Legal Edge: U.S. States being used as tax haven for ultra-rich

Legal Edge

WASHINGTON DC (WLNS) – The “International Group of Investigative Journalists” published leaked documents dubbed “The Pandora Papers” earlier this week.

The leak shows U.S. states are increasingly becoming tax havens for the ultra-rich around the world.

When the rich want to hide their money, one way is by opening accounts in certain U.S. states.

Alexandra Thornton with the Center for American Progress says rules in certain states allow accounts to more easily hide the owners’ names.

The project shows states like South Dakota, Florida, Delaware, Texas and Nevada offer tax shelters for the wealthy.

“Those calling for change say secretive banking doesn’t just allow the rich to dodge taxes, it could also allow criminal activity to be hidden,” said Thornton. “If you don’t even know who owns the asset, then it’s difficult to find out where that money came from.”

Thornton says many wealthy Americans likely were not implicated in the Pandora papers because loopholes in the U.S. tax code already allow them to legally shield most of their wealth.

“If the tax rules are changed and those loopholes are closed, then they won’t be able to avail themselves legally of those kinds of practices,” said Thornton.

The Biden administration says the President supports reforms.

“He has been clear he wants to make the tax system more fair. Congress did pass the Corporate Transparency Act and as a result, new banking transparency rules are expected later this year,” said White House Press Secretary Jen Psaki.

But critics say those changes alone won’t solve the problem.

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