As global wealth inequality rises, the Pandora Papers reveal the greed of the ultra-rich

The Pandora Papers have exposed the secret assets of the world’s most powerful people, including King Abdullah II of Jordan and associates of Vladmir Putin., CC BY 3.0 , via Wikimedia Commons

The Pandora Papers have exposed the secret assets of the world’s most powerful people, including King Abdullah II of Jordan and associates of Vladmir Putin.

Vinay Joshi, Business Manager

The Pandora Papers report, conducted by the International Consortium of Investigative Journalists, exposes hundreds of the world’s most powerful people for exploiting loopholes in the global financial system.

The nearly 12 million documents that were leaked revealed how hundreds of billionaires, world leaders, public officials and other influential people have been holding their assets in offshore tax havens and using shell companies to get away with paying little to no money in taxes. For example, through the use of shell companies, a Qatari ruling family avoided taxes on two London mansions, saving roughly 18 million pounds in the process.  

The Pandora Papers hit closer to home than most may think. South Dakota has had relaxed financial laws since the 1980s, with no capital gains tax or inheritance tax. This means money can be left untouched for centuries, allowing for generational wealth to be perpetuated. 

South Dakota’s financial laws are some of the most secretive in the world. A settlor, the owner of an asset, can involve a trustee to manage and invest the asset for a beneficiary, who is often connected to the settlor. Essentially, the trustee can manage everything without involving the settlor or the beneficiary, shifting the liability away from them. In addition, all three parties can legally claim that they do not own the money.

These laws have loaded sleepy South Dakota towns with massive amounts of money. Altogether, South Dakota holds roughly $360 billion in assets, and this figure is rapidly growing. To the displeasure of the South Dakota GOP, the billions of dollars in assets are not spurring the economic growth they hoped it would. 

As money pours in from across the world, South Dakotans are not getting much richer from a GDP per capita standpoint. In the past decade, the US GDP per capita has risen roughly $13,000. In the same time span, South Dakota’s GDP per capita has only increased $1,000.

Sophomore Achinteya Jayaram was not surprised by South Dakota’s role in the Pandora Papers leak. “It makes sense that a state with low economic growth would try to do something drastic and maybe unethical to try to grow,” he commented. “I just wish that their government understood what is actually happening and would put a stop to the loopholes. It’s not a good look.” 

Other states that have lagged behind the US’s average growth, such as Delaware and Nevada, are also notorious tax havens. This results in the US ranking #2 in the world for financial secrecy, only behind the Cayman Islands.

The Pandora Papers have damaged the reputations of many world leaders and celebrities. For example, King Abdullah II of Jordan used a number of shell companies to discreetly buy 15 homes across the world with state funds, spending nearly $100 million in the process. This includes houses in Malibu, London and Washington D.C. The people of Jordan, a poor, developing country, are understandably upset, and the king’s legacy may forever be tarnished. Shakira, Elton John and other celebrities have also been exposed in the Pandora Papers.

Although the use of shell companies and tax havens may not be illegal in all circumstances, the ultra-rich have been taking advantage of them for decades to escape taxes, hide assets from the public and siphon government money into their own pockets. Simply put, the world’s wealthiest people have demonstrated that they play by a different set of rules than the rest of the population.

In a similar vein, alleged corporate greed has been the subject of scrutiny locally. As of Oct. 25, the John Deere strike has been going on for two weeks. One of the chief complaints of strikers is that John Deere’s billions of dollars in profit are not fairly distributed to the workers that contributed to creating it. 

Senior Rithvik Vanga, Co-President and Founder of PV’s Economics Club, reflected on the state of income inequality in the US. “While the Pandora Papers and the strike aren’t directly related, I think they both speak to how much people are fed up with the rich hogging all of the world’s wealth,” Vanga said. “People aren’t mad at Deere executives and billionaires for being rich, but I think they are annoyed with the lack of transparency and greed that they have shown.”

With the Pandora Papers and John Deere strike, journalists and workers are using their voices to criticize what they think is wrong. While the lasting impacts of both are yet to be seen, it has become apparent that the public opinion of the wealthy is at a low point.