How Billionaires Pay Millions to Hide Trillions – Chuck Collins

Chuck Collins, a member of Patriotic Millionaires, has unraveled how the super-rich use the wealth defense industry to gain power in its efforts to hoard and hide their clients’ assets. As a result, it becomes a parasitical appendage on the real productive economy, extracting rents and fees from the wealthy and enterprising sectors of the economy. Mr. Collins joins Paul Jay on theAnalysis.news

Paul Jay

Hi, I’m Paul Jay. Welcome to theAnalysis.news. We’ll be back in just a few seconds with Chuck Collins. And please don’t forget the donate button and the subscribe button and the share button and all the buttons. Be back in a second. 

In his book, The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions, Chuck Collins writes, “powerful corporate interests benefit from weak local government and badly enforced consumer protection laws and enforcement. Their efforts to block the creation of the Consumer Financial Protection Bureau and their ongoing campaign to defund and weaken the agency are an indication of how the odds are stacked against the non-wealthy. The pro-wealthy tilt to our political system has enabled the wealth defense industry to gain power in its efforts to hoard and hide its clients’ wealth. As a result, it becomes a parasitical appendage on the real productive economy, extracting rents and fees not just from the wealthy, but also from enterprising sectors of the economy.”

Chuck Collins inherited a hefty fortune himself and was offered a place to slurp from the money river, as he calls it. You’re going to find out what that’s about in a minute. Instead, he decided to give much of the principal of his fortune, not just the interest, away. That, by the way, I learned, is a cardinal sin among the wealthy, as the meaning of life itself is defined by passing on wealth to future generations.

Now joining us is Chuck Collins. He’s the director of the program on Inequality and the Common Good at the Institute for Policy Studies, where he co-edits inequality.org. His new book is The Wealth Hoarders: How Billionaires Pay Millions to Hide Trillions. He’s a founding board member of Patriotic Millionaires. Thanks very much, Chuck.

Chuck Collins

Paul, thank you for having me.

Paul Jay

All right, so what is the money river and tell us the story of how you were invited to come find your place on its banks and start slurping.

Chuck Collins

Well, I owe a debt to Kurt Vonnegut. One of his earliest novels, God bless you, Mr. Rosewater, was about an heir to a wealthy dynastic fortune in Indiana who created a one man fire and rescue squad. And he kind of had this perspective that he explained to one of his relatives that, “it’s not that I’m smart or that I did anything in particular. I was just born by the banks of the money. I learned how to go down and slurp, benefit from that flow of money. And we have all these helpers who help us drill more wells and extract more wealth than we could possibly imagine.” And that was certainly my circumstance. I was born on third base or won the lottery at birth as the great grandson of the meatpacker, Oscar Meyer. And that was what got me in my 20s asking questions like, “do I really need this inheritance and do I want to live in a society where some people inherit so much and others have nothing?” And it gave me a front row seat, this wealth defense industry that you describe. All the trusted family advisors who help you sequester the wealth in perpetuity, ideally.

Paul Jay

So why did you even ask such questions? I mean, most kids born into such families, their identity is formed in that culture. It’s practically that defending wealth is patriotic. You call yourselves patriotic millionaires and you guys are for financial reform and higher taxes and such. But, in the course of fundraising for non-profits and such, I’ve met lots of wealthy people, mostly progressive, some not. But I know that the culture is that somehow it’s rationalized, justified. Defending wealth, passing it on to the future generations of your family is a noble endeavor. And you grow up going to the schools, private schools that teach that you’re the safeguards of society and values and so on. But it really is all about hoarding and defending the wealth. So how the heck did you break from that?

Chuck Collins

You know, Paul, it’s sort of a mystery to me too. I had all those forces around me. It was clear that I was a fish swimming in the water of wealth and all those assumptions. My one theory is that my mom did not grow up with tremendous wealth. And she sort of had a critical voice that she put in my head. But I also grew up in the suburbs of Detroit in 1967 and was trying to make sense of the Detroit riots and why was it that there were these great inequalities between downtown and suburb? And of course many of us can go through life with lots of stories and justifications for these inequalities, but for some reason, it didn’t quite crack for me. Some of the mythologies or justifications just didn’t ring true.

Paul Jay

But there’s other rich kids that saw the same stuff.

Chuck Collins

I know. How do any of us become who we are? I think part of it was that it was extreme to me, the divide, the gap between city and suburb, black and white, rich and poor. And when you’re three or four generations down the pike, if you will, the sort of deservedness mythology starts to crack. And it’s kind of like, what did I do that got me here? I understand my great grandfather, but me, what have I done? I just picked the right parents. I wish I had a better answer for that.

Paul Jay

But was there something specific that influenced your life? Like when you say you grew up in the late 60s, what age are you talking about? Like the Vietnam War, the antiwar movement, the civil rights movement? Did something kind of touch you?

Chuck Collins

Well, I think there wasn’t one single thing I was affected by. I was 7 in 1967. But then as time went on, I did work for Catholic Relief Services, I did have a sort of religious and faith tradition that talked about the preferential option for the poor and economic justice. I worked for Catholic Relief Services in El Salvador, so then I sort of got a global picture of the situation. So all these things sort of had a cumulative effect where the mythology of justification just didn’t take hold in me in the same aggressive way that it seems to capture other people’s imagination.

Paul Jay

The reason why I’m pursuing this, and we’re going to get into the substance of your book soon, is that we have eight or nine years, maybe, in terms of climate before it’s maybe a point of no return. The science seems to be saying if we can’t stay within the 1.5 degrees of warming, then you start getting a kind of runaway effect. And so we’re at a point in human history where if some sections of the elites don’t really get this, and I don’t mean get it superficially or just get it from a point of view of trying to make some money out of it, but actually don’t really get the urgency of the climate crisis and the profound inequality. And I have to add, because people don’t talk very much about it, but the threat of nuclear war too, which everyone’s in denial of. You look at the level of the mass movement, the workers’ movement, the progressive movement, there’s stuff happening, but not at the scale that in seven, eight, nine years, it’s going to be enough to change the course of government policy. So some sections of the elites have to really get this. So I’m always particularly intrigued when you meet someone who, I don’t know how much of your wealth you gave away, but you’re still in those circles. Is there any hope that there’s some other people like you that have some real wealth and power that might actually not just understand the urgency, but actually break with doing business as usual?

Chuck Collins

I’m seeing what I would describe as cracks within the elite. That there are people who understand that to keep going down this path ecologically and economically, that it’s not actually in their personal interests, that extreme inequality undermines healthy democratic societies, will undermine the economy, and that it’s locking us into our inability to respond to the ecological crisis. So I also share all of that and I see people kind of waking up. Not enough, not fast enough, but I do see particularly a younger, under thirty five generation very much questioning the privileges and prerogatives, saying things like, “look, I want to distribute my money and put it into a generative healthy economy and take money out of the extractive economy.” And if you’re talking to wealth advisors, which is relevant to the topic of the book, who are not in the same groove of unlimited accumulation and creating dynasties for the next generation, they’re saying, “hey, let’s forget about your unborn great grandchildren and passing on wealth to them. Let’s try to pass on a livable planet.” And in order to do that, we’re going to have to move these resources to organizing, campaigning, and transitioning to a new energy future. So I do see some hope.

Paul Jay

I wrote a piece about BlackRock, the big asset manager, and a lot of very wealthy people have their money in BlackRock. It gets invested for them on these index funds. And Larry Fink, who is the head of BlackRock, said, “Our primary responsibility is to defend the assets of our investors.” But you got to say that it should also include defending the asses of your investors because if there isn’t a change of course, these assets, this generational approach to money, it’s not going to mean very much.

Anyway, let’s get a little more into the substance of the book. So talk about what was the money river? What was your experience? And a little bit more of your story in terms of why you decided not to slurp?

Chuck Collins

Well, when you’re in your mid 20s, speaking as somebody who has three children in their 20s now, you’re creating your own identity. And I wanted to have a path that was separate from something that happened generations ago. And I was quite social change oriented and really concerned about it. And this was in the 70s and 80s before the even worse inequality now. But I could just see how inequality was tearing our societies apart, how poverty had damaged and wounded and traumatized people. So that very much shaped me. And then I saw that it was not just the wealthy individuals who were saying, “oh, I want this money. It was a whole infrastructure of these wealth defense industry people, tax attorneys, the professional accountants, the wealth managers, they were all steeped in a sort of ideology around wealth accumulation, concentration, preservation, and passing it on, essentially creating these kind of inherited wealth dynasties that they measured success by how little taxes their clients could pay and how much accumulated generation in and generation out. And I saw that as fundamentally counter to a healthy, democratic, socially mobile, form of capitalism. I just saw that we were going to become more of an oligarchy than a healthy, socially mobile, democratic society.

Paul Jay

And, of course, this wealth defense industry, because they have the “expertise,” wind up writing the tax laws, which forces you, the wealthy and even not so wealthy, to pay them to make some sense of how you file your tax returns. But of course, the laws are written in a way that if you can afford this expertise you can avoid much, if not all your tax.

Chuck Collins

Yeah, and I would focus on that and say that I’m not talking about people who have half a million dollars or a million dollars and are just simply planning so they don’t run out of money before they die. I’m talking about people in the top one tenth of one percent, starting at 30 million and up. These are the folks who are hiring the expertise. Really using their wealth in an extraordinary way. The people in the wealth defense industry will say we’re just helping our clients a bit. As I point out in my book, they’re helping write the law. They’re helping write the regulations, they’re helping to fend off oversight and regulation. They’re actively engaged in manipulating the rules that they say they’re helping their clients obey. So they’re an active class that’s trying to make the wealthy a protected class.

Paul Jay

Now, one of the major ways that wealth is hidden from taxes, even though supposedly the tax laws are supposed to catch this, is offshore and various kinds of tax havens. So how does that work practically because I thought, if you’re a U.S. citizen, American tax laws capture all your income offshore or not?

Chuck Collins

Well, actually, starting in 2009, that began to be more true, meaning that the Obama administration pushed to enter into treaties with other countries, requiring more transparency and disclosure of institutions where U.S. citizens were parking their money. However, you can be a billionaire and bring your money here to the United States and the U.S. isn’t reporting to your authorities. So that’s one of the things that’s changed. The United States has become more of a magnet for global kleptocratic capital and people who have stolen money from their own people or your Russian oligarch or whatever. You’re bringing your money here because we are now the weak link in the global transparency system. And that’s one of the reasons why I think you’re starting to see more luxury real estate owned by international interests, more land purchases by international wealth, people buying up art and other asset classes. The wealthy around the world are looking to park their money in the United States because we’re a stable, regulated marketplace and it’s a good place to hide your wealth.

Paul Jay

So, in fact, they’re avoiding taxes in their home countries because the U.S. doesn’t cooperate with those countries. But to what extent has it gotten more difficult for the American wealthy to use tax havens? With regards to the Panama Papers and what that involved, was that essentially illegal parking of money offshore? And is a lot of this actually illegal. In your book, The Offshore, it talks about trillions of dollars being hidden offshore.

Chuck Collins

The Panama Papers, which came out like five years ago, really were focused on shell companies and the role of anonymous shell corporations that were parked in different places of the world. And it really shook up primarily European powers. A number of governments’ leaders had to resign. The president of Iceland, David Cameron, the prime minister of the U.K., they were all implicated in the Panama Papers, whereas U.S. wealthy folks were less implicated. Part of what’s going on is that in the United States, the wealthy are keeping their money onshore using shell companies and trusts and other devices. So there’s less need to go offshore. Some of what they can do to sequester and hide money they can do here onshore. And in terms of the question of whether it’s legal or not, it’s all kind of skirting and dancing along the law, but some of it is not criminally obtained money. In the U.S., it’s just people who are avoiding taxes and lawsuits and accountability through these trusts and other mechanisms.

Paul Jay

And how does the trust protect them? Essentially like private foundations?

Chuck Collins

They are in a sense. In a typical trust, and it’s a medieval ownership structure, it’s really a vestige of feudalism, you have the grantor. So if I’m going to create a trust for you, Paul. You’ll be the beneficiary and we’ll get our friend Lewis to be the trustee. So I’m going to create the trust, put the money into it. You’re going to someday be the beneficiary and receive the money. From an ownership and tax point of view, we’ve just put that money into a kind of limbo state. Is it my money? No, I gave it to the trust. Is it your money? No, you haven’t received it yet. Is it Lewis’s money? No, he’s the trustee. Who has the wealth? And that limbo state is part of how they’ll explain to tax authorities, “well, nobody really owns this wealth.” And now they’ve created what they call dynasty trusts where they’ve suspended the rule against perpetuities, which limits the lifespan of a trust so that they can exist for centuries and into perpetuity. So people are putting money into trusts where the beneficiaries might be ten generations down the pike. And so huge amounts of wealth will grow inside these trusts, outside the reach of taxation or any kind of transparency and accountability.

Paul Jay

Which is, as I was saying in the introduction, which I picked up from your book. Once you have millions and millions of dollars to live on, the point of the accumulation of this wealth can’t be anything to do with your standard of living. It’s because of the power it gives you. But even more so, most billionaires, multi millionaires, are not particularly politically active I don’t think. They donate to a candidate here and there. They like that their phone call gets picked up when they want something from an elected politician. But most of them don’t spend much of their life worrying about what’s happening in the world unless it very directly affects their economic interests. They are very much tied up with this idea that they’re going to make sure their kids are looked after and their kids’ kids and so on. So these trusts are really in line with their mission in life, which is to pay it forward to their future generations, but it means the fortunes go untaxed.

Chuck Collins

Yeah, I think it’s the desire to have immortality or to protect the legacy in a very narrow bloodline, family tree sense. And in order to do that, you want to pay as little taxes as possible, such as transfer taxes like the estate tax, gift taxes, generation skipping taxes. These are all taxes that these trusts are designed to sort of circumvent. And without that, you are seeing essentially dynastic accumulations and they become a form of power. It’s not just about having agency and a good life. Its about being able to shape the environment that you live in, including tax policy. In a healthy, democratic society with a fair tax system, wealth would go from shirtsleeves to shirtsleeves in three or four generations. The whole idea being, that one generation maybe creates a useful something, whether it’s bologna or whatever. Four generations from now, because you’ve had children, because you’ve been paying your taxes, maybe because you’re sharing your money through charity, the money is dispersed. That’s sort of the natural order of things in a democratic society with a functioning tax system. What the wealth defense industry has done is essentially arrest that normal process of dispersal and now we’re seeing dynastically wealthy families, the Waltons, the Kochs, the Mars family, etc., seeing their wealth accelerate over generations. So that’s why we should sit up and take notice because we’re seeing almost feudal-like dynastic conditions emerging.

Paul Jay

Now, is that new? There were certainly some great fortunes from the late 19th, early 20th century, Rockefellers and such, that generation. They were very dynastic as well, were they not?

Chuck Collins

Yeah, what’s happened though is that in 1916, we passed the progressive income tax. We passed the inheritance tax, the estate tax. That actually did put a meaningful break on the build up of these concentrations of wealth and power. So it’s funny, you do see some dynastically wealthy families that are still around. Then you see a 50, 60 year period where there were no new wealth dynasties created. Where wealth did disperse over generations because there was a functioning progressive tax system. And now we see the emergence of the next generation of Gilded Age dynasties in the current period. So it has always been that way. And there was this 40, 50 year period where there weren’t these great dynastic fortunes created.

Paul Jay

In your book, you quote this guy Kahn as saying, “only fools pay the estate tax.” I’ve always thought the estate tax is one of the only ways to get at this accumulated aristocratic wealth. But some people, even on the left, liberal economists, say it doesn’t really work because they find so many ways out of paying it. Where are we at now with the estate tax? And is there a way to have an effective estate tax?

Chuck Collins

Good question. And actually, I sort of cut my political teeth in 1999 when George W. Bush campaigned on eliminating the death tax and he did a whole campaign to eliminate the estate tax. And I was organizing wealthy people to defend the estate tax and I got a call from this guy, Bill Gates senior, the father of the founder of Microsoft. And I thought it was a crank call, you know, but he said “Hey, this is Bill Gates, the father of Microsoft’s founder. I think the estate tax is an all-American tax. It’s how we defend meritocratic social mobility. I’m willing to help with this campaign.” And he and I and lots of others worked to defend the estate tax. What happened is it has become more porous. First, they’ve raised the wealth exemptions up. So today, the tax exempts the first eleven and a half million dollars of wealth, or about 23 million for a couple. So the exemption is far higher. That’s actually not a problem. The problem is primarily that people are using these aggressive planning techniques so that only morons pay the estate tax, meaning only people who are not hiring professionals and creating these trusts. I now think we need to retain the estate tax, close down some of these loopholes, and look at adding an inheritance tax where taxes also are levied on the recipients of big inheritances. Let’s say if you receive two million dollars untaxed, but above that you pay some form of tax on inherited wealth, just like another form of income. I think we need to do both those things because there’s now so much wealth that’s been put outside the reach of the estate tax that the way to capture that is now when it comes to the beneficiaries.

Paul Jay

I once wrote an article during the protests in Wisconsin when they occupied the buildings in Madison and I looked at the Wisconsin deficit and the state debt. And I saw that if you went back to 1990 levels of estate taxes, and you assume that there would be a certain amount of avoidance through various kinds of loopholes, but in terms of the actual money that could have been raised at 1990 levels of estate taxes just from the people on the Forbes billionaire list who live in Wisconsin, which was like I think seven or eight, with just those fortunes, you would have paid off the entire debt of Wisconsin, the deficit and the entire debt. Of course, now I think Wisconsin doesn’t even have an estate tax anymore. Many states have dropped it completely. There seems to be a lack of wanting to focus on that, even among some progressives. They say, no, just focus on income, but then you don’t get where the real money is.

Chuck Collins

I completely agree and actually I do think there is more appetite for looking at the wealth side of the equation. I think Senator Elizabeth Warren’s proposal to levy an annual wealth tax is wildly popular. With wealth over 50 million you start to pay a two percent annual tax. When you hit a billion, you pay three percent. It raises three trillion dollars over 10 years. It’s like 60, 70 percent of voters, including Republicans and independents, that all like this idea. So I think people understand income. Yes, there are great income inequalities, but the real entrenched inequalities now are in wealth and assets. You have like 40 percent of U.S. households that have zero or very little financial reserves. And then you have billionaires who’ve seen their wealth go up during the pandemic by one point six trillion dollars in 14 months. So I think people are getting schooled in the power and importance of taxing wealth and that that’s going to be a key ingredient of how we pay for some of the stuff that we need to do.

Paul Jay

I just want to say again, there were such laws after World War Two. What was the estate tax during the Eisenhower years? Its was like 90 percent or something?

Chuck Collins

It was steeply progressive under FDR. In 1936, 1937, they raised the estate tax up into the 90 percentile. So you almost had a hundred percent wealth tax on inheritance above a very high threshold. I mean it would have been 10 to 12 million in today’s dollars. Important point here, Teddy Roosevelt supported this idea. Bernie Sanders has an estate tax reform bill where you have a graduated rate structure. So you have 20 million dollars, you pay at the 40 percent rate. Any wealth over 20 million, you pay a 40 percent estate tax. But then you step it up to 60 percent, 70 percent, when you’re talking about a billion dollars. You start to slow and deconcentrate these democracy distorting levels of wealth and power. And that was always one of the purposes of the estate tax. It wasn’t just about revenue. It was about deconcentrating wealth and power.

Paul Jay

I’ve talked to right wing libertarians who, we probably disagree on many, many things, sometimes we agree on foreign policy things, but some of them supported the wealth tax. This is the same point you’re making. That if you want any form of democracy, you can’t have an aristocracy. And you wind up with that when you have this great inherited wealth. But part of the reason this discussion doesn’t get more prominence is that this wealth defense industry you’re talking about, the individuals, the lawyers, the accountants and all the rest are also, to a large extent, the people who are the bundlers of political funding for the parties. And so they have an inordinate direct connection to the whole political process. And their big mission is to defend the wealth.

Chuck Collins

Paul, you said it perfectly. One must understand this is a class. They are not as wealthy as their clients. They’re not oligarchs, but they align themselves with their interests. And they use their considerable networks and power. I mean, think about the trust and estate section of the American Bar Association or the family office industry in the United States with two to three thousand family offices or accounting groups and wealth management networks. These folks use their power to fend off oversight and to protect their clients’ interests. So it’s not just seven hundred billionaires. It’s hundreds of thousands of professional people in the top five to ten percent of incomes who use their clout. That’s just helping wealthy individuals. There’s a whole other group overlapping, but the larger group that works with let’s say a couple hundred transnational corporations on their tax shenanigans. So now we have probably 200 to 300 thousand people who get up every morning and help the biggest corporations and the richest people in this society to hoard their wealth in perpetuity.

Paul Jay

It’s like lawyers who defend the Mafia. They can justify to themselves that “everyone deserves a fair trial, so I can make my living defending the Mafia.” These guys say, “well, they’re following the law so I can help them preserve their wealth, even if it’s destroying society and the planet.”

Chuck Collins

One of the other great justifications is we’re just helping families.

Paul Jay

Oh, yeah right. They just want to look after their kids.

Chuck Collins

They’re just helping families stay together, family values, you know.

Paul Jay

Just to show you how much I am not in that class, I never heard of such a thing called a family office until I started reading your book. What is a family office?

Chuck Collins

A family office is, and many people during the pandemic think, “Oh, yeah, I’ve got a family office now. You know, I’m working from home over here.” I said, no, no, no, no. That’s very different. A family office is when a wealthy family brings the wealth defense industry services in house. So instead of going over to Fidelity and going to a law firm, they bring the lawyer, the wealth management professionals in the house. They still might contract for services. But typically it’s families with about 250 million dollars or more. And it’s not a surprise you haven’t heard of them. They’re not exactly advertising their existence. One interesting current event, though, is that family offices have grown tremendously in the last couple of decades. There was probably a couple thousand family offices in 1983. Now there’s an estimated 10,000 family offices globally. Their mission is capital preservation and succession. Getting as much money to the next generation as possible. So they’re in the dynasty building business. They are in the tax minimization business. That’s inherent to what they are. After the 2009 economic meltdown, as part of the Dodd-Frank legislative process, overseeing the financial system, setting up some guardrails, etc., family offices lobbied very hard to be left alone. “We’re just families.” And to some extent, you could sort of make the case that they are qualified investors, they’re wealthy. If they lose a little bit of money, it’s not the end of the world. They’re not going to be bamboozled by fraudsters. So all of a sudden, you saw these hedge funds converting and turning themselves into family offices. Soros, Appaloosa, and one of them was this guy, Bill Hwang, who started something called Archegos.

Paul Jay

Yeah, we heard of him recently.

Chuck Collins

Well, guess what? That was a family office. It was an unregulated family office.

Paul Jay

Remind people what happened.

Chuck Collins

So Archegos was an investor who borrowed money from Credit Suisse and Morgan Stanley and lost about ten billion dollars of those two institutions’ money because he entered into these highly leveraged financial swaps. Complex financial transactions. But here’s an example where this family office wasn’t just a wealthy person losing their money, they lost some other people’s money, too. And therefore, we should probably bring them under some form of oversight. So that’s an example where family offices are now kind of moving to the adventurous end of finance, the speculative end of finance. So my little retort to that is you take some billionaires, you take unregulated pools of trillions of dollars in family offices, you put it together with a pandemic speculative financial situation and what could possibly go wrong? And I would say unless we bring these family offices, which manage somewhere in the six to seven trillion dollar wealth level, unless we bring them under some kind of oversight, they are going to be the shadow financial system that still exists coming out of the economic meltdown. And just for perspective, all the wealth in global hedge funds is about three point four trillion dollars. So we’re looking at a private, unregulated sector twice as big as the hedge fund sector that no one’s really keeping an eye on.

Paul Jay

And that’s at least the size of a quarter of the American GDP, if not even a little more than that. You made a really interesting point in the book about how in the U.S., which is a tax haven for billionaires outside of the United States, a lot of criminal money, avoiding accountability in their own countries, comes to the U.S. because it’s become a safe haven, a tax haven, but then it gets embroiled and interwoven with big American money. I mean, the obvious example of that is Trump. Where the allegations are pretty strong about Russian oligarchs buying all kinds of condos from him and through other ways cleaning their money through Trump. But I’m sure Trump’s not unique in this. And you seem to be suggesting that in the book.

Chuck Collins

Yeah, I think that the U.S. is particularly attractive as a place to bring wealth. So let’s say you are a Russian oligarch or you’re a Chinese billionaire and you need to get your money out of China because you think the government might appropriate it or you are a dictator in the global south in some kind of mineral rich country and you’ve been sort of squirreling away and extracting bribes and taking the wealth of your people, stealing wealth from your own people. Where do you take it? You need to get it out of your country. You need to get it into some form of anonymous ownership. You need to run it through some kind of offshore bank. But once you’ve laundered it, you want to bring it to a stable market. And the United States is beckoning. And this is where you have to get into your sort of inner billionaire here. You’ve got a billion dollars. You need to kind of spread that around. You can’t have all of it sitting in one place. You can’t have it over in the equity markets. You want to have your money parked in a lot of different asset classes. Real estate is very attractive because you can buy real estate all over the country, you could buy luxury real estate. But we’re seeing this incredible wave of global money coming in and buying up US luxury real estate. Anonymously in some cases, using a Delaware shell company or the like. There’s a fight between two factions of the Saudi monarchy going on. And the previous family members took about 3.5 billion out of Saudi Arabia. And they’re trying to get it back. Well, where is that money? It’s in real estate in New York, Toronto and Boston. I could give you a tour of ten condos owned by Saudi money. Is that illegal money? Not necessarily. Well, it depends who’s in charge over there. They might say, “well, that was illegally taken,” which looks quite likely, actually. Art is another place. People love to park money in art. So part of it is you’re not even looking to buy real estate to invest in. You’re purchasing it because you think it’s going to hold value. You got your adventurous money over here going into Bill Huang’s Family Office Investment Fund, and you’ve got your stable, just trying to hold value assets over here and the like. So it’s changed the American economy in weird ways. And for many of us who live in cities where the cost of housing and land have just been driven up, it’s another factor that’s contributing to the housing crisis.

Paul Jay

Yeah, I know. Right now I’m in Toronto. I go back and forth between U.S. and Canada. And of course, in Toronto, Vancouver, the condo market’s gone insane. Everyone keeps predicting it’s going to crash because it seems like there’s a heck of a lot more condos than there are people. But the money coming in, especially from Hong Kong and from China, again, parking it. But in a sense, they’re making money out of it because so much money is pouring in that the housing values keep going up and up. So maybe the wealthy are making money out of it, but housing is getting increasingly unaffordable for people.

Chuck Collins

In Vancouver they found it was just hollowing out neighborhoods. It wasn’t just luxury condos, but family houses and money was coming in and buying up half the houses in a neighborhood. They even had companies that made it look like someone was living in the house. They put up a pumpkin at Halloween and some holiday lights in December, but these were empty ghost town neighborhoods. And all of a sudden there’s no foot traffic, there’s nobody going to the mom and pop store in the corner. And Vancouver and British Columbia’s response was to tax vacancies, discourage foreign ownership, levy anti-speculation taxes on transfers over a certain threshold. They were trying to contain the destructive impact.

Paul Jay

I don’t know if you’ve done any work on this. This, to some extent, jives with the issue of how this is a corrupting influence, this kind of international money coming in. But there’s a section of the mafia, I don’t remember its name right now, but it originally came from Calabria, southern Italy. And it’s actually now headquartered in Toronto. The family leaders are here. And according to a few news reports, the family’s global operations are generating 60 billion dollars a year. And in the article, I believe it might have been Reuters, they’re making more profit than McDonald’s and Deutsche Bank put together. Where’s all that money going? Obviously not getting taxed, but are some of the same tax avoidance structures creating money laundering opportunities?

Chuck Collins

Yeah, the money is not sitting on some little Caribbean island. It is in active markets. It’s in real property. It’s in art, jewelry, cryptocurrency now. It’s spread over a lot of nation states and markets. And when you have that level of wealth, you are taking portions of it and putting it into the casino.

Paul Jay

But actually that is probably the number one way to launder money, through casinos. I made a film in Las Vegas and the insiders were telling me the consumer stuff is just sideline. The money laundering is what the business is about.

Chuck Collins

Well, there’s the real casinos and then there’s the speculative part of the financial markets, the casino financial sector. And that’s where you have huge amounts of wealth trying to drive high returns. And that’s how we got into trouble in 2008, 2009. You had 20 percent of the wealth controlled by the richest one percent, chasing really high returns and saying, “let’s move this money out into the mortgage sector. Let’s go, let’s go, let’s go. Let’s do some deals.” And in fact, the real economy couldn’t sustain or support those levels of return. So it creates volatility. I think the reason why we should care is that it contributes to volatility in the marketplace when so much wealth is chasing high returns.

Paul Jay

Why don’t you elaborate that, because that’s one of the more important points in your book. It’s not just that this is unfair, it’s not just that it’s unequal. It actually distorts the entire economy in a way that it just becomes increasingly parasitical. And I think if you want to understand the Trump phenomenon, of course, disillusionment among sections of the working class, but they aren’t the ones who created Trump. Let’s remember the financing of Trump was through Robert Mercer, the hedge fund billionaire quantitative trader, that’s completely parasitical, and Sheldon Adelson, whose money is out of casinos in Vegas and Macau. The most parasitical sectors of this financial economy are the ones that created Trump.

Chuck Collins

Yeah, I think to understand that there’s sort of this extractive economy that’s trying to hoover up as much wealth from different aspects of the economy, the real economy, it’s parasitical on the healthy, real economy. It’s extracting value. And that is the organized class that obviously pushed for Trump. They just want to keep the band going. They just want to keep the party rolling here for as long as it can run. How much can the parasitical economy extract from the real economy before the party’s over? And the wealth defense industry is part of what creates the protections. Anonymous shell companies, anonymously owned real estate, trusts that have no clear beneficiaries, these are the tools. Sheldon Adelson, he used something called grantor retained annuity trusts through which he passed like eight billion dollars to his children. Avoiding about two to three billion dollars in estate taxes using these 30 various trust forms. We sort of know some of this information, thanks to leaks and very good investigative reporting, but for the most part, we don’t know it. We don’t know how this is working because there’s so many layers of protection and anonymous activity. We learn a few things periodically when there’s a leak. When the Panama Papers leaked, when the Paradise Papers leaked, when somebody gets a divorce and they have to disclose what they actually have. But for the most part, we’re in the dark as to what’s really going on.

Paul Jay

Now, as far as I understand it, very little was done about this during the Obama administration. Certainly, with the financial fraud that went on, nobody went to jail. Is there any sense that the Biden administration will get any more serious about any of this?

Chuck Collins

It’s interesting, Biden obviously represented the state of Delaware for 36 years in the Senate. The state of Delaware is the supreme weak link in the secrecy jurisdiction. And yet over the last couple of years, he’s been pretty outspoken about cracking down on global money laundering. I think that there are people in the administration who are really trying to rebuild the oversight capacity of the Internal Revenue Service and of the Treasury Department and the Securities Exchange Commission. They understand that the oversight, the cops on the beat, have been depleted. You’re more likely to be audited by the IRS for using the earned income credit, which is a tax break that working class folks use, than if you’re using one of these fancy trusts. Since 2010, the IRS has been decimated. They’ve lost like 18,000 staff, but they’ve also lost the expertise to follow the money. It takes a certain amount of sophistication to understand these complex transactions and deals and trusts and which ones are bogus and which ones are legitimate. And that’s completely missing right now. So I do think there’s a recognition that if we want to restore any progressivity to the tax code, we have to rebuild the oversight function. He’s proposing investing 80 billion over 10 years to rebuild the IRS. And there’s pretty broad support for that. If you go outside of a few howling crazy Republicans. This is just about obeying the existing laws here, getting people to obey the existing laws.

Paul Jay

The thing with the existing laws is even if they tried a single case against the big fortune it could cost tens of millions of dollars with the talent they’re up against. Clearly the majority of people that are in the wealth defense industry get paid extremely well. And why would you go into government when you can go there? And certainly there’s some talented people in government, too. But, Jesus, when you can make 20, 30, 50 times the salary. So, the way the laws are, even if there were attempts to implement them, it’s almost impossible to do it on a scale. And the number of cases they’d have to have. You talked about thousands of home offices. Every one of them could be a case. Doesn’t there have to be a more radical approach like just outlawing these trusts? Like a big sweeping kind of change. Because I just can’t imagine, even if you throw billions at it. Billions seem like a teacup worth of resources compared to what it would really take to deal with the wealth, deal with the tax avoidance, and most importantly, the political power all that wealth has.

Chuck Collins

Yeah, well, you’re absolutely right in that the IRS is completely outgunned by this wealth defense industry, but there’s four things that I take heart in. One, there is a movement for enforcement and rebuilding that capacity. Second, at the end of last year, Congress passed and actually Trump signed something called the Corporate Transparency Act, which would require corporations to disclose who their real beneficial owners are to an arm of the Treasury Department, the Financial Crime Enforcement Network. Now, we’re in the process of fighting over the regulations of that, but that bill had Republican support and strong support from law enforcement. Remember, law enforcement is as frustrated as anybody with having to deal with these money laundering systems because they hit the walls all the time. “Oh, Delaware limited liability company, end of search.” So they want disclosure and transparency.

What you say is exactly the position I would say, as there’s certain trusts that should be banned. Certain kinds of transactions should be outlawed. The IRS does have a system for what they call posting listed transactions, which is basically saying, “sure, you can do this transaction, but you will be audited.” And that discourages its use. And Senator Bernie Sanders, his estate tax reform bill has a bunch of these provisions to shut down some of these shell games. How did that happen? Disgruntled members of the wealth defense industry have come over to our side. There are defectors. There are people who, at the end of their professional careers have said, “what have I done for humanity? All I’ve done is help the richest people in the world get richer and more powerful. I’m going to now devote the rest of my life to shutting that system down.” And that’s part of my work. I’m trying to organize more and more. Every time I do a podcast or a conversation like this, somebody emails me and says, “I’m 64 years old. I’m ready to do something different. I want to help my fellow human being.” And so there are cracks emerging in this wealth defense system. We’re even getting rich people to tell their advisors, “Stop the games. Stop it. I need to pay my fair share of taxes. Stop creating these tax dodges.” The final step is we rejoin the family of nations. We go create treaties with other nations, starting with a corporate minimum income tax treaty that the G20 is going to be talking about in the next couple of months. So you can start to see the path to closing and shutting down this hidden wealth system. Enforcement. Transparency. Outlawing certain kinds of transactions and trusts. Global cooperation and treaties. And getting as many people from the wealth defense industry to bring their talents to the enforcement side. Do that in a couple of years, it’s game over for this hidden wealth system.

Paul Jay

Well, that’s a big if. But I think you’ve got to add a serious estate tax with real teeth, because if you don’t break up the big fortunes it won’t go very far.

Chuck Collins

But think about if the U.S. and the U.K., with its sphere of influence and its traditional Commonwealth nations legal system, which still is under the oversight of the Privy Council, a vestige of colonial power, but if the U.S. and the U.K. came together and said, we’re going to raise financial regulations because there are social movements in our societies pushing for that. How long is it going to take before Belize and the Cook Islands and the British Virgin Islands cave? They only have these tiny little wealth defense industries. They’re powerful and influential. But when the UK and the US say, “Hey, do you want to be part of global trade arrangements with us? Do you want to have global tourism exchanges? Do you want to participate in the global financial system? Here’s the price of entry. You have to abide by these rules.”

Paul Jay

Well, you’re going to need a people’s movement at an enormous scale and a president somewhere, at the very least along the lines of a Bernie Sanders, and a Congress that goes along with him. On the other hand, if we don’t have all of that, we humans aren’t going to be around in an organized society for much longer.

Chuck Collins

Yeah. Playing out the current trajectory of both inequality and ecological catastrophe, I think we have five to ten years to step up the pace of human transformation. We need to start turning the corner, whether it’s on carbon emissions, but also on these concentrations of wealth and power. And that’s why I’m very glad to talk to you and just have this conversation. I’m finding people tend to say, “Well, I always knew the rich had a lot of power and that they had their own set of rules, but I didn’t understand that there was this sort of support structure there and that that can be a pressure point for change.” And I end the book by giving a mock commencement address, although it’s not too late for the Harvard Business School to invite me to give it on May 27th, but I give a talk to younger people. There are all kinds of options for careers, and my message to them is don’t work for the billionaires. Don’t work for the wealth defense industry. Don’t use your one and only precious life to help the rich get richer. Help us rebuild the Commonwealth. And help us build healthy communities and more egalitarian societies. Don’t use your talents to help the wealth hoarders sequester more. And I find younger people are very receptive to that and are very much rethinking their vocation when it comes to this work.

Paul Jay

All right. Thanks very much for joining me, Chuck.

Chuck Collins

Thanks, Paul.

Paul Jay

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