wealth and income would have avoided tax, through non-criminal means.) And, of course, in the United States, one does not have to look further than Donald Trump to understand how inflows of shady money can infect and corrupt democracy.
The damage inflicted also (of course) includes higher inequality, a scourge that Chuck Collins has fought against for many years. But the damage goes way further. The actions of the Wealth Defense Industry are worsening racial, gender, and regional disparities and tensions, making housing less affordable, boosting organized crime, corrupting politics, undermining national security, and encouraging the looting of poor countries by small predatory cliques. The sum total of these dangers is unmeasurable. Along with climate change, the rise of artificial intelligence, and rising nuclear-tipped geopolitical tensions, tackling this amounts to one of the great challenges facing humanity.
This book, a “primer to the secrets of the money river,” is an essential reformers’ handbook for navigating these dangerous times now facing us – and future generations.
Nicholas Shaxson, June 2020
Author of Treasure Islands: Tax Havens and the Men Who Stole the World, and The Finance Curse: How Global Finance Is Making us All Poorer.
Acknowledgments
My thanks go to the leaders in this field, who have spent years understanding the offshore system, secrecy jurisdictions, and the Wealth Defense Industry. Several were particularly generous to me in the writing of this book. They include sociologist Brooke Harrington, who is an important voice throughout the book, and “C. Dalton Thompson,” my “John Doe,” for his patience with all my questions. The Tax Justice Network has inspired me for decades, including the individuals John Christensen, and Andres Knobel, the latter for his work on trusts. Journalist Nicholas Shaxson has written the most important big picture books on this topic, starting with Treasure Island and now, The Finance Curse. Other important pioneers and thinkers on whom I have depended include Jim Henry, David Cay Johnston, Senator Carl Levin, and Jeffrey Winters.
Within the US, I have benefited from the community of transparency activists at the table convened by the Financial Accountability and Corporate Transparency (FACT) Coalition. From our first retreat in a blizzard at Pocantico in 2011 to the present day, I’ve benefited from the work of Gary Kalman, Elise Bean, Conrad Martin, Scott Klinger, and the late Rebecca Wilkins. Thanks for extra conversations with Clark Cascoigne at FACT, and Maureen Heydt at Global Financial Integrity, for sharing an interest in family offices. Thanks to the We’re Not Broke film crew, starting with co-directors Karin Hayes and Vicki Bruce. Thanks to Charles Davidson, Jack Blum, and our Sundance film festival gang.
Bob Lord has been a great colleague and associate fellow at the Institute for Policy Studies. He’s one of the great lawyers working in this area. Several other people get special thanks for reading the whole manuscript and bringing their legal expertise to the conversation. In addition to Bob Lord, my thanks go to Pat Martone; and Marcia Peters brought her dual talents of editorial expert and legal wizardry to the manuscript.
My IPS colleague Sophia Paslaski did amazing first reads and edits and helped whip the citations into shape. Other IPS colleagues whom I want to thank include our Inequality Program team, with Kalena Thomhave, Bob Keener, Sarah Anderson, Sam Pizzigati, John Cavanagh, Tracy Bindel, Kathleen Gaspard, Omar Ocampo, Peter Certo, and Negin Owliaei. Thanks to the Patriotic Millionaires crew, led by Erica Payne, Kelsea-Marie Pym, Morris Pearl, Stephen Price, Pat Martone, Fiona McCarthy, Sam Quigley, Rene Felt, and the rest of the team.
Thanks to George Owers from Polity Press, who invited me to write this book – and to Julia Davies from Polity for our trans-Atlantic correspondence, which helped to nurture this book.
Some personal thanks go to those friends and colleagues who have had me in their corner and cheered this project along. They include Nora Collins, Sam Hannon, Andrew Boyd, Rhea Becker, Danny Faber, Nina Schlegel, Jodi Solomon, Josh Hoxie, Dedrick Asante-Muhammad, Dan Petegorsky, Jom Michel, Carol Bell, and many others.
A special thanks to all of us sequestered during the Covid-19 pandemic that accompanied the writing of this book – especially housemates Luke Concannon, Stephanie Hollenberg, Caleb Hannon, and the amazing Mary Wallace Collins, without whom there would be no book.
Prelude 1983 Discovering the Money River
We don’t get money. We have money.
Former Massachusetts Governor Bill Weld
Thirty wealthy people sit in a circle of couches and comfortable old chairs. I am one, a participant at a weekend conference for people with inherited wealth, sponsored by a local family office and a foundation. It is 1983 and I am 23 years old. A few years earlier, I learned that I would inherit a substantial amount of money upon turning 25 as the scion of a successful Midwestern meatpacking family. I quickly suppressed this information and went about my life.
Now, having finished college, I am finally coming to terms with this reality. But I’m perplexed and actively wrestling with the ethics of inherited wealth. When a friend tells me about this conference, I jump at the chance to learn more and meet others in the same boat. The meeting room is in a stone mansion on a hundred-acre estate that had been previously owned by the Stevens family, including textile baron J. P. Stevens, who made their money from wool and cotton. The house, surrounded by lawns and stonewalls, is perched on a hill at the end of a long driveway, about thirty miles northwest of Boston. Water sprinklers swoosh constantly outside the window, ensuring the acres of grass remain green, even through hot August days.
A tall lanky woman named Melanie stands in front of an easel, writing down topics for discussion. She is the only black person in a room of white people. Participants are encouraged to suggest topics not already on the agenda and form small discussion groups. Some people suggest, “setting up a family foundation,” and “teaching children about money and values.”
I raise my hand. “I know everyone says that you should never give away your principal.” [This is the asset foundation of one’s wealth that generates income.] “But why not?” I say. “I’ve been wrestling with the ethics of continuing to hold onto wealth. Would anyone else like to talk about giving away assets?” The question hangs in the air for a moment.
“I would,” volunteers Edorah, smiling warmly from across the room. The two of us had already spent most of the previous evening talking about the idea.
“That would be …” flutters an older woman named Dee, craning forward in her chair. “That would be utterly foolish.”
“Yes,” agrees Catherine, a friend of Dee. “Don’t ever touch the principal.”
“Hold your horses,” Melanie interjects with a chairwoman’s authority. “They can talk about whatever they want. Are there others that want to join Chuck and Edorah?”
Two others raise their hands, and we are assigned a meeting room. Dee and Catherine join our group of four in order to convince us we are loony. “We are both grandmothers,” Dee explains. “We know a thing or two.”
“What will you prove by committing class suicide?” asks Catherine. Her face is flushed and agitated – and she eyes me through her thick glasses as if I am about to detonate a bomb.
“Give away your income,” counsels Dee more calmly. “But for God’s sake, don’t touch the principal.” Her silvery blond hair is pulled back in a bun and she flashes beautiful white teeth. Dee is from a well-known New England family and can attest to the benefits of holding onto money through multiple generations.1
Catherine and Dee dominate the conversation with stories of imprudent cousins who “invaded their principal” with “hare-brained” investment and charitable schemes. One of Catherine’s cousins had been duped into signing over part of a trust to a religious cult. “Don’t do anything