Born
into a wealthy family (his great-grandfather, Oscar Mayer, founded a
prominent national lunch meat company in the United States), Collins
says he was exposed early in life to the world of wealth managers and
came to realize the inequalities they help perpetuate. Now an author and
senior scholar at the Institute for Policy Studies in Washington, D.C.,
Collins draws on his personal experience, extensive research,
interviews with industry professionals and ICIJ’s own investigations for
his latest book, “The Wealth Hoarders.”
The
book, subtitled “How billionaires pay millions to hide trillions,”
offers insiders’ accounts of what’s described as the “wealth defense
industry” — made up of a coalition of professionals from advisors to
lawyers and accountants — and how it deploys anonymous shell companies,
family offices, offshore accounts and trusts to help the world’s richest
people shield their wealth from tax collectors.
We asked Collins
about the wealth management industry and what’s changing in the world
of wealth inequality, fair taxation, and more.
You begin your
book with a fascinating anecdote from a conference for people with
inherited wealth in the 1980s. You were considering giving your
inheritance away, and someone asked you: What would you prove by
committing class suicide? A recent headline also described you as an
“upper-class traitor.” What does this mean, the idea of ‘class suicide’? I
think what happened to me in my mid-20s is I got an understanding of
how the system worked, where the rules were tipped in my favor, where
there was this group of trusted advisors who were there to help the very
wealthy preserve their existing wealth and pass it on to the next
generation. And I just was like, Oh, well, this is not good for me. And
this isn’t good for society, you know, I don’t really want to benefit
from the system of inherited wealth dynasties. So yeah, it was unusual
to give away assets, and that’s where I kind of crossed the line. You
can be kind of quirky, and you can do whatever you want with the income,
but when you start to give away assets — and, as I did, give them to
groups working for social change — then you’re betraying your class
interests. That’s how people would look at it.
If you had to answer that question today, what were you trying to prove? And do you feel like you proved anything? I
didn’t really want to benefit from the system that allowed this kind of
perpetuation of inherited wealth dynasties. So I don’t know if I was
trying to prove anything other than, you know, I didn’t want to
cooperate with it or benefit from it. I guess I was thinking, well,
maybe I would try to make my own way. But now, honestly, in retrospect, I
realize the money was just one of many, many advantages.
What were the other advantages? Well,
growing up white, male, affluent in the United States, having
multi-generational security, access to health care, access to education,
property, financial education. I didn’t quite understand where I fit
in. But I now know, not everybody has that, those advantages. So yeah,
they’re just things that were kind of hardwired into my life.
How do your kids feel about you giving away your money? I
should say they all are happy and support the decision I made — but
they didn’t really have a say in any of this, they weren’t even born!
Parents do things that just drive you crazy. What can you say?
But
I think one of the things it’s done is, they were raised in a very
different situation than I was. They are better prepared to live in a
more equal society than I was. And, as a parent, I think they appreciate
that.
In your book you write at length about the “wealth defense industry.” Can you talk about this concept? The
first thing I should say is that I didn’t create that phrase. Social
scientists like Jeffrey Winters, who wrote a book called “Oligarchy”,
have been using this concept for a long time. So just to clarify, his
idea is that what distinguishes ordinary rich people from an oligarchy
is that all oligarchs invest in wealth defense, they use their wealth to
get more power and wealth and defend their wealth, and to lobby and rig
the rules around them. And I would argue that about the $30 million and
up level, people start to invest in wealth defense.
When you’re
in a certain class of wealth, people are marketing their services to
you. If you have money and it is in a bank or it is invested somewhere,
there are investment advisors, and pretty soon they’re saying: have you
done tax planning? How do we minimize your taxes? Have you used any
partnerships or trusts? Are you preparing to avoid estate taxes? How can
we set up trusts for your children and unborn grandchildren? So there’s
a lot of money to be made working with these clients. There’s a whole
culture and industry surrounding wealthy families. Some would sometimes
inherit what are called the trusted advisors, right? You have a trust
that was created before you were born by people who your family’s still
connected to.
So it comes with the territory … It’s
totally in the territory. It’s just like having somebody who cleans your
pool. They are the financial butlers, but they are a class. And I think
that’s what I’m trying to point out, they are a class in and of
themselves. There are tens of thousands of them, who wake up in the
morning, and are devoted to helping the richest people in the world get
richer, and pass their wealth with as little taxes as possible. And they
are not as wealthy as their clients. But they are quite well paid.
They’re paid millions to hide trillions.
Who are some of the players who make up this industry?
They
would be tax attorneys, people who specialize in tax and estate law.
They are accountants. They are people who work in family offices, trust
and estate practitioners, self-identified wealth managers. They’re white
collar professionals. They might work at a major investment house or
work in a family office setting....
