The great American tax haven: why the super-rich love South Dakota

The Guardian | Nov 14, 2019 at 6:00 AM
  • Late last year, as the Chinese government prepared to enact tough new tax rules, the billionaire Sun Hongbin quietly transferred $4.5bn worth of shares in his Chinese real estate firm to a company on a street corner in Sioux Falls, South Dakota, one of the least populated and least known states in the US.
  • This barrage of innovations has allowed lawyers to create structures with complex names – the South Dakota Foreign Grantor Trust, the Self-Settled Asset Protection Trust, etc – which have done two simple things: they have kept the state ahead of the competition; and they have made South Dakota’s property protections extraordinarily strong.
  • Eric Kades, the law professor at William & Mary Law School, thinks that South Dakota’s decision to abolish the rule against perpetuities for the short term benefit of its economy will prove to have been a long-term catastrophe.