There is a major article on the effect of shell companies and secret malevolent wealth increasingly hiding in New York (and the USA in general).
In at least 55% of properties worth more than five million dollars in New York City, the owners are kept hidden. The New York Times details a particular case. The most expensive real estate is booming, worldwide, because plutocracy is booming. A Gauguin painting was just purchased by an Arab plutocrat for 330 million dollars. Plutocrats have more wealth and power, and stealth, than ever.
[Notice that this plutocratic building, the 426 meters tall 432 Park Ave. is higher than the top floor of the 1 World Trade Center, the so-called “Freedom Tower”, visible just on the immediate right. A fitting symbol! Plutocracy dominates Freedom.]
In “Stream of Foreign Wealth Flows to Elite New York Real Estate” February 8, 2015 the Times reveals that:
“Behind the dark glass towers of the Time Warner Center looming over Central Park, a majority of owners have taken steps to keep their identities hidden, registering condos in trusts, limited liability companies or other entities that shield their names. By piercing the secrecy of more than 200 shell companies, The New York Times documented a decade of ownership in this iconic Manhattan way station for global money transforming the city’s real estate market.
Many of the owners represent a cross-section of American wealth: chief executives and celebrities, doctors and lawyers, technology entrepreneurs and Wall Street traders.
But The Times also found a growing proportion of wealthy foreigners, at least 16 of whom have been the subject of government inquiries around the world, either personally or as heads of companies. The cases range from housing and environmental violations to financial fraud. Four owners have been arrested, and another four have been the subject of fines or penalties for illegal activities.
The foreign owners have included government officials and close associates of officials from Russia, Colombia, Malaysia, China, Kazakhstan and Mexico.
They have been able to make these multimillion-dollar purchases with few questions asked because of United States laws that foster the movement of largely untraceable money through shell companies.
Vast sums are flowing unchecked around the world as never before – whether motivated by corruption, tax avoidance or investment strategy, and enabled by an ever-more-borderless economy and a proliferation of ways to move and hide assets.
Alighting in places like London, Singapore and other financial centers, this flood of capital has created colonies of the foreign super-rich, with the attendant resentments and controversies about class inequality made tangible in the glass and steel towers reordering urban landscapes.”
The following comment of mine, underlined below, was censored by the New York Times. It is interesting to wonder why:
Cities such as London and New York have officially called the world’s richest people to come live there, and escape taxation.
Thus the United States has become the world first tax haven. It’s followed by the United Kingdom, with its archipelago of tax havens, from the Channel island of Jersey, the world’s number one exporter of. bananas, to the British Virgin islands, with half a million shell companies and Apple funneling through hundreds of billions dollars.
Shell companies may exist on paper only, with no real employees nor offices. They are untraceable. Thus perfect for money laundering, giving and taking bribes, sanctions busting, stealing, drug trafficking, tax evasion, financing terror, religious fanatics, and plutocratic plots. The trail has gone cold in countless criminal probes, because law enforcement was unable to pierce through a shell’s corporate veil.
One the problem with home ownership is that prices have kept climbing, while incomes have been (at best) stagnating. International plutocracy has pushed real estate prices up in major cities, worldwide. They escape even most of local taxation by setting up shell companies. They don’t contribute to the local economy.
The preceding four paragraphs of mine are pretty much well established. Yet the New York Times found something to censor. Censorship is a delicate thing. The NYT is navigating delicately between Pluto propaganda that feeds it, and the necessity of talking about what everybody can increasingly see.
Here is an extensive quote from the NYT:
“it is nearly impossible to establish with certainty the source of money behind shell companies. Purchasers can register shell companies in the names of accountants, lawyers or relatives. Purchases are often made not just by individuals but on behalf of groups of investors or numerous family members, further obscuring the origin of the funds. What is more, ownership of shell companies can be shifted at any time, with no indication in property records.
The high-end real estate market has become less and less transparent – and more alluring for those abroad with assets they wish to keep anonymous – even as the United States pushes other nations to help stanch the flow of American money leaving the country to avoid taxes. Yet for all the concerns of law enforcement officials that shell companies can hide illicit gains, regulatory efforts to require more openness from these companies have failed.
“We like the money,” said Raymond Baker, the president of Global Financial Integrity, a Washington nonprofit that tracks the illicit flow of money. “It’s that simple. We like the money that comes into our accounts, and we are not nearly as judgmental about it as we should be.”
In some ways, officials are clamoring for the foreign wealthy. In New York, tax breaks for condominium developments benefit owners looking for a second, or third, residence in one of Manhattan’s premier buildings. Mayor Michael R. Bloomberg said on his weekly radio program in 2013, shortly before leaving office: “If we could get every billionaire around the world to move here, it would be a godsend.””
So why did the NYT censor my own comment? The most offensive part was: Cities such as London and New York have officially called the world’s richest people to come live there, and escape taxation.
However, this is a fact.
Foreigners sheltering capital in the United Kingdom and the USA pay no tax. “every billionaire around the world to move here” was Thatcher’s explicit strategy. As the New York Times revealed, those don’t even pay local taxes.
For shell companies, related crimes, and other plutocratic plots:
The New York Times February 8, 2015:
“One type of corporate structure now commonly used in real estate transactions, limited liability companies, or L.L.C.s, did not even exist in the United States before the late 1970s. At first, they were primarily used by oil and gas traders in Wyoming to shield individual owners from liability – if, say, a well worker was hurt – and to avoid taxation of both the company and the investor.”
The end result is that honest people making an honest living find ever more difficult to find decent, affordable housing. Throughout the West. This, in turns, augments taxes of citizens, demotivate workers, and contribute to the general economic malaise.
The New York Times admits there is a problem:
“About a year ago, after the Group of 8 industrialized nations issued goals requiring identification of shell company owners, a British representative met with Justice Department officials to complain about the United States’ failure to comply.
According to two people at the meeting, the British representative, Dominic Martin, delivered a stern message: The lax American laws were being used by other countries as an excuse for inaction.
Such a message resonates with Justice Department officials who have advocated tightening the rules.
“For a long time we’ve taken the view that you have to focus on the people that manage the gateway to the financial system, and those guys are not only the banks,” said Stefan Cassella, a Justice Department lawyer. “Bad guys who are trying to invest money in the financial system – they use lawyers, they use accountants, they use real estate, they use jewelers and private jets.””
Law is local, plutocracy is global. USA based plutocracy has tried very hard to make sure that the USA stays the (control) center of world plutocracy. Hence the nice treatment for foreign plutocrats.
In general, USA legislation, or lack thereof, plus deregulation (from Clinton’s era) has been all too favorable to the hyper wealthy, not just on an individual basis, but as a class.
We were fed the propaganda drivel that the wealthiest are “job creators”, and wealth creators for all, and so ought to be taxed less, and they have been, now for decades. However the law of compound interest says that the more wealth, the easier is it to get more. To prevent that societies have invented progressive taxation.
Except, of course, in plutocracies, by quasi-definition, the richest go tax-free (European aristocracy did not pay tax). Thus, the very fact that the wealthy are taxed less is an indication of our rush to plutocracy.
NYT again: “The precise impact of wealthy foreigners on the city may be more complex, though. As nonresidents, they pay no city income taxes and often receive hefty property tax breaks. A program aimed at new condo development doles out about a half-billion dollars in tax breaks a year, according to the city’s independent budget office. These savings are passed on to owners in the form of lower property taxes. The Time Warner Center was not part of the most lucrative tax break program, but many other buildings around Central Park have benefited.
The city’s first condo costing more than $100 million, which sold in the last few weeks at the new luxury tower One57, had property taxes this past year of $17,268, according to the city’s finance office. Those taxes will go up over time, but for now that is a savings of more than $359,000.
The Fiscal Policy Institute, a nonprofit in New York, recently suggested a downside to the influx of billionaires who are in the city only sporadically.
“In terms of the local economy, you don’t have people who are going to plays, going to restaurants,” James Parrott, the institute’s chief economist, said. “They’re not spending at the dry cleaners, the grocers and all of that, so it deprives New York of all that local multiplier effect.”
What is more, Mr. Parrott said, the skyrocketing prices of the pieds-à-terre are affecting the price of real estate in the city more broadly. “There’s a downside to having such pressure at the top. It pulls up the prices overall. When owners of $10 million condos see that there’s a big market for $95 million condos, they’re more likely to raise their prices,” he said. “Then the person at $2 million raises his prices, then the person at $1 million sees that and there aren’t any prices below $1 million.””
So much for the Obama prosperity.
The leadership of the USA has engaged in a deliberate take-over by the wealthiest. An example is FATCA, a legislation to reveal money held overseas mostly by middle class USA citizens working overseas. FATCA was imposed on countries worldwide. This has given a weapon for USA authorities to crack-down on foreign banks and investment firms. The result? The USA controls much more of the secret (“Dark Pools”) money than before. But that was not to decrease the secrecy. Quite the opposite. The practical effect is that most money centers, worldwide have been infeodated to New York and Washington more than ever.
Much of the class of people gravitating around the leadership of the USA has perceived, consciously or not, that helping world plutocrats and other malefactors, was useful to augment the power of the USA leadership. So this will go on, until, We the People of the USA realizes that the rise of plutocracy is not in their best interest.
So it is nice that the New York Times is revealing the problem. However, the fact they censor comments such as mine shows that they are clearly revealing only what everybody already sort-of know.
England and the USA have made a Faustian bargain with Pluto (who else?): they gained wealth, but lost their soul. Understanding global plutocracy offers an opportunity to recover both.
In Greek mythology, one of Pluto’s characteristics, was his ability to make himself invisible. (Something Pluto Putin cultivates in Ukraine, and throughout Western media.)
At its peak, the Roman empire taxed wealth to finance the education and welfare of poor children. This rested on a cadastrum, a repertory of wealth in the empire. We need the same, worldwide. And then we need to tax wealth. And we need force to do both.
Force in the service of goodness is no sin. Love and weakness in the service of evil has no future, but mayhem.