Treasure Islands - Nicholas Shaxson [75]
These LLCs are a filter between the assets and the owner, screening out the information. U.S. states cream off a few hundred dollars in fees, and crimes around the world go unpunished.
A Wyoming website boasts that “Wyoming Corporations and LLCs have a tax haven within the United States with no income taxation, anonymous ownership and bearer shares…. Shelf Corporations and LLCs: Anonymous entity where YOUR NAME IS ON NOTHING! These companies already exist and are complete with Articles, Federal Tax ID numbers and registered agents…. You may have these complete companies by TOMORROW MORNING!”
Yours for $69, plus modest state filing fees.30
These places are selling a cheap and very strong form of secrecy.31 In Switzerland, information is typically retained, but secrecy laws mean locals may not disclose it. States like Wyoming have no such prohibitions on breaking the secrecy: The trick is simply to ensure no information is available in the first place. All company records may be kept outside the state—in North Korea, for instance—so even if the authorities wanted to find out what your company was about, they couldn’t. Stock can be transferred instantly and privately without filing a public notice.
With its corporate laws, the United States does not even comply with the transparency requirements of the IMF’s rather toothless IMF Financial Action Task Force, which requires countries to be able to identify beneficial owners. When congressional staffers and others have tried to change this, they have met ferocious lobbying from these states and from the American Bar Association.
“When other countries ask us for company owners, we have to stand red-faced and empty-handed,” said Senator Carl Levin. “The United States has been a leading advocate for transparency and openness. We have criticized offshore tax havens for their secrecy and lack of transparency. We have pressed them to change their ways. But look what is going on in our own backyard.
“America should never be the mattress corrupt foreign officials use to hide their money.”32
Secrecy is just one of several lures that individual U.S. states offer to financial capital elsewhere. Tax is another lure, though a fairly minor one. Certain types of state corporations shield residents from state income tax, asset tax, sales tax, stock transfer tax, or inheritance tax, and U.S. corporations push trademarks, patents, and other nebulous things into low-tax states in a transfer pricing game to cut state taxes. World-Com, for instance, shifted nearly $20 billion tied to “management foresight” to a Delaware company before it collapsed in 2002. Tax is never the individual states’ top attraction, though: Corporations paying no state taxes owe U.S. federal taxes.
Two further lures have turned certain U.S. states into corporate havens. One involves usury; I will explore this in chapter 10. The other involves corporate governance, which is largely governed in the United States by state, not federal, laws. In both of these, Delaware plays a starring role.
What ties all these different strands together—the tax, the secrecy, the usury specialties, and the corporate governance—is the political establishment of this tiny state, where everyone knows everyone else and Democrats and Republicans alike seem to share a uniform opinion that local laws must be shaped to satisfy corporate desires, to attract business for the state—and the rest of the world can take care of itself. Only a definition of offshore like the one I use in chapter 1—focusing on how locals prioritize their own interests explicitly at the expense of others