This report examines the growing wealth of billionaires and other ultra-high net worth individuals in Massachusetts — where voters will have the chance to levy a 4 percent surtax on those making more than $1 million a year this November.
(Photo by Spencer Platt/Getty Images)
As part of sanctions against Russia’s invasion of Ukraine, the United States, United Kingdom, and other European Union nations are cracking down on Russian oligarchs, freezing assets and tracking the yachts, private jets, and luxury real estate holdings of oligarchs.
“I say to the Russian oligarchs and the corrupt leaders who bilked billions of dollars off this violent regime: no more,” Biden said in his State of the Union address. “We are coming for your ill-begotten gains.”
Targeting Russia’s elites, who have stolen trillions from their own people, is an important strategy to pressure Putin, who himself may be among the wealthiest people on the planet.
But the U.S. faces a major obstacle in this effort, which is our country has become a major destination tax haven for criminal and oligarch wealth from around the world, not just Russians. While other EU countries have been increasing transparency and cracking down on kleptocratic capital, the U.S. is a laggard. As the Pandora Papers disclosed, the U.S. has become a weak link in the fight against global corruption.
Delaware, the state President Biden represented in the U.S. Senate for 36 years, is the premiere venue for anonymous limited liability companies that don’t have to disclose who the real beneficial owners are, even to law enforcement. And South Dakota is the home for billionaires creating dynasty trusts where they can park wealth outside the reach of tax authorities for generations. Even more, U.S. charities, as my IPS colleague Helen Flannery wrote last week, have received billions from Russian oligarchs, helping to sanitize their reputations.
Global wealth is flooding into the U.S., especially in luxury real estate. The New York Post did an expose, complete with maps, on the luxury real estate holdings of Russian oligarchs in the Big Apple. But other asset classes are being used to hold oligarchic wealth, including art, cryptocurrency, and jewelry.
This vast wealth-hiding apparatus would not exist with an enormous enabling class of lawyers, accountants and wealth managers. This “wealth defense industry” are the agents of inequality, the facilitators of the wealth disappearing act. This class of professionals, including the American Bar Association, uses their considerable political clout to block reforms.
The first step in fixing the hidden wealth system is ownership transparency –requiring disclosure of beneficial ownership in real estate, trusts, and companies and corporations. Cities like Los Angeles are exploring municipal-level disclosure of real estate ownership so they can know who is buying the neighborhood.
But we should shine a spotlight on the enabling wealth defense industry. Days after the release of the Pandora Papers, U.S. lawmakers introduced the ENABLERS Act, to require such attorneys, wealth managers, real estate professionals and art dealers to report suspicious activity. The attention on Russian oligarchs has revived interest in this legislation.
If the U.S. wants to clamp down on Russian oligarchs, the first step is to get our own house in order.