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I'd really like to see a report of the actual "jobs" (and job quality) created through SD's lax finance regulatory environment. Growing up in Sioux Falls, I would say it generally felt like there were everyday South Dakotans *from* the state, whose incomes were overwhelmingly low, moderate, or scratching-by middle class--- and then there were the corporate execs transferring from out of state who built their McMansion on the hill (Prairie Tree and surrounding areas). Back then the much-lauded growth of the finance sector at large generally resulted in everyday South Dakotans getting shoddy part-time $10/hr call center jobs with Citibank (not sure what the case is these days, and I guess I know a small handful of persons that graduated with me who now work in the finance sector there).
But I really hope that someday South Dakotans start holding their elected reps accountable to not selling them out to corporate or national right-wing interests-- it seems there's a long history of SD politicians greenlighting out-of-state lobbyists drafting legislation for them. **$360 BILLION**-- how much benefit is the average South Dakotan (or the state's general infrastructure) getting from this????
And of course there are all the ancillary jobs that come about to support these. Is it a majority of South Dakotans? No. It's one piece, but it's a valuable piece.
$360 Billion is the amount of assets under management. Most likely some small percentage of that is taken out as management fees every year. I don't know how much, but if it's 0.1% that's $360 million being paid out to South Dakotans in the finance industry every year.
The way the trust laws are written, to set up a trust in South Dakota, you have to involve South Dakota companies and residents in the process - law firms, financial advisors, trustees, etc. The laws are written very specifically to ensure South Dakotans are employed and benefit from the out of state trusts.
How are South Dakotans being sold out? I don't see any downside to this.
This article (https://www.theguardian.com/world/20...ota-trust-laws) discusses the enormous long-term implications of SD's 'innovation' of trust laws. And sure this haven might be good for SD's elite professional class (lawyers, accountants, etc.), but is it correct to assume it in no way otherwise benefits the average South Dakotan or state other than via those same taxable services supporting the industry? The ethics and optics here are pretty awful, not to mention SD is being a pretty shoddy citizen/ neighbor to other US states and globally. From the article: "Perpetual trusts can (and will) facilitate enormous wealth and power for dynastic families. In the process, we leave to future generations some serious issues about the nature of our country’s democracy.”
This article (https://www.theguardian.com/world/20...ota-trust-laws) discusses the enormous long-term implications of SD's 'innovation' of trust laws. And sure this haven might be good for SD's elite professional class (lawyers, accountants, etc.), but is it correct to assume it in no way otherwise benefits the average South Dakotan or state other than via those same taxable services supporting the industry? The ethics and optics here are pretty awful, not to mention SD is being a pretty shoddy citizen/ neighbor to other US states and globally. From the article: "Perpetual trusts can (and will) facilitate enormous wealth and power for dynastic families. In the process, we leave to future generations some serious issues about the nature of our country’s democracy.”
No, it isn't correct to assume that. The professional class is not a hereditary class. Anyone is free to work in the industry in any capacity and benefit directly. The people who do so not only benefit themselves, but they buy products and services which benefits other South Dakotans. The alternative is that money doesn't come into South Dakota, the state economy shrinks, fewer people have jobs, and everyone in the state is worse off. And people will go to one of the other several states that have substantially similar laws to set up their trusts.
There is nothing wrong with the ethics, and the optics are whatever the author makes them out to be to sell a story. The reality is South Dakota has created trust laws that allow people to set up their trusts in ways that most other states do not, and that brings in jobs and income. It's no different than New Mexico paying movie production companies to film movies in their state, except South Dakota isn't paying anyone anything.
South Dakota is not being a shoddy neighbor to other states or countries. Every state and country in the world incentivizes businesses to set up shop there and hire local residents. What trust laws should be is up to each state, and South Dakota (as well as several other states) has created trust laws to bring business into the state to benefit their residents.
The quote about perpetual trusts is the author's opinion, no doubt influenced by their desire to sell a story. Read the original article posted by the OP. The entire thing is phrased in an ominous way, but when you ignore the window dressing and just look at what it actually alleges, it comes down to nothing more than rich public officials are a bunch of hypocrites for cultivating a populist image, then in private doing all they things they rail against in public. That's hardly breaking news.
Just to add a little real life perspective. This seriously helps the local small time South Dakota farmer. With the huge increase in land values I personally know several farmers who can pass the farm down in the family instead of having to sell.
This has nothing to do with corporate taxes. It has everything to do with trusts. E.g., South Dakota trusts can last forever. In many states they're limited in duration. If you want a trust that can last more than one or two generations you have to set it up in a state that allows it. No one (at least in the US) is getting away with anything. They are simply using a service not available in their own state.
If people in other countries are putting their money here in a trust and illegally not reporting it to their own governments, the resolution to that is a treaty with the US government to provide transparency to catch tax cheaters. The US has essentially forced all other countries to provide that transparency to us, but made the decision not to reciprocate. If the US signs that type of treaty with another country, their government will know everything their citizens are doing in the US, and no state can prevent it. Note that even today, people who do this are not able to evade US taxes on their trust earnings.
I'm aware the Pandora Papers are not focused on corporate taxes. The point of the OECD link was to demonstrate the "peer pressure" being brought on some countries, primarily but not exclusively by the US, over corporate taxes, and to point out that "tax haven" for individuals could very well be next.
BTW, even the article you linked doesn't accuse anyone in any country of avoiding taxes or doing anything that would be illegal in their own country through their SD trusts. It accuses them of being hypocrites for conducting their personal affairs in secrecy in the opposite way of their public statements, but that's about it.
So the trusts are located in SD for the scenery and weather?
Seems to me SD is risking its credibility for a modest gain. Wonder how much the industry has contributed to the pols who passed the legislation? Wonder how much the industry has paid to the state in corporate income taxes? Oh, Wait! That's right there's no corporate tax in SD.
Wonder if the beneficial owners of the SD trust companies are even SD residents?
No, don't say that!
So the trusts are located in SD for the scenery and weather?
No, they're in SD because SD trust law permits services many other states don't. Anyone can form a trust anywhere, just as anyone can form a corporation anywhere (and most large corporations are incorporated in Delaware because of Delaware's corporate law, which is written to bring that business to Delaware).
Different does not mean illegal or unethical, it's just different. Every state promotes its own interests and residents, trust law is just one way SD does it. It only gets this attention because it involves famous people being hypocritical. The original article could have accurately been titled "after extensive analysis, we found no evidence of SD law being used to evade taxes," but no one would read that.
No, they're in SD because SD trust law permits services many other states don't. Anyone can form a trust anywhere, just as anyone can form a corporation anywhere (and most large corporations are incorporated in Delaware because of Delaware's corporate law, which is written to bring that business to Delaware).
Different does not mean illegal or unethical, it's just different. Every state promotes its own interests and residents, trust law is just one way SD does it. It only gets this attention because it involves famous people being hypocritical. The original article could have accurately been titled "after extensive analysis, we found no evidence of SD law being used to evade taxes," but no one would read that.
I'll note you responded to my rhetorical/sarcastic post and ignored the substantive one.
I'll note you responded to my rhetorical/sarcastic post and ignored the substantive one.
What substantive post are you referring to? That there are ~400 people who work directly for trust companies in South Dakota? This ignores financial advisors, lawyers, etc. A very narrow definition of direct beneficiaries of having this business in SD (as opposed to another state). There are <900K people in the entire state, I wouldn't expect to find 100k people working in this industry. It also ignores all of the jobs that are generated off of this (building, restaurants, retail stores, ...).
> Seems to me SD is risking its credibility for a modest gain.
What credibility risk? They've written trust law, nothing more.
> Wonder how much the industry has contributed to the pols who passed the legislation?
I'm glad to hear it's the only industry in the country that lobbies the government. If everyone did that you'd have government giving money to unworthy entities all over the place. So glad that isn't the case at all.
I'll note the only substantive accusation you've made is that South Dakota's trust law is different than most other states. If you have more than that please spell it out, because so far you haven't. The article was a bunch of click bait that boiled down to rich and famous politicians being hypocrites, and I haven't seen anything more substantial than that yet.
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