TWO YEARS OF living through a pandemic has given us deeper insight into how extreme inequalities of income and wealth matter—and in some cases dictate who lives and who dies.
The pandemic economy supercharged existing inequalities, worsening the economic circumstances of the already precarious while further concentrating wealth and power in the hands of the already wealthy. In the first 21 months of the pandemic, roughly 700 U.S. billionaires saw their combined wealth increase by $2.2 trillion, even as millions lost their lives and livelihoods. A few hundred U.S. billionaires now have a combined wealth of $5.2 trillion, while the bottom half of all U.S. households—165 million people—have a combined $3.4 trillion.
It’s easy to see these inequality trends as invisible or remote forces without agency, or as failures of government policymakers to write the rules of the economy to ensure greater shared prosperity. However, there are private actors who function as “agents of inequality” whose daily work inflames existing divisions. These include what social scientists call the “wealth defense industry”—the veritable professional army of accountants, tax lawyers, wealth managers, and family office staffers that facilitates the hiding and sequestering of wealth.
These enablers serve the ultrawealthy—those with wealth upward of $30 million—and are paid millions to hide trillions. They labor to ensure that there is a two-tier tax system, with one set of rules for their ultrawealthy clients and another set of rules for everyone else. They also facilitate the creation of inherited wealth dynasties and monopoly power, directly exacerbating the existing racial wealth divide and entrenching concentrations of wealth and power.
The role of these enablers is in plain sight as nations around the world try to recover from the pandemic and find revenue to pay for it. One popular idea globally is to tax the billionaires who’ve profited tremendously during the pandemic. At the 2022 World Economic Forum in Davos, Switzerland, three organizations—Oxfam, Fight Inequality, and the Institute for Policy Studies—called for an annual wealth tax on the 3.6 million people in the world with over $5 million in wealth.
Stashing the world’s wealth
TAXING THE ULTRAWEALTHY has broad public support in the U.S.: Nearly two-thirds of Americans support a tax on extreme wealth, like the proposed Billionaire Income Tax introduced in Congress by Sen. Ron Wyden or an annual wealth tax, as proposed by Sens. Elizabeth Warren and Bernie Sanders. Billionaire investor Leon Cooperman complained that if a tax on wealth is passed, the wealthy will simply “rush to find ways of hiding their wealth.” But, as a growing number of leaks reveal, trillions of dollars of the world’s privately owned assets are already hidden. At the global level, as much as $36 trillion—or more than 8 percent of the world’s wealth—is stashed in hidden wealth vehicles such as trusts, anonymous shell companies, and noncharitable foundations that obscure ownership and responsibility.
These are not affluent families saving for retirement, but the wealthiest people on the planet, those with more than $30 million and the estimated 2,750 global billionaires. These are the people who can afford to hire professional wealth defense practitioners. They deploy a toolbox of opaque trusts—including what some call dynasty trusts—to sequester wealth for future generations, with the goal of attaining a sort of multigenerational wealth immortality. They will defend their actions as “just obeying the law” while instead they are actively engaged in lobbying for law changes and blocking reforms to defend the interests of their ultrawealthy clients.
Every indication is that during the pandemic, wealth-hiding activity has increased. The U.S. estate tax—the country’s only levy on the accumulated wealth of the top 0.1 percent—is so porous that even a former Trump official quipped, “only morons pay the estate tax.” In 2020, the tax raised a paltry $9.3 billion. An exposé by ProPublica found that half of the wealthiest 100 U.S. billionaires deploy a complex scheme called a grantor retained annuity trust (GRAT) to pass on wealth to heirs and avoid estate taxes.
The number of “family offices” or private wealth management advisory firms serving clans with more than $250 million has mushroomed, rising from less than 1,000 in the 1980s to an estimated 10,000 globally today. While family offices perform some of the more mundane wealth management services, their core purpose is wealth preservation, tax reduction, and intergenerational succession, essentially a dynasty-building mission.
Tax haven USA
IN OCTOBER 2021, the world got a riveting window into the inequality machinery with the release of the Pandora Papers, the result of a massive set of leaks from 14 offshore wealth service firms in 11 different countries. The leaks were reported by more than 600 journalists from around the world affiliated with the International Consortium of Investigative Journalists. The findings document how the world’s superwealthy dodge taxes and stash trillions of dollars.
When you think of secretive tax havens, you might imagine Swiss bank accounts or Cayman Islands shell corporations. But one revelation from the Pandora Papers is that the United States is now globally recognized as a tax haven in its own right, with our anonymous Delaware limited liability companies and South Dakota trusts attracting the wealth of foreign despots and kleptocrats. Many also launder billions through luxury real estate in the U.S., avoiding taxes while parking their treasure in a stable, regulated market.
The United States didn’t become a tax haven overnight. Over the last 30 years, several states—including South Dakota, New Hampshire, Nevada, Wyoming, and Alaska—have morphed their laws to accommodate anonymous shell companies and trusts with essentially unlimited lifespans. South Dakota is getting special scrutiny because it leads the pack in entities known as “dynasty trusts,” where wealthy families are parking billions with the intention of avoiding taxes for centuries.
The Pandora list does not include many of the U.S. superrich, even though they use the same toolbox of offshore banks, anonymous shell companies, and opaque trusts. That’s because this trove of leaks originated from offshore wealth advisory firms in 11 countries including Samoa, Cyprus, and Belize—not places where superwealthy U.S. citizens go for financial services. And more often, U.S. billionaires no longer have to go offshore.
Harms
IN ADDITION TO fueling inequality, this system of wealth hiding causes harm in both the U.S. and around the world.
First, it allows for the plundering of wealth from the world’s poorest and most vulnerable populations. The hidden wealth system thwarts the efforts of governments in lower-income countries from taxing their own wealthy citizens to make public investments in health, infrastructure, and education. Some of the kleptocrats parking their assets in the United States have committed crimes in their home countries or pillaged their public treasuries. The hidden wealth system in the U.S., with our anonymous companies and clandestine trusts, enables these heists to happen.
This same hidden wealth apparatus enables the wealthy to shift their tax obligations onto everyone else. When transnational corporations and wealthy individuals dodge their taxes, they pass the bill for public services onto everyone else—or create the conditions for phony austerity and budget cuts. This effectively sticks the rest of us with the costs of public services. As the Biden administration and Congress debate how to pay for long overdue investments in infrastructure and climate change mitigation, the hidden wealth system is enabling the very wealthy to “opt out” of their responsibility to chip in.
The hidden wealth system also disrupts local housing markets in many cities. The secret global cash flooding into U.S. real estate markets adds to the forces pushing up the cost of housing for everyone else. Much of this housing is vacant, a form of “wealth storage” for the superwealthy whose goal is to park their wealth in stable U.S. assets. Affordable housing groups find themselves shadow boxing with anonymous owners in efforts to anchor affordable housing.
This hidden wealth system facilitates the creation of inherited wealth dynasties while undermining economic security for everyone else, especially during a pandemic. As French economist Thomas Piketty warned, unless the U.S. can reverse this trajectory, we’re on track to become a hereditary aristocracy of wealth—where one generation from now the children of today’s billionaires will dominate our economy, politics, philanthropy, and culture.
As wealth and power concentrates, the cycle continues. The wealthy deploy their power to further shape the rules, news, and culture of society. They block popular reforms by capturing the political system and ensuring dysfunctional gridlock. This leads to further consolidation of wealth dynasties, impervious to taxation and accountability. It also leads to further social breakdown and polarization, as our collective capacity to solve big problems—like responding to a pandemic or ecological disruption—is rendered inoperative.
For a country that was forged out of a rejection of feudalism, it may be hard to spot the telltale signs of a reassertion of feudalistic and monarchic norms. One component is what law professor Allison Anna Tait describes as a culture of “high-wealth exceptionalism,” where the wealthy believe they are entitled to a separate set of laws and rules governing them because of their wealth—and the rest of society tolerates this arrangement.
Reversing the trends
WE CAN SHUT down this hidden wealth system with greater enforcement, transparency, and global cooperation—efforts that are moving in the right direction in other parts of the world. Congress could invest in tax enforcement, rebuilding the ability of the Internal Revenue Service to monitor the financial shell games of the superrich and to enforce existing tax laws. Congress could regulate or ban trusts and transactions that serve no purpose other than tax dodging.
Such congressional action could build on the success—after a decades-long campaign—of passing the Corporate Transparency Act of 2020, which requires anonymous shell companies to disclose their real beneficial owners to the Treasury Department. At the local level, municipalities are pressing for real estate disclosure laws so communities can unmask anonymous buyers in their neighborhoods.
More pressure should be put on the wealth defense industry to be accountable for its actions. Days after the release of the Pandora Papers, a bipartisan group of U.S. legislators introduced the ENABLERS Act, which would require attorneys, wealth managers, real estate professionals, and art dealers to report suspicious financial activity.
In the end, this is a global system. And the U.S. will need to join global treaties to raise standards and ensure global cooperation to root out money laundering. The rest of the world is leading the way, and the U.S. must step up to join the movement.
The barrier to change isn’t just the superwealthy, but the self-interested class of professional wealth hoarders at their employ. It is in their interest for the wealthy to create trusts that will live forever—and, of course, provide the wealth managers with substantial fees.
The first step to reform is getting past our cultural tolerance for “billionaire exceptionalism.” The second is to appreciate that the wealth defense industry thrives on complexity and opaqueness and to press lawmakers for transparency and simplicity instead.
If four decades of mounting inequality and stagnating middle-class wages weren’t enough, the devastation of the last two years should prove it: Inequality kills. Fortunately, our country is now seeing vibrant new social movements—and vast popular support—to reverse these trends.

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