The billionaire Koch family have 1888 Management LLC to manage their $100.6 billion in combined net worth. Hedge-fund manager William Ackman and Google co-founder Sergey Brin each have one.\u201d\u00a0<\/p>\n

\"WorldCom
WorldCom saved $20 billion in state taxes by shifting assets to Delaware. South Dakota cut time limits on trusts, allowing rich families to hide their wealth in perpetuity.<\/figcaption>
Alamy (2)<\/span><\/figcaption><\/figure>\n

Family offices hold \u201cover an estimated $6 trillion or more, the equivalent of 7 percent of the world\u2019s stock markets,\u201d Collins writes. \u201cThink about it. Trillion-dollar pools of unregulated, anonymously owned capital. What could possibly go wrong?\u201d\u00a0<\/p>\n

Collins writes that there are 60 countries \u2014 including the United States \u2014 that have \u201ccontorted their laws to attract global financial services,\u201d allowing companies to register there without disclosing beneficial ownership. One way this is done is through anonymous shell companies, which rarely conduct any actual business and allow their owners to keep their identities as hidden as the money they squirrel away within the companies. One expert, quoted by Collins, believes the state of Delaware is the largest source of anonymous shell entities in the world.\u00a0<\/p>\n

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The wealth-hiding system is not a minor sideshow in the larger economic system \u2014 it is the system<\/p>\n

Author Chuck Collins<\/cite><\/p><\/blockquote>\n<\/figure>\n

While many of the biggest financial scandals, including Bernie Madoff and 1MDB, wind up involving Delaware shell corporations, the state also offers significant tax advantages to its anonymous clientele.\u00a0<\/p>\n

\u201cDelaware does not tax certain profit-making intangible items \u2014 like trademarks, royalties, leases, and copyrights. Yet those same intangibles can be part of a tax strategy that allows them to be classified as deductions in other states, reducing the company\u2019s tax bill there,\u201d Bradley P. Lindsey, co-author of the study \u201cExploring the Role Delaware Plays as a Domestic Tax Haven,\u201d says in Collins\u2019 book.\u00a0<\/p>\n

This loophole has \u201cenabled corporations to reduce taxes paid to other states by an estimated $9.5 billion over a decade by shifting royalties and revenues to Delaware-based holding companies. WorldCom used the loophole to cut $20 billion from state taxes thanks to an intangible asset called \u2018management foresight,\u2019 \u201d Collins writes. (According to The New York Times, management foresight refers to \u201cstrategic plans\u201d that WorldCom charged its subsidiaries billions of dollars for.)\u00a0<\/p>\n

\"Many
Many units in luxury buildings like Boston\u2019s Millennium Tower (left) and One57 in Manhattan (right) are purchased by shell companies and trusts \u2014 acting as \u201cwealth storage units.\u201d <\/figcaption>
Alamy; Getty Images <\/span><\/figcaption><\/figure>\n

Delaware is not alone. In the 1980s, South Dakota, long home to weak regulation and no state income tax, repealed rules that put a time limit on trusts. Instead of being forced to liquidate a trust after a certain number of years, the state allowed rich families to keep on hiding and nurturing their money, essentially offering them an \u201celixir of immortality for dynastic wealth.\u201d\u00a0<\/p>\n

\u201cIn 2010, [South Dakota] trust companies managed a total of $57\u2009billion,\u201d writes Collins. \u201cBy 2020, they were managing over $350 billion.\u201d\u00a0<\/p>\n

Many have used anonymous shell companies to park their wealth in luxury real estate in big cities nationwide, such as the Millennium in Boston and One57 on New York\u2019s Central Park.\u00a0<\/p>\n

According to The New York Times, \u201c54 percent of real estate purchased in New York for more than $5 million was acquired in the name of anonymous shell companies\u201d in 2014, Collins writes.\u00a0<\/p>\n

\"Author
Author Chuck Collins says he has given away his own inheritance to charity.<\/figcaption>
Courtesy of Chuck Collins<\/span><\/figcaption><\/figure>\n

\u201cIn the six most expensive condo projects in the city, the owners in a majority of units were hidden by shell companies, including 77 percent of the units in One57 and 69\u2009percent of the units at The Plaza. The value of the 900 condominiums in these six buildings was equal to the value of 20,000 average American homes.\u201d\u00a0<\/p>\n

Collins advocates for greater wealth transparency in the American system \u2014 and for rules that make it harder for the nation\u2019s richest people and corporations to avoid paying tax.\u00a0<\/p>\n

\u201cThe wealth-hiding system, an ecosystem if you will, operates because of the tolerance and enablement of many different institutions and actors,\u201d he writes. \u201cIt is not a minor sideshow in the larger economic system \u2014 it is the show. It is the system.\u201d\u00a0<\/p>\n

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\"The<\/figure>\n<\/div>\n

Currently, the IRS is urging lawmakers to give the agency greater funds for enforcement, including more staff and tougher rules requiring more reporting of financial information by businesses. In congressional testimony last week, IRS Commissioner Charles Rettig argued that each additional dollar spent on tax enforcement could yield $5 to $7 in revenue, and raise an additional $1\u2009trillion over a decade without raising taxes, The Wall Street Journal reported<\/a>.\u00a0<\/p>\n

\u201cIt is not just a body count of how many people we have in enforcement,\u201d Rettig said. \u201cWe need to have specialized agents.\u201d\u00a0<\/p>\n

Collins says wealth hoarding can be reined in if the government can find the strength to confront it. In fact, bipartisan steps have already begun.\u00a0<\/p>\n

\u201cIn December 2020, Congress passed the Corporate Transparency Act, which requires corporations to disclose beneficial ownership. Republicans and Democrats came together, but it doesn\u2019t include trusts,\u201d Collins tells The Post.\u00a0<\/p>\n

\u201cWe could establish a federal law saying that trusts can only exist for 80 years as opposed to these dynasty trusts that exist forever. We could totally fix this. With the political will, we could shut down a lot of this.\u201d\n <\/p><\/div>\n

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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“#The shocking ways billionaires, profitable companies hide money” At 60-stories high and 684-feet tall, Boston\u2019s Millennium Tower, a residential luxury high-rise that opened in 2016, is the fourth-tallest building in the city.\u00a0 It is also a virtual ghost town.\u00a0 That\u2019s because the Millennium is less of a playground for the rich and more of a…<\/p>\n","protected":false},"author":1,"featured_media":212602,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/nypost.com\/wp-content\/uploads\/sites\/2\/2021\/03\/stealth-wealth.jpg?quality=90&strip=all&w=1200","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[99687,70971,70505,72588,46483,72439],"class_list":["post-212601","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-3-27-21","tag-billionaires","tag-millionaires","tag-money","tag-taxes","tag-wealth"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/212601","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=212601"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/212601\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/212602"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=212601"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=212601"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=212601"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}