If SD would just tap into these trusts, we would never have to pay taxes again

Another ‘flattering’ story of how we allow Billionaires to take advantage of our laws in South Dakota;

South Dakota is fast becoming a mini-Switzerland for the world’s rich. Analysts and local politicians estimate that $250 billion to $900 billion is now stashed in South Dakota trusts by the likes of Chinese billionaires looking to keep their fortunes out of reach of the government, Europeans looking to avoid taxes and Americans looking to shield wealth from spouses.

I have argued for a long time that if we only put an annual .01% tax on these trusts the state could take in $90 million in tax revenue.



15 comments ↓

#1 "Woodstock" on 05.09.20 at 1:52 pm

“Yah, but aren’t they the ‘job creators?'”

#2 matt johnson on 05.09.20 at 2:11 pm

Several thoughts: you of course take the high end (of a large spread) to arrive at the $90 million dollar amount. The state budget is about $4.1 billion, so the amount of tax you estimate would cover only a modest amount of that budget. Those trusts are here for several reasons, but utmost because they are not subject to tax- they can be moved to other states. Lastly, it always comes down to someone deciding the other person doesn’t need/want/deserve their money.

#3 l3wis on 05.09.20 at 2:15 pm

That tax is so tiny, I’m not even sure the trusts would notice. To put it in perspective, it would be like paying a penny tax on a $100 purchase. The citizens of SF currently pay 650 times that amount on purchases.

#4 Conservative Here on 05.09.20 at 2:53 pm

No, we would always need to pay tax, you know why because no matter how much money govt takes from people, it’s never enough. We have a spending problem in this country, not a tax problem. The reason we fight, bicker, and claw over taxes is that we are overtaxed and we are all fighting on how to spend the money. This is a simple money management issue like when pro athletes who make millions of dollars are broke after playing ball, it’s not because they didn’t have plenty of money its because they are bad with money. Face it, people, the government is bad with money, we just need to give them less, they will piss away anyway. I hate paying taxes, not because I don’t think I should chip in and pay my fair share, way too many people don’t and it goes towards garbage we don’t need. 46% of the country effectively pays no Income taxes. Yes, this includes the rich and it includes low-income folks. Regardless of your position on taxes, I think EVERYONE needs to be part of the solution and not part of the problem.

#5 John on 05.09.20 at 3:37 pm

No tax is a bonus. There here for secrecy/ hiding assets.

#6 "Very Stable Genius" on 05.09.20 at 4:13 pm

We need to change federal tax laws to get rid of these trusts that are in perpetuity and restore throughout the land the rule against perpetuity. It’s modern day feudalism. #ItsAllJanklowsFault

#7 Anonymous on 05.09.20 at 7:25 pm

Can someone explain the rule against perpetuities?Asking for a friend.

#8 anominous on 05.09.20 at 9:32 pm

https://listen.sdpb.org/post/moneyland-author-oliver-bullough

#9 "Very Stable Genius" on 05.09.20 at 10:12 pm

A low wage is a tax. I love it when people say we don’t have an income tax in this state, because we do. It’s our low wages.

The wealthy living in South Dakota, who pay low wages and benefit from the lack of an income tax, are the true welfare queens. Oh, that’s right, they’re the “job creators”, aren’t they? Yah, that’s it my ass…. #wagecollusion

#10 l3wis on 05.10.20 at 3:07 am

I always love the argument, ‘But if we tax them, they will leave.’ And if 99.999% of the populace isn’t receiving any financial benefits from these trusts, who cares if they leave?

#11 rufusx on 05.10.20 at 8:50 am

I’m pretty sure the logic is “Tax them, and they’ll just go find a different tax haven. So, we’d just never collect the taxes anyhow.” As is, at least we can collect income tax – oh wait – no – from the managers offices here. Oops. well, maybe $100 a year or so from the sales of office supplies.

#12 The Guy From Guernsey on 05.10.20 at 12:14 pm

Upon what basis do you collect a tax from these trusts? On the basis of a personal financial property tax?

#13 l3wis on 05.10.20 at 12:43 pm

In general, the trust could pay income tax on any income its assets generate. This of course is different than what I said originally, taxing a percentage of the entire amount. You would basically set a tax on interest from the trust yearly. That of course would be much higher than .01%

#14 The Guy From Guernsey on 05.11.20 at 9:05 am

The business and tax laws are pretty complex, so it is difficult to craft a straightforward outlook on this.
Resident Trusts. Nonresident Trusts. Resident beneficiaries of Trusts (residents of the State which receive income from a SD trust). Nonresident beneficiaries of Trusts (people who are not residents of SD, but receive income from a SD trust).
Only the income retained by a resident trust would be subject to a state income tax. Not certain I see a way you can tax ‘income’ to resident trusts, without taxing income to resident citizens. Sauce for the goose. Sauce for the gander. Good luck with that!
SD could not lay claim to collect tax upon income to nonresidents, especially as that income might be subject to levy of income tax in the resident state (can’t tax the same income twice). There was a 2015 Supreme Court case which places precedence on this.

#15 The Guy From Guernsey on 05.11.20 at 9:25 am

Ironically, if your policy goal is a state income tax, one which includes a tax levied upon income retained to trusts resident to SD, PTH may be your guy.
Some would consider PTH ‘Woke’ for this policy initiative.
But it really would be nothing more than an extension of that which ‘Southern Exposure’ references in comment to another post on your blog as “ideologically vacuous”. PTH seems rather unmoored relative to ideological pursuit.
He will make a great, but hopefully unsuccessful, candidate “to bring pragmatism and South Dakota common-sense to Washington”.