There’s nothing that collects arrows like success. And South Dakota has recently drawn considerable fire in recent days for the amount of money being invested in the state through trusts. A recent article in business insider magazine is pointing out that our small population state of South Dakota has managed to become one of the biggest destinations in the country for people’s money:
Financial secrecy laws in South Dakota have made the state a prime location for foreigners who want to conceal and protect their assets, with tens of millions of dollars tied to people accused of financial crimes and human rights abuses, according to newly public documents.
The Pandora Papers, leaked to the International Consortium of Investigative Journalists (ICIJ), explores the secretive offshore system the wealthy and power use to shield their money. The millions of pages of documents were shared with media partners including the Guardian, BBC Panorama, Le Monde, and the Washington Post.
and..
South Dakota is so appealing to the ultra-rich because they want the best security, the best income, and the lowest costs, the newspaper says.
The state’s laws have moved to allow for more financial security to protect asset holders, the Guardian explains.
How has it been allowed to happen that people and industry poor South Dakota appeals to the super-rich to invest their money? Are you kidding? We’ve been working on building our attractiveness for investments for decades! And we’re not afraid to tell people about it:
Governor’s Task Force on Trust Administration Review and Reform
The Task Force operates under the authority of Executive Order 2017-08. It is a body comprised of representatives from the trust industry, recognized as experts in their field and appointed by the Governor. This body has been assembled with the goal of establishing and maintaining South Dakota’s stature as the premier trust jurisdiction in the United States. Members of the Task Force were instrumental in crafting South Dakota’s Trust Company Act, South Dakota Codified Law (SDCL) 51A-6A, which helped establish South Dakota as a leader in the fiduciary services industry.
Members are appointed by the Governor to terms of three years. Responsibilities of the Task Force include reviewing and making recommendations for changing South Dakota’s trust administration statutes. The primary goals of the Task Force are to provide the most efficient and effective environment for the administration of trusts, and to provide a timely response to ongoing innovation and evolution in fiduciary services. The Task Force meets periodically, and provides the Governor with an annual report detailing its recommendations, by November 1 each year.
Executive Orders
The following Executive Orders established and amended the Task Force’s authority.
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Executive Order 97-10 – Establishes and Authorizes the Governor’s Task Force on Trust Administration Review and Reform
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Executive Order 97-12 – Amends 97-10; Removes limitation on number of members
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Executive Order 97-17 – Amends 97-10; Removes report submission deadline
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Executive Order 2011-14 – Reconstituted the Trust Task Force and implemented three-year terms for members.
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Executive Order 2014-14 – Continued authorization of the Task Force
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Executive Order 2017-08 – Continued authorization of the Task Force
Read all about South Dakota’s success story here.
Under Governor Janklow’s vision, South Dakota started down the road to becoming a financial powerhouse drawing such companies as Citibank to come to our state. And part of his vision also included making South Dakota more investment friendly, including for trust investment.
According to the website, “The Governor’s Trust Task Force” was originally assembled with the goal of establishing and maintaining South Dakota’s stature as the premier trust jurisdiction in the United States,” according to the Division of Banking.
If you think about it, Business Insider is actually writing their expose’ on South Dakota accomplishing what it set out to do those many years ago.
Mission accomplished!
Right! I’m proud to take on a greater tax burden if it means we can help these billionaires be more free. And we’re also helping international drug lords and oligarchs avoid the demons of overregulation. And we’re getting so much out of this – like, at least 7 jobs! And this investment helps our state grow, right? Like, it doesn’t just sit in a metaphorical vault, doing nothing but avoiding all taxes, including South Dakota? Because if that’s what it did, it wouldn’t be an investment, that would just be us being played as rubes. But I’m sure that’s not what’s happening.
Please explain in detail how your tax burden is increased by this.
The manipulation of the state’s population by unknown actors keeping people away from their money .. takes many forms, most of them sordid and cruel.
I think this has a negative effect on the economy of South Dakota, especially the tech economy.
We have deep state goons assigned here to spy to protect, in the meantime, business prospects are siphoned and stolen away from the rank and file South Dakotans who are supposedly benefiting from the Trust deposits.
As a percentage of the population of South Dakota, how many South Dakota normies have become millionaires because of the Trust deposits? Less than 1%? How many would have become millionaires with state-level focus on building our ag, tourism, and high tech economy?
A lot more I’d reckon.
A lot more hundred thousandaires, too.
A haven for crooked money. Pure republicanism. Only republicans could be proud of that.
Pretty sure that’s the family wealth for the Democrat Governor of Illinois.
I think people are worried about us being complicit in global elites’ shady business – all in the name of tax relief.
Because our legislators don’t read bills and are well-lobbied.
You might want to read about the political leanings of some of the people who stashed money here. It doesn’t cut as neatly along political lines as you seem to believe.
Dear John;
You should be more careful with your bigotry.
Assigning the attributes of some of the group to the rest of the group is bigotry.
Other examples include, “all blacks are ..”, “all mexicans are …”, and so on.
Sincerely,
John Dale, Conservative Republican
We’re making ourselves complicit in labor, environmental, and human rights violations… protecting the wealth of some of the globe’s shadiest elites.
We’re now the state that Trump/Noem supporters PRETEND they’re protecting us from.
Weird flex.
I would think most people are not happy living in a opaque tax-free money dump for criminals, traffickers, and despots.
South Dakota has a tax on banks.
You don’t know what you are talking about.
Key insight, identifies risk. What is the mitigation?
It would be better if the money belonged to South Dakotans.
If you dig into it. Majority of these accounts tie into socialist/Marxist countries. This could of been eliminated by banning shell companies years ago. But bankers/lawyers are benifiting.
Really none of the commentators, nor the article’s author seem to understand who this truly works. I am well versed in the SD Trust Industry and there is no actual downside to South Dakota or South Dakotan’s or the world at large because of our current trust laws.
South Dakota has hundreds of trust company and bank employees that earn good livelihoods from this industry. If there are goons that have trusts, they should be placed on watch lists and sanctions lists which trust companies are required to run the names of their actual beneficial owners against regularly. In addition, trust companies pay substantial franchise tax and supervisory fees to the State of South Dakota.
Of all of the supposed “bad people” in the article, none were actually convicted of any crime. Being “accused” by someone or settling a business dispute doesn’t or shouldn’t prevent someone from settling a trust. Neither the SD Government or Trust companies determine the OFAC/FINCEN rules regarding who they can accept as clients.
Lastly, having favorable tax jurisdiction where a trust owns assets (when you settle a trust, you are no longer the legal owner) holds high tax jurisdictions accountable. Similar to reducing/eliminating the SALT deduction holds high tax states accountable. For international clients, the vast majority simply want their funds held in US dollars to avoid confiscation from the poorly run government that they live in…remember Panama seizing bank accounts in the 1980’s and Mexican inflation that briefly ran into the several 1000 percent. International clients don’t typically receive any tax benefits from settling a SD trust, they simply want stability. Also, wealthy clients in some countries are motivated to pay good money into South Dakota for an increased level of personal privacy because in their home country, they are prone to be exploited, extorted or kidnapped if they keep their money in their home domicile. All of this is 100% legal, and all appropriate reporting under CRS and/or FATCA takes place.
The SD Trust industry provides a valuable service to clients who pay good money into our state in exchange for a legal service. Billy the Kid is right in that many of these clients live in socialist/marxist countries where citizens rightfully don’t trust the governments. The only people complaining about this are high tax jurisdictions and/or high corruption countries who are miffed because they can’t long-arm tax or have a list of assets to seize that are no longer under their jurisdiction.
This!
If people don’t want those from outside the US to put their money in a US bank, that’s a federal government thing. But if people are going to bank in the US why not South Dakota?
Well said.
Well, Said a week ago I just sent this to several legislators about creating a NEW TRUST FUND allowing Citizens to invest into it instead of Social Security. I will share it below. I love that SOUTH DAKOTA is a tax haven state, built on TRUSTS.
Upon reading this in an article, this scares me, and upon learning of this tax scheme by the Federal Government, I would like to recommend a legislative bill that creates a State Financial Program for Citizens of South Dakota to invest into a “State Public Trust Fund” in order to avoid paying into Social Security. We could pattern it as such, as the City of Galveston, Texas has done, where the residents of the city are fully vested within a city investment trust that creates a retirement account for each of the residents of the city who voluntarily wish to participate. The sole intent would be to fully opt out of the Federal Social Security Trust Fund. I believe as a State, we have the right to do this, and I am proposing this proposal because of this article:
Now the Social Security Administration says you can claim the “Child Tax Credit” even if you do not file a 1040 each year. Does this sound like the Federal Govt attempting to rob from the American People to you?
Yes – it is true, the Federal Govt now says do not worry about filing a 1040, we will give non-filers a child tax credit regardless.
Now correct me if I am wrong, but the entire purpose of the 1040 is to “ASSESS” your gross income, claim as many qualified expense deductions as possible, and where your net income falls below a specific threshold, the government will provide you a tax subsidy, credit, grant, or monetary fund where you qualify for one. That is and always was the true intent to file a 1040. If you expect to gain from the federal tax payers, you were to file an assessment to assess your annual income.
So now, the Federal Govt wants to rob from the American People, and give federal tax dollars to anyone and everyone regardless. I say this is a classic example of tax without representation.
Makes you wonder what really is this so-called “temporary” Federal Pilot Program to charge Americans $0.08 cents per every mile you drive your vehicle over 12 months. hmm…
Do not believe me. The Social Security Administration now says do not worry about filing a 1040, we will give you a child tax credit anyway.
https://www.ssa.gov/coronavirus/eip/?utm_medium=social&utm_source=facebook&utm_content=english-ad2-traffic&utm_campaign=cm-fb-economic-impact-payment-3.2&fbclid=IwAR2pdnMlQtL8n0UqTYr_iC0HPa2owQZFLqW9sgTgM2a-4XPlFPhDfQeG-aM
Now, I would like to something to the effect as I suggest below:
An Act to Create the South Dakota Citizen Security Trust Fund for the People of the State.
Be it Enacted by the Legislature of the State of South Dakota:
51-1-1. Purpose of which a trust may be created. Except as otherwise prescribed by chapters 43-4 and 43-25 relating to transfers, a trust may be created for any purpose for which a contract may lawfully be made. The Department of Revenue is hereby ordered to establish the South Dakota Citizen Security Trust Fund in the name of the citizens of this state, for the sole purpose to allow the citizens to voluntary by contract, to deposit a portion of their gross income earned by means of employment and/or self employment contracts over the course of twelve calendar months, to be vested for the duration of their working adult career, for the relaxed benefit of securing a self insuring security for their future. That upon the department establishing the SDCSTF, it shall promulgate rules of which to set up individual depository accounts, identified by an account identification number that shall be unique to each individual, shall provide for a uniform set of rules of which to control, manage, and set forth terms of use, and shall provide for the financial tools of which to invest in, in order for each individual participant to earn a minimum of 3.00% annual return on investment.
Keeping in line with the U.S Constitution Article 1, Section 9, Clause 4, No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be take, the State of South Dakota shall protect all such properties, from being taxed by the Federal Government whereas the citizens of each state wish to participate in activities within each state, in order to maintain control of, and to avoid all such federal taxes levied on property, the State Department of Revenue shall at all times enforce this specific section of the U.S Constitution, protecting such properties of the citizens of this state, and of which all monies fully vested within the SDCSTF shall remain property of the State of South Dakota, and such property shall not be assessed any such direct taxes by the Federal Government. The Secretary of the Department by order of this legislative act, shall have extreme oversight, control of, and all powers delegated to him/her to uphold and enforce such constitutional clause, thus protecting the private property of the citizens of this state.
Each participant of the SDCSTF shall provide to the department such information consisting of but not limited to: their place of employment, date of birth, residential postal address, contact information, beneficiary(s), an assessment of annual gross income, maintaining such information to the department upon any changes that may occur for the duration that the individual account shall be activated. The Department shall promulgate the forms necessary for the department to collect such information, and set forth rules and codes of which manage each individual account.
The legislature may at anytime create additional rules in such manner of to manage the fund, and to establish types of financial instruments of which the citizens may choose from to invest their gross income into any combination of mutual funds, money market accounts, bonds, or cash based accounts in order to maintain the minimum 3.00 annual return on investment. The legislature may adopt rules that restrict each citizen to a specific percentage of gross income that can be deposited into the fund, and shall have full authority to demand audits, or to request any such information from the department in order to ensure the fund is being well managed.
The SDCSTF shall at all times be considered a State Retirement Trust Fund, and all monies shall be property of the State of South Dakota, and all monies shall be left untaxed, free from, and protected from the Federal Government at all times, but the Federal Treasury shall upon warrants, shall from time to time be privileged to audit such fund in order to obtain a list of participants electing to contribute to the fund, but no such private information shall be given to the Federal Treasury that may incriminate a citizen of tax fraud, whereas the citizen has the right to avoid such federal taxes as per Article 1, Section 9, Clause 4 of the U.S Constitution. The State Department of Revenue shall protect, indemnify, and ensure the citizens of this state that their property shall be free from any such federal tax at all times, and that the Federal Government may not at any time hold any such citizen accountable to such foreign tax, the citizen does not wish to pay.
The South Dakota Citizen Security Trust Fund shall be considered property of the State of South Dakota, and all monies vested within its jurisdiction, shall be considered shielded from all forms of Federal Taxes, and shall serve solely the people of this state, and no foriegn interest at any such time, without the full consent of the citizens of this state.
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We should look at establishing some form of “TRUST FUND ” in order to protect the citiens of this state, especially if the Federal Govt is going to make such types of laws that unfairly take from the Citizens of this State what is rightfully theirs. IF they FEDS are going to mismanage Social Security, then “WE” should have the right to opt out of all such federal program, which is considered a voluntary based program. We have the right to opt out of the federal trust fund, by investing in a State type of financial fund. The STATE is sworn to protect all properties of the Citizens from any such direct taxes levied by the Federal Govt. This concept attempts to protect the citizens of this State, and I encourage the Legislature to devise a plan, a program, a trust fund that ‘we’ as South Dakota Citizens may participate within.