As the political season heats up, several candidates are vowing to end economic disparity by taxing the rich and giving the spillover to the poor. So, now seems a good time to refresh our memories about the ways the superrich hide their assets. Today we review free ports. Free ports are tax-free zones that offer clients a legal way to house treasures without paying taxes until someone decides their final destination.
Traditionally, the laws governing free ports have been lax. Usually, no one sets time limits on how long objects can remain in a free port. Recently, the Swiss broke with that tradition, however, and closed the tax-free window after 12 months. (Secret Museums, by Hugo Miller, Bloomberg Businessweek, May 27, 2019, pg. 62.) But, in other places, these treasures can languish in storage for decades or until owners decide to sell them. Often these transactions take place within the free port boundaries, which means the buyer and seller avoid paying taxes. And that’s the rub.
True, free port sales are legal but so unethical as a tax dodge, the word “criminal” comes to mind. Perhaps that’s why some who use these storage sites hide their identities, even going so far as to create fake corporations to obscure any involvement. And let us not forget, there have been occasions when a government has ordered a site opened only to discover it contained art the Nazi’s confiscated during the Holocaust.
Doubtless, the number of valuables hidden in Free ports could finance a small nation for one or two years. Of course, that’s not the only way to hide assets, as the Panama Papers testify. Nonetheless, it is a common one.
Tax the rich, by all means, if there is a way. But let us not be naïve. The wealthy are versed in the art of protecting their money. Leona Helmsley spoke for many of her peers when she explained taxes are what the little people had to pay.