Nothing like driving over the crest of the Golden Glades flyover on I-95, the moment when that stunning cluster of towers rises out of the distant haze, to make me feel like a sucker.
Especially now. As tax day looms. Knowing that the luxury condominiums that dominate the Miami skyline are often less about sheltering people than sheltering taxes.
The Herald’s Nicholas Nehamas, who joined the International Consortium of Investigative Journalists sorting through the leaked confidential files known as the Panama Papers, discovered that the Panamanian law firm Mossack Fonseca has done lucrative work creating offshore shell companies. And that those shadowy entities allowed an international assortment of undisclosed buyers to pour secret millions of their untaxed money into Miami real estate.
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And that was based on files leaked from a single law firm. No one thinks that Mossack Fonseca had a monopoly on this stuff. But if you extrapolate what the Panama Papers revealed, many of the condo towers built in Miami-Dade, Broward and Palm Beach counties over the past five years begin to seem like tainted monuments.
You almost want to laugh when civic activists complain that new condo projects will exacerbate South Florida’s traffic and infrastructure woes. Not if you subtract the phantom buyers, whose main interest is to find a hidden sanctuary for their money rather than a place to live. There’s a reason, when you drive along the Brickell condo canyons at night and happen to look up, that so few lights illuminate the tower windows.
Ninety percent of Miami-Dade’s new residential purchases are made with cash
Nehamas reported that 90 percent of the real estate buyers snatching up new residential construction in Miami-Dade are paying cash. Much of this, apparently, was secreted out of South America via these shell companies. Most of us peons don’t have several million dollars in cash available when we go house hunting. (My own cash reserves are of the loose change kind, kept in the glass vase tax haven I keep on my bedroom dresser.)
I might not mind this so much if Monday’s IRS deadline wasn’t reminding me of my woeful lack of a tax refuge. Somehow, I’ve muddled through another year without incorporating in the Cayman Islands, without disguising my income as capital gains, without an equity swap, without establishing a trust, without a deferred compensation plan. Got no tax haven. Got no tax shelter. Got no offshore shell corporation registered anonymously in the British Virgin Islands where I can hide my vast fortune.
And I’ve got no Brickell condo purchased through that mysterious company in the islands. Nothing in the 6,500 pages of the U.S. tax code offers a loophole for the likes of me.
So far, the reporters digging through the 11.5 million pages of the Panama Papers have been concentrating mostly on the array of foreign nationals, including government officials from South America, Iceland, Russia, Pakistan and elsewhere, who appear to have used their shell companies to avoid taxes back home and to park their money in safe assets like Miami real estate.
Of course, wealthy Americans and U.S. corporates also used shell companies to hide wealth and avoid taxes. Gabriel Zucman, the University of California economist and author of Hidden Wealth of Nations, the Scourge of Tax Havens, estimates that about four percent of U.S. wealth has been stashed in offshore tax havens. But nearly 20 percent of Latin America’s financial wealth has been been hidden offshore. And even a bigger percentage has been spirited out of Africa and Russia. Zucman told Vox, the on-line magazine, that he thinks $7.5 trillion of the world’s financial wealth has disappeared into tax havens.
So the rich are able to stay rich. And we peasants get to pick up the tab for their unpaid taxes.
No doubt I’d consider this a damn fine system if I just had my own shell company along with few million bucks to hoard away. Then I could buy myself (surreptitiously) a place way up in the dizzying heights of the Miami skyline with my fellow tax cheats. Unhappily, I can’t seem to find a deduction on the IRS 1040 short form for a sucker without a tax haven.