Trusts are unregulated, untaxed, invisible

Brooke Harrington on trusts:

"Trusts contribute to financialization in three main ways: by consolidating the power of the investor as the central figure in the global economy; by facilitating the dominance of Anglo-American finance; and by increasing the autonomy of finance from the nation-state system. … 

"Like corporations, trusts are structures for holding and managing assets. But unlike firms, trusts are not legal entities in their own right: thus, they cannot be sued, they cannot go bankrupt, and they are often lightly regulated, if at all. In most places, they are not registered, are not taxed, and are not subject to any public accounting or reporting requirements. ...

"No one knows how many trusts exist in the world, or what kinds of assets they contain. ... trusts are essentially invisible: what little we know about them comes from data leaks like the Panama Papers, or lawsuits that put trust documents into the public record. However, the advantages of these features in a global market economy can hardly be overstated. In essence, trusts allow assets to be moved around the world, accumulating wealth or being parceled out to different recipients, with a minimum of restrictions and legal friction. By creating strategic obscurity around assets and their ownership, it becomes virtually impossible to impose limitations or accountability—and easy to do all manner of things that are not permitted to corporations. …

For both firms and private individuals, offshore trusts are attractive because legal ownership can be attributed to trustees based in states where tax and regulatory compliance costs are low to non-existent. This gives trusts an immense competitive advantage in terms of transaction costs over firms, which are subject to much more tax and regulatory scrutiny.”