This article consists of three parts. The good news is in Part 1.I will get to South Dakota and Delaware in Part 2.
Part 1: It seems that being rich does not necessarily mean you are greedy. An article appeared in The New Republic magazine by Robin Kaiser-Schatzle (June 22, 2021). It reviews three books about money.
The first one, “The Millionaires Who Want to Abolish Extreme Wealth,” says: “The Patriotic Millionaires are a group of wealthy people who have made a splash in recent years in their calls for higher taxes. They formed in 2010, defining a millionaire as someone with over $1 million in income per year or $5 million in assets.”
Another group, Responsible Wealth, has a similar purpose. Its members say: “We are a network of business leaders, investors, and inheritors in the richest 5% of wealth and/or income in the U.S. that believes that growing inequality is not in our best interest, nor in the best interest of society.” This is good news!
Part 2: Getting to South Dakota and Delaware, their state laws make it possible for the rich to conceal their wealth and avoid taxes. Another book reviewed in the article is: “Tax the Rich! How Lies, Loopholes and Lobbyists Make the Rich Even Richer.” Some Patriotic Millionaires are co-authors of the book!
The book says: “Trusts also make wealth so opaque that it can’t be taxed. South Dakota allows trust accounts to be anonymous, and the ‘Wealth Defense Industry’ can cover clients’ tracks by running assets through a couple of trusts that are owned by a variety of shell corporations owned by other shell corporations in Delaware (a state that allows corporate owners to remain anonymous).
“After this process, there’s almost no way to know how much wealth a person has. … While it is not legal to avoid taxes you owe (that’s called tax evasion), it is legal in South Dakota and Delaware to conceal ownership, thus making it impossible to accurately tax wealth.”
That’s why I say these states should be fired from the union!
Part 3: However, there may be a more practical way to have these two states reform their ways. In fact, I have come up with a plan to get their legislators to abolish their harmful laws. We give each resident in those two states not only a tax break but an outright grant, in exchange for getting their legislators to change the laws.
Here’s how it will work. The citizens of those two states would vote only for a governor and representatives who agree to abolish those laws within 30 days after taking office. If they don’t do it within 30 days, there would be an immediate impeachment vote.
What would motivate the citizens of those states to do that? The same thing that motivates the people who have these anonymous corporations: money!
Let’s say we gave each resident in those states an annual grant of, say, $25,000 each, until death, if they abolish those laws. That means a family of four would receive $100,000.
How much would that cost us? These states have a total population of only 1,858,243 people.
The grants to every citizen would total only a little over $46 billion out of the US budget each year. They would be paid to each current resident until they died. Compare that to the hundreds of billions the U.S. would then be able to collect from the wealth-hiding tax-evaders every year!
If South Dakota and Delaware are smart, they will get ready to protect themselves from the massive influx of new citizens who will stealthily start moving into their states as soon as they read this article. Perhaps the states could build a wall to protect themselves.
Citizens of South Dakota and Delaware: Give this a try. It would be better than getting fired out of our union. There is the question, though, of how we get members of Congress to agree to these changes, especially those who own these kinds of trusts themselves.
Maybe the Patriotic Millionaires can give us some help with this part of the puzzle.
The author lives in Santa Barbara.