South Dakota has long been known as a tax haven for full-time, retired RVers. In fact this business is one of the leading mail forwarding businesses in the country. The other irony is that while ‘REAL’ residents are paying retail and property taxes to help support services in our state, these people are taking advantage of residency to skirt taxes (besides the pittance they pay in vehicle licensing).
But this article goes beyond the little tax loophole RVers are participating in;
Among the nation’s billionaires, one of the most sought-after pieces of real estate right now is a quiet storefront in Sioux Falls, South Dakota.
Don’t look for any heiresses in this former five-and-dime. Most days, the small offices that represent these families are shut. Even empty, they provide their owners with an important asset: a South Dakota address for their trust funds.
In the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn’t actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota’s tax-friendly trust laws.
Can you believe that? On the corner of 1oth & Phillips, where billions in dynasty trusts are sheltered from taxes you only have to walk a few blocks to the SAM bus station to see some of the poorest people of our community.
South Dakota’s sudden popularity illustrates how, at a time of rising U.S. economic inequality, the wealthiest Americans are embracing ever more creative ways to reduce taxes legally. Executives at South Dakota Trust Co., one of the biggest in the state, estimate that one-quarter of their business comes from special vehicles known as “dynasty trusts,†which are designed to avoid the federal estate tax. Creation of such trusts has surged in recent years as changes in federal law enabled more money to be placed in them.
Still others are drawn to South Dakota’s iron-clad secrecy, and protections of trust assets from creditors and ex-wives. Many of these features emulate those available in Bermuda and other island havens.
You ain’t kidding, secrecy. You can’t even get developers to release names of investors when they are asking for millions in TIF’s.
In South Dakota, a farm state that’s home to two of the 10 poorest counties in the U.S., lawmakers say they’re bolstering the trust industry to generate work for local law firms and bankers, and forge ties with prosperous families that may one day decide to build a factory or a warehouse here.
LMAO! How did that packing plant in Aberdeen work out? Or the cool million wasted in recruiting a couple of welders to SD for Trail King?
And our, conflict of interests, non-ethical legislature has no problem with robbing the federal government of tax dollars while holding out their hands for EB-5 programs;
The bill was sponsored by the House’s Committee on State Affairs, whose chairman, David Lust, is also House majority leader and head of the trust task force. When the part-time legislature isn’t in session, Lust works at a Rapid City law firm where one of his partners is a leading trust lawyer.
Lust receives no “direct benefit†from the legislation, he said.
Bernie Hunhoff, a Democrat and the House minority leader, said some in his caucus roll their eyes when the task force’s annual proposals come up for a vote. They’re aware that the trust industry drains revenue from the U.S. Treasury, which supplies almost half the state’s budget each year, he said.
“There’s a bit of an irony there, if not hypocrisy,†said Hunhoff, editor and publisher of South Dakota Magazine. “Anything we can do to poke the federal government in the eye, or to help anybody, even wealthy strangers from 1,000 miles away, avoid taxes, that seems to be a popular thing out here.â€
Still, Hunhoff said the proposals have bipartisan — and virtually unanimous — support.
“If we don’t provide for these kinds of trusts here, this will happen in some other state, so we might as well try to get the activity here,†he said. “If we can find opportunity for a few dozen young lawyers, I guess I’ll set my philosophical concerns aside.â€
Bernie? Hypocrisy in the South Dakota Legislature? Get the F’ck outta here!
I think this is more of a federal issue than a state issue, because if these people aren’t living here or using state services then they aren’t costing anyone here a dime… yet they are paying for those lawyers and accountants and investment bankers.
Seems like the real core issue at play here is the changes to law pushed forth by the GOP that resulted in the opportunity to never pay taxes on an estate no matter how large. Today there are loopholes that allow someone to make money via various investment vehicles, and when the die that money can be passed on to their benefactors tax free. Better yet, the earnings from those funds won’t even be taxed.
Thus the old saying about nothing can be said to be certain except death and taxes? Well – these days the only thing that is certain is death. Taxes can be avoided – if you have enough money to hire the right people.
Only in good old SD!
This story is just further proof of how South Dakota is literally the Cayman Islands of the northern tundra.
Want a bank charter with no worries about usury rate regulation?… Then come on over to South Dakota….
Want a green card?…Then just donate $ 500,000 to one of South Dakotas economic development plans which just so happens to have a convenient jobs creating multiplier table (compliments of the Chief Adjudication Officer of the CIS), which allows any EB-5 program located in South Dakota to be a potential bottomless pit of money laundering and capital creation….. Oh yes…..
Do you want cheap vehicle registration costs which are complimented with no income or inheritance taxes, void of property taxes because you are a renter, but with voting rights?… Then come on over to South Dakota…
..South Dakota, Great Faces Great Loopholes…..
Is there anyone in Sioux Falls who is super rich and didn’t get there by inheriting wealth, screwing people over, or preying on the vulnerable? When the town’s biggest players were all made on high-interest credit cards, a lack of usury laws, payday lending, trust loopholes, farm subsidies, etc. or by providing services to those who did, it’s a fair question to ask, right?
About your first link and alternative resources. There were over 2000 RV’ers who called the Tower Campground at 4609 West 12th Street home just a few years ago? Not bad for a DUMP that has all of 20 hook ups. Or the hundreds of RV’ers who call Yogi Bear Campground home? Or the hundreds of RV’ers who call Comfort Inn on North Cliff home? There are THOUSANDS of Minnehaha County registered voters in these RV’s who call these dumps home simply because they have the the mail forwarding business afforded them by operations like ALTERNATIVE RESOURCES. Think about it. THOUSANDS of so called RESIDENTS voting on our issues while safely tucked away in “Esacapee Trailer Parks†in the sun belt. Rv’ers who NEVER were, and NEVER will be SD residents.
How many of these RV’ers who call Sanford Falls home base voted in the EC election and others?
SD is a pathetic state run by the banksters, for the banksters. Who’s on the board of the governor’s economic development – mo’ banksters. This ain’t a NY or DC bankster problem – it’s local and since it’s local we can fix it — if we can get the nitwit white-haired minions to stop voting against their interest.
Notice how this story came from “real media” and not the home-grown advertisers.
To be fair…
http://siouxfallsbusinessjournal.argusleader.com/article/20130619/BJNEWS02/306190015/
Under Putin, the Russian tax rates have dropped to 20% corporate (6% for small businesses) and 13% for individuals (30% max for non-residents). The result: their Economy is growing faster than the rest of the G7 including us:
http://www.forbes.com/sites/markadomanis/2012/07/26/russias-economic-growth-in-comparison-with-the-g7/
Doesn’t it bother any of you that our current POTUS doesn’t understand what both SD and Russia do: if you tax it to death, it will eventually move?
Well said SY…
Potus and his group turn a blind eye to the real hidden money of the wealthy, meanwhile blaming the other parties for being the problem. Good example is John Ketchup Kerry docking his mega yacht in another state to avoid the luxury tax in his own.
http://www.huffingtonpost.com/2010/07/23/john-kerry-saves-500000-b_n_656985.html
You damn well bet Gates and Buffet hide their money in trusts, meanwhile telling the rest of us we don’t pay enough in taxes.
Sounds like a golden opportunity for the state. Set a yearly surcharge for all trusts established and functioning from a South Dakota address. A trust registration so to speak.
Sy, many countries have growth rates that far outstrip ours. Typically they’re the ones that have whiled away human capital and productivity for generations in a complete broken economic system – like, say, communism.
Afghanistan’s GDP is growing at a rate of 14%. Liberia has experienced double-digit GDP growth in three of the last four years. Shall we be more like them too?
Time and again research shows that state and local tax rates, unless there are exorbitant differences, matter very little to business when it comes to choosing where to locate. One need do nothing more than layer median income figures over the Tax Foundation’s map of best and worst states in which to do business to see this plain as day. The only people who buy into your explanation are 19-year-old freshmen in College Republicans who have wet dreams while reading Milton Friedman.
The biggest consideration for business location is availability of human capital – an area where South Dakota fails miserably unless you’re an employer looking for unskilled and semi-skilled labor at below-average market rates. And boy, South Dakota has that in droves because its higher education system sucks.
But you keep on pushing your vision of South Dakota-as- Oliver Twist, a world in which state residents meekly ask their economic overlords for another bowl of watery gruel and convince themselves that anything better is completely beyond their reach.
Great Faces, Great Places? More like “Serfdom Forever.”
“Some families also have invested in or bought businesses in the state, he said.”
Yeah, that’s why we had to go to China and South Korea for a packing plant investment.
The ‘dynasty trust’ business in SD does very little to benefit the regular South Dakotan. Are we seeing more money for education? Job training? Our public universities? I think people should hold residency in the state their trust exists in. South Dakota is becoming the PO Box of the nation for the wealthy and tax dodgers.
As we were working the petition drives at the courthouse in Sioux Falls, it was amazing how many people of a certain age were getting their residency changed while they were in town. It would also be interesting to know how many of these people vote using their new South Dakota residency.
That’s right, let’s tax the hell out of them so they will move their trusts somewhere else and South Dakota can go back to being the barren arctic tundra with some ring-neck birds and giant hospital cartels that it once was!
Craig – may not be true that their presence is not costing anyone anything. How do these trusts impact the official “median income” of SDn’s. Are they a significant part of why the state’s median income has been on the rise lately? Aren’t there federal programs/payments rates (Medicaid for ex:) that are based on the state median income?
LJL – Buffet and Gates don’t say “the rest of us” don’t say enough taxes – they say THEY – THEMSELVES don’t pay enough taxes.
Having anger and envy as YOUR motivators doesn’t typically lead to honesty.
I wonder if anyone at the Argus Loser notices the irony in the fact that they wrote about this same topic over the summer, except it was a giant, sloppy wet kiss to all the parties involved, talking about how being a giant tax shelter for billionaires was such an awesome thing.
Also, I wonder if any of them will bother to contrast this issue with one they wrote about today talking about how record numbers of kids in the Sioux Falls School District are signing up for free and reduced lunch.
It sounds like the school board gets the problem, just like you, just like me, just like so many others who are not the mayor or the city council or anyone empowered to do anything about it. Per the article, “South Dakota Division of Labor statistics show that half the workforce in the four-county Sioux Falls Metropolitan Area earns less than $15 an hour — about $31,000 per year.”
That number is right around what I was making in my job here until I left. And it’s livable, if you’re single, have no kids, and have no debt. Wonder how many in that bottom half of the workforce can say all three of those things? But I’m pretty sure there are a lot of people in the upper half who’d rather blame those people for their “life choices” than recognize that when half your population is effectively the working poor, your community is about as resilient as a house of cards.
Missed that story about the labor stats? Today’s paper? What page?
Rufux.
Do ever come up for air, or is MSNBC talking points your only form of reality?
Quite simply if they wanted to pay more taxes, they would not hide their money in trusts. It’s really easy. Write down how many billion you’ve screwed others out of on the ol d1040EZ form and pay up like the rest of us.
They claim not to pay enough in taxes but have full time tax people to find them the biggest tax shelters.
WAKE UP!!!!
Poly, it’s on the website now. I’m guessing they’ve got it teed up for tomorrow’s paper.
I’ve read some crazy things on this blog but conflating FULL-TIME RVers and BILLIONAIRE DYNASTY TRUSTS is ludicrous. Seriously.
I’m not saying we should tax the hell out of them, or they wouldn’t be here. I don’t have a problem with them holding their money here. I just think if we $121 Billion in trusts in SD, we could impose a couple of higher fees besides the bank franchise tax. If it is worthwhile for them, it should be worthwhile for the rest of us.
The labor statistics don’t surprise me. One of the main reasons is unskilled labor. You don’t know how many restaurants are struggling in SF to get good workers, some of that aren’t even skilled enough to make a freaking salad. It goes back to our piss poor education system, and high dropout rate.
CPA – Didn’t know I was combining the two? That would be ludicrous. I was just pointing out ‘different’ forms of tax shelters in the state. They are by no means the same.
Did you visit the website within the article CPA? Let us help you out.
Here’s from their website.
The Full Time travelers have a much greater need. Not only do they need their mail taken care of, but they also need to establish a “permanent residence” for a drivers license, vehicles, passports, etc. This is why South Dakota and Alternative Resources has become the best State and company to establish a “new legal residence”.
* No State Income Tax
* No Personal Property Tax
* 3% Excise Tax on net Purchase of Vehicles, RV’s
* Ranks 47th in Lowest Private Passenger Car Insurance Rates
* No State Inheritance Tax
* No Intangible Tax on Investments
* Low Vehicle License Fees
* No Vehicle Inspections
* South Dakota per capita taxes lowest in Nation (Sioux Falls Argus Leader 7/27/01)
A PERSON ALREADY LIVING IN THIS STATE WOULD ALREADY KNOW THIS INFORMATION. HENCE FOR THE OUT OF STATE TAX DODGER.
Does Mr. Buffet need to set up a SD PO box to dodge taxes NO. But it is surely tempting to every other wealthy guy looking to hide from the burdens of high tax.
SD is 2nd most corrupt state and trying for number 1. It’s my understanding most RVer’s are democrat. They must not vote. A quick way to get them to the polls is to put a 10X tax increase for RV’s on the ballot. They’ll show and pull the democrat handle. Surprise, a republican state becomes democrat.
Pathloss your rants are always amusing, but the idea of putting an RV tax on the ballot to swing elections towards the Dems is simply brilliant. That is Karl Rove level thinking right there.
Jus think – this level of entertainment is 100% free. To Paraphrase Yakov Smirnoff… America – what a country.
Interesting article @ Bloomberg. Even people in the present administration think SD is a great place to store their wealth.
http://www.bloomberg.com/news/2013-12-27/moguls-rent-south-dakota-addresses-to-dodge-taxes-forever.html
Any wat to get this to the big television stations.
Did you read the first line of that article SD.CPA? I’ll help you out.
“Among the nation’s billionaires, one of the most sought-after pieces of real estate right now is a quiet storefront in Sioux Falls, South Dakota.”
Told you so!!!