
The great American tax haven: why the super-rich love South Dakota - elorant
https://www.theguardian.com/world/2019/nov/14/the-great-american-tax-haven-why-the-super-rich-love-south-dakota-trust-laws
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tomatotomato37
Interesting fact: Despite having one of the lowest tax rates in the nation,
South Dakota ranks in the top 5 for fiscal stability and lowest state debt,
and also maintains an average to above average ranking for public services
such as infrastructure and education.

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undersuit
Sources, sources, and sources. SD is top 5 in the short-term fiscal
stability[1]. SD may be top 5 in lowest state debt but they are 16th in per
capita debt[2](that's below average). Hey I guess you're right about the
public services, a local news paper reports they are also "above average"[3].

[1] [https://www.usnews.com/news/best-states/rankings/fiscal-
stab...](https://www.usnews.com/news/best-states/rankings/fiscal-stability)

[2]
[https://ballotpedia.org/South_Dakota_state_budget_and_financ...](https://ballotpedia.org/South_Dakota_state_budget_and_finances)

[3] [https://rapidcityjournal.com/news/local/south-dakota-
ranks-t...](https://rapidcityjournal.com/news/local/south-dakota-ranks-th-in-
annual-best-states-report/article_b8c27c68-26a5-5787-ad94-9651699c852f.html)

I don't know maybe I'm just commenting because all these numbers are actually
meaningless to the conversation.

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mindslight
"not much else" ? Mount Rushmore is a tourist trap - the view is basically the
same as looking at a photo. Visit the Black Hills themselves, and of course
the Badlands.

As for the article's actual gripe, I can't tell what it is besides an
overembellished "rich people have a lot of money and you don't". AFAICT the
tax advantage of a trust is the same as retirement accounts, but retirement
accounts are essentially limited to one (and a half) lifetimes while a trust
can go on forever. The tax advantage comes from having enough money to be able
to _commit_ so much of it on a long time scale, just like having the stability
to give a newborn $15k per year to reduce your eventual estate.

Which yes, is a problem. But not due to the exact protections a trust can
provide from creditors, which seems to be the article's only bit of substance.
In fact, given the ongoing "healthcare" trainwreck, the middle class really
should be looking into trusts to protect themselves against hospital
extortionism. Not having your nest egg available to pay a fictitious $100k
emergency room bill gives you a much better shot at not losing that game of
musical chairs!

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teh_infallible
This article reads like a few I have seen in the NYT— it’s written in a
populist tone, but it simultaneously reads like an advertisement: “Want to
park money somewhere anonymously? Try South Dakota!”

The NYT has run similar articles on Cook Island Trusts and the use of
anonymous LLCs to purchase real estate.

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RickJWagner
I was born and raised in South Dakota. I still have family and friends there.

It's bitter cold in the winter, and summers can be hot. The people are tough
by nature, they have to be. I never heard of this trust issue before.

I expect most South Dakotans would favor it. Nature has given them few
advantages over other states. (New York has history, and the ocean to bring
immigrants. California is blessed with great weather. The southern states have
no harsh winter. Etc) It's probably considered good to have at least some
factors that drive money their way.

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lacker
This article is pretty bad at actually conveying information. It’s nominally
about trusts in South Dakota, but first there’s a story for many paragraphs
about the history of some unrelated laws that make a few random South Dakotans
look bad.

So the main thing these South Dakota trusts actually do isn’t evading taxes,
it’s just lasting an indefinite amount of time, being private, and not putting
many restrictions on what you can do with the money. None of those seem that
bad to me.

Way down at the end of the article, it even mentions that many other states
have now copied the South Dakota trust rules, so there’s nothing particularly
unique about them nowadays, and South Dakota changing their laws probably
wouldn’t have any effect. Well okay, that kind of defeats the whole point of
the article though, which was that South Dakota was doing something bad.

The one interesting thing to me is that when cracking down on offshore
accounts, the US created some international standards that the US states don’t
have to follow themselves. In a sense that was a protectionist move, which I
didn’t realize before.

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undersuit
>do isn’t evading taxes, it’s just lasting an indefinite amount of time

Isn't the money taxed when a trust ends? So choosing a trust that lasts
forever sounds like it carries a tax advantage.

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seibelj
When you decamp from SF to Texas, or NYC to Florida, you avoid a significant
amount of taxes whether you made the move specifically for that or not.
Similarly, if you are in Europe and change your primary residence to Monaco or
Luxembourg, you accomplish the same thing.

There is a disconnect when you do something and someone vastly richer does
something. There is a line above which it is immoral and wrong, and below
which it’s totally OK because you aren’t rich and you are just a good person
making a financial decision.

Probably we should pass laws that stop anyone from making any decision that
avoids taxes. It’s not fair if you are raised and educated in SF and then take
all your money away from the future generation there. Logically it must follow
that you owe the community that raised and nurtured you a lifelong duty of
taxes. It’s very wrong how people move from SF to Texas.

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GhettoMaestro
Haha no. You’re basically advocating tax slavery. Freedom of movement is a
freedom like any other.

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seibelj
Obviously I’m not in favor of limiting freedom of movement, that would be
insane. I’m merely advocating for fairness. Why is it wrong for someone to
move their wealth to South Dakota to avoid taxes, but OK for someone to move
from SF to Texas and avoid paying back the community that raised and nurtured
them?

Maybe we need to have the government track where you reside every day, and
then your taxes are paid proportional to the communities in which you lived.
This would be some sort of “social tax” which is the fair solution.

~~~
lucifirius
Fairness would involve treating everybody the same, rich or poor.

You don't like the poor, you just hate the rich.

~~~
undersuit
Taxes are applied equally to all. I follow the same tax code as someone making
200x what I do.

