Pandora Papers expose tax havens in the United States

Far from the Swiss mountain landscapes or the paradisiacal beaches of the Bahamas, several rural states of USA are tax havens that make their legislation more flexible to attract capital, such as South Dakota, which comes to light in the Pandora Papers.

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“Over the past decade, South Dakota, Nevada and more than a dozen US states have become leaders on issues of financial secrecy,” highlights the extensive journalistic investigation.

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Tax secrecy, regimes that allow companies to avoid paying taxes, or individuals to avoid payments during an estate … these states compete to attract funds, American and foreign.

“Around half of the states” in the country “are in this competition,” explained to AFP Chuck Collins, from the Institute for Policy Studies, and one of the experts who gave elements of context to the journalists who worked on the Pandora Papers . The specialist cites Alaska, Wyoming and Nevada among others.

They are above all “small states, in which a service industry more focused on finance will have great power,” he said.

– Sioux Falls –

Do you need to create a shell company that gathers international activities to avoid paying taxes? “Delaware (the state for which Joe Biden was a senator for 36 years) is, in a way, the first tax haven if you want to create a limited liability company,” says Collins.

“If you want to create a trust (a legal figure to incorporate heritage), states like South Dakota modified their laws” to allow it, adds the expert.

By offering these financial companies the possibility of lasting 100 years, and even forever, the assets included in these schemes can be transmitted from generation to generation, without paying taxes at the time of succession.

South Dakota, a rural north central state known for hosting Mont Rushmore with the faces of presidents etched into the rock, as well as populations of bison, has been a forerunner in the matter since the 1970s and 1980s, when He wanted to raise funds at a time when his economy was doing very badly.

In 1981, the state began authorizing loans at any interest rate to attract Citibank card activity and associated jobs.

Then, “year after year (…) state legislators approved rules written by members of the trust industry,” the Pandora Papers detail.

Sioux Falls tax law firms highlight, on their websites, the advantages of these laws, the discretion or the low taxes of the system.

“Client assets in South Dakota trusts more than quadrupled in the past decade to $ 360 billion,” the research adds.

– Little financial transparency –

Dozens of other states followed suit to South Dakota, to a greater or lesser extent. In 2020, 17 of the 20 least restrictive jurisdictions in the world for trusts were located in US states, according to an Israeli university study cited in the Pandora Papers.

The United States thus occupies 25th place in the 2020 ranking of tax havens of the NGO Tax Justice Network.

In terms of financial opacity, the world’s greatest power occupies a place on the podium, with the ‘silver medal’, just behind the Cayman Islands.

The United States, on the other hand, represents more than a fifth (21.27%) of the world market for financial services destined for non-residents, the NGO highlighted.

In this context, the Joe Biden government leads the great powers that want to harmonize fiscal policies between countries.

The US president “is determined to bring more transparency … to the US and international financial systems,” White House spokeswoman Jen Psaki reacted at a press conference on Monday.

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Deshawn