How South Dakota became a global tax haven

[corbe]

How South Dakota became a global tax haven

Felix Salmon, author of Capital


Illustration of a dollar bill with Mount Rushmore on it
Illustration: Sarah Grillo/Axios

South Dakota has become the world's foremost tax haven — right up there with the Cayman Islands, and ahead of old-fashioned locations like Switzerland. That's one of the clear messages from the Pandora Papers leak of confidential financial information about the world's richest individuals.

Why it matters: The hundreds of billions of dollars sequestered in South Dakota trusts generate no taxes and are effectively off limits to anybody who might have a legitimate claim on them.

How it works: A South Dakota trust is "the most potent force-field money can buy," in the words of the Guardian's Oliver Bullough.

Like most tax havens, South Dakota has no income tax, no inheritance tax and no capital gains tax. But the state has gone even further than that. South Dakota allows for extreme secrecy when law enforcement comes knocking, and protects assets from being claimed by creditors, ex-spouses, or pretty much anybody else.

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https://www.axios.com/south-dakota-global-tax-haven-5120d206-20ab-4cc1-ba91-d1d59fe22487.html

[Wingnut]

The story makes it seem like it is bad thing.

[corbe]

   It is Axios, afterall. I found it mostly informative.

[Kamaji]

Not sure exactly how this makes South Dakota a tax haven.  A SD-based trustee must still file U.S. federal income tax returns, report the income, and report foreign beneficiaries (and also do tax withholding on amounts that are attributable to foreign beneficiaries).  If the foreign beneficiaries are from a country that has a comprehensive income tax treaty with the U.S., or has a tax assistance agreement, that information will then be provided to the foreign beneficiaries' home country upon request.