South Dakota Is Becoming A Tax Haven For The World's Super Rich

The Guardian: The great American tax haven: why the super-rich love South Dakota

It’s known for being the home of Mount Rushmore – and not much else. But thanks to its relish for deregulation, the state is fast becoming the most profitable place for the mega-wealthy to park their billions.

Late last year, as the Chinese government prepared to enact tough new tax rules, the billionaire Sun Hongbin quietly transferred $4.5bn worth of shares in his Chinese real estate firm to a company on a street corner in Sioux Falls, South Dakota, one of the least populated and least known states in the US. Sioux Falls is a pleasant city of 180,000 people, situated where the Big Sioux River tumbles off a red granite cliff. It has some decent bars downtown, and a charming array of sculptures dotting the streets, but there doesn’t seem to be much to attract a Chinese multi-billionaire. It’s a town that even few Americans have been to.

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WNU Editor: Money always goes to a place where it feels that it is safe. You cannot get more safe than South Dakota.

China Condemns Recent Reports On The Wealth Of Their Elite

China Condemns Report On Elite's "Hidden" Wealth, Censors Discussion -- Reuters

The Chinese government condemned on Wednesday a report on the wealth of the country's elite being hidden in overseas tax havens as illogical and having ulterior motives, as the government blocked websites and censored mention of the story online.

The report, the result of an investigation by the International Consortium of Investigative Journalists, was published in newspapers, including Britain's Guardian and Spain's El Pais.

It said that the relatives of top Chinese leaders, including President Xi Jinping and the former premier, Wen Jiabao, were among members of China's elite making use of offshore havens like the British Virgin Islands.

Reuters was unable to independently verify the contents of the report.

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More News On China's Response To Recent Reports That Their Elite Are Hiding Their Wealth In Tax Havens

China condemns report on elite’s ‘hidden’ wealth -- Euronews
Guardian blocked in China after story about leadership's offshore wealth -- The Guardian
Guardian website blocked in China after it ran a story on the wealth of its rulers -- The Independent
Newspaper Websites Blocked In China After Reports About Chinese Leaders' Wealth -- Huffington Post
Authorities block online access to ICIJ's exposé of Chinese elite's offshore holdings -- The Center of Public Integrity
Chinese media speaks no evil over offshore leaks -- Deutsche Welle

My Comment: Regular readers of this blog know that I am a China watcher as well as being a regular visitor to China since the mid-1980s. I have many friends and contacts in China .... and it would not surprise me if some of the people that I know are on the list that the International Consortium of Investigative Journalists have compiled. As it was explained to me by my friends in China almost two decades ago .... China is ruled by about 800 families .... they control all of the government institutions, companies, banks, trading companies, investment groups, and .... well you get the idea. What surprises me is that they have only stashed away $4 trillion .... I thought the number was much higher.

How China's Oligarchs Quietly Stashed Up To $4 Trillion In The Caribbean

Illustration: Tim Meko

China's Princelings Storing Riches In Caribbean Offshore Haven -- James Ball and Guardian US Interactive Team, The Guardian

Relatives of political leaders including China's current president and former premier named in trove of leaked documents from the British Virgin Islands

More than a dozen family members of China's top political and military leaders are making use of offshore companies based in the British Virgin Islands, leaked financial documents reveal.

The brother-in-law of China's current president, Xi Jinping, as well as the son and son-in-law of former premier Wen Jiabao are among the political relations making use of the offshore havens, financial records show.

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More News On The Wealth That China's Elite Has Accumulated (And Stashed)

China's cash haven in the British Virgin islands – the key points -- The Guardian
Exclusive: Offshore assets of China's elite revealed in leaked records -- CBC
Report Says China’s Elite Use Offshore Companies -- New York Times
Report Details Overseas Accounts of Chinese Elite -- New York Times
China's Elite Wealth in Offshore Tax Havens, Leaked Files Show -- Bloomberg Businessweek
China's Elite Hide Wealth Offshore -- Voice of America
Report: Families of Top Chinese Leaders Concealing Riches Overseas -- Voice of America
Secret Offshore Wealth of China's Leaders Revealed -- ABC News
Chinese leaders' riches cloaked in offshore tax havens, report says -- NBC
Relatives of China's leaders stash wealth in offshore tax havens: report -- Global Post/Yonhap News
Found: Offshore Wealth Stashed by Families of China’s Leaders -- Time
Relatives of Chinese leaders have offshore accounts, says ICIJ -- The Hindu
Chinese oil giants make use of offshore shell companies in Caribbean -- The Guardian
Reporting on ‘Offshore Leaks China’ took six months and news partners from around the world -- Poynter
ICIJ Reveals China's Elite's Offshore Trillion-Dollar Offshore Holdings: Five Takeaways -- IBTimes
More than half of China’s most powerful officials have links to tax havens. Now what? -- Heather Timmons, Quartz
China's Epic Offshore Wealth Revealed: How Chinese Oligarchs Quietly Parked Up To $4 Trillion In The Caribbean -- Zero Hedge

WNU Editor: The International Consortium of Investigative Journalists report on China's "hidden wealth" can be read here.

Is $32Trillion Of The World's Wealth In Off-Shore Tax Havens?

(Click on Image to Enlarge)

Wealthy May Hide as Much as $32 Trillion Offshore, Report Says -- Bloomberg

Wealthy individuals may have been hiding as much as $32 trillion offshore at the end of 2010, according to Tax Justice Network, a U.K.-based organization that campaigns for transparency in the financial system.

The estimate is almost three times the organization’s last estimate of $11.5 trillion in 2005. Fewer than 100,000 people own $9.8 trillion of offshore assets, according to the research, carried out by former McKinsey & Co. economist James Henry.

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More News On $32 Trillion In Off-Shore Tax Havens

World's wealthiest have 'deprived the taxman of £13TRILLION by hiding cash in tax havens overseas' -- Daily Mail
Tax Justice Network: Wealth Held in Tax Havens Skyrockets -- Wall Street Journal
Tax havens: Super-rich 'hiding' at least $21tn -- BBC
Wealthy hiding $21 trillion in tax havens, report says -- CBC
World's super-rich are holding $32 trillion in tax havens -- Digital Journal
Wealth doesn't trickle down – it just floods offshore, new research reveals -- Heather Stewart, The Guardian

My Comment: I can understand wealthy individuals and corporations leaving assets off-shore .... many of them are doing it legitimately. I can also understand that corrupt governments and criminal groups may want to keep their money elsewhere .... in case they have to run and/or do something else with those funds .... OK .... there is some money there. But .... the super wealthy hiding assets that are 1.5x - 2.0x of the US GDP ($21T - $32T) .... in short .... offshore tax havens are worth double what the US GDP was for 2011. Hmmmm .... sorry .... that's stretching it..

The Tax Justice Network's website is here.

Tax Shelters -- Some Facts And Figures

Ralph O'Neal, Prime Minister of the British Virgin Islands, speaks during an interview with The Associated Press in Road Town, Tortola, Thursday, April 2, 2009. As an offshore haven, the British Virgin Islands host hundreds of thousands of companies while the territory's leader insists the government tolerates no fraud. Tax havens worldwide are under attack by G-20 leaders in London. (AP Photo/Todd VanSickle)

Islands Resent Crackdown Of Tax Havens By G-20 -- Yahoo News/AP

TORTOLA, British Virgin Islands – More than 400,000 companies share a few local addresses in this tiny Caribbean financial center, where their incorporation papers are kept in a gray two-story building.

The vast majority have no employees on the island. All conduct their business elsewhere and many avoid paying taxes back home.

And yet the British Virgin Islands welcomes their business, which provides more than half of the government's revenue, making it one of the Caribbean's most prosperous places.

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My Comment: Tax avoidance has been with us since the concept of taxes was developed .... and I can easily predict that it will still continue. My concern is the use of these tax havens by dictators, arms merchants, and criminals. Stopping these tax havens will be a big step to help in bringing peace to many places in the world.

The End Of Tax Havens?

From Foreign Policy Blog:

As part of an overall package of regulations, European leaders pledged to crack down on tax havens over the weekend. “We want results on this, with a list of tax havens and a series of consequences,” said French President Nicolas Sarkozy. German Chancellor Angela Merkel, who's had tax havens in her crosshairs for a while, stressed the need to eliminate "“blind spots on the global map when it comes to financial-market products, market participants and instruments.”

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My Comment: I find this article fascinating for the simple reason that many of the small wars in the world, terrorist financing, and the maintaining of power by despotic tyrants .... all of their financial resources would be useless if these "safe" havens were no longer there.

But Foreign Policy is right on one point .... the U.S. is one of the biggest tax haven in the world. If they were to change their financial rules and regulations, their financial and economic system would be even more sicker than what it is today.