Collins was an heir to the Oscar Mayer wiener fortune, an inheritance that he gave away completely. But that meant he learned firsthand how the wealthy (even the very charitable) hold onto their fortunes. It’s one thing to give up your income, he learned, and another to compromise the principal — and deprive future generations of accrued wealth — completely.
He opted to give it all away. Today, he’s the director of the program on inequality and the common good at the Institute for Policy Studies, where he delves deep into billionaire gains, income inequality, and how the ultrawealthy dodge taxes in America.
The situation is likely worse than widely appreciated. Recent research found that America’s highest earners may have been hiding billions from the IRS — far more than assumed. In fact, the report found that the top 1% of Americans don’t report 21% of their income, and the figure might be twice as high for the top 0.1%. That research comes from the government itself in the form of the Internal Revenue Service (IRS), along with academic economists.
Sen. Bernie Sanders has introduced legislation that would increase taxes and cut loopholes, and The Wall Street Journal reported that Biden is looking into beefing up the IRS. (Sanders wrote a blurb fo Collins’ book.)
In his upcoming book, “The Wealth Hoarders,” Collins dives into what he calls the Wealth Defense Industry: The army of tax attorneys, family offices, accountants, and more who are devoted to protecting clients’ wealth — and circumventing taxes. His thesis implies that this industry is an inevitable outgrowth of financialization, in which the financial sector grows out of proportion to the rest of the economy. But he argues it’s not too late to reverse it.
Ahead of its publication, Insider spoke to Collins about his own history, the book, and what needs to come next.
The current state of the ‘Wealth Defense Industry’
Collins writes that the Wealth Defense Industry has “mushroomed” in size since his first introduction to it in 1983. For instance, there are now over 10,000 family offices worldwide, he writes.
Collins said that legislation like that introduced by Sanders, Biden’s election, and the blue wave of the 2020 election, led wealth advisors to urge clients to move their money into “new forms” that would be more difficult for tax collectors to find.
“I feel like we’re kind of in a moment where this industry has been growing and growing and accelerating really in the last 15 years — the number of family offices, the number of planners, the number of dynasty trusts,” Collins said. “And it’s reaching this pinnacle moment because, for the first time in a long time, there’s a meaningful discussion about taxing the very wealthy.”
What ordinary people may not understand about how wealth is hidden
Collins told Insider that there’s an outdated image of hiding wealth where it’s all stored offshore but that the US is the No. 2 destination for “global kleptocratic capital.” Instead of storing money offshore, he said, the wealthy can turn to places like South Dakota, Wyoming, or Delaware.
“The thing I think we don’t understand is we are now the tax haven,” Collins said.
In the book, Collins details the myriad, complex systems that the so-called wealth defense industry uses to obscure money. One is “artports,” or art-storage facilities that could be in your neighborhood, full of incredibly valuable paintings.
While one of those facilities could be blocks away from you, these ports are technically in free-trade zones, and the art never actually enters US commerce.
Or take, for instance, those brand-new glass towers in your downtown, where the wealthy could be parking their wealth by buying up units. Collins used the Millennium Tower in Boston as an example. Those empty apartments, with their panoramic views, function as “wealth storage units” — Collins writes that over 35% of the units there are owned by shell companies and trusts.
On his own decision to give up his wealth, and the pressure that the wealthy face
“I would say the overwhelming cultural message for someone growing up in my class was ‘protect and preserve.’ You can do quirky things with your income, but don’t touch the corpus. Don’t touch the asset, let it just keep growing,” Collins said.
For him to think differently meant going up against the “whole universe of wealth management” — and others in his position face an industry that has an interest in holding on to their assets and growing them. But Collins contends that there’s a certain point where people don’t need to keep accumulating or stockpiling wealth.
“There’s probably people out there that fundamentally think that they should pay more taxes, but their advisors — just, it’s unthinkable, right?” Collins said. He said there’s a whole culture surrounding the urge to use every possible tool and loophole to reduce taxes.
But there’s momentum for change
Collins said he thinks the “reform train” is moving, pointing to proposals from the Biden administration to increase taxes. But even with new laws, he said, the agenda could be undermined by the wealth defense industry, underscoring the need to shut down this hidden wealth system and close loopholes.
“It’s like we’ve had a wild party at this restaurant and now the billionaires are going to slip out the kitchen door before the bill comes,” Collins said. “And we basically have to say, ‘Nope, everybody has to stay, and we need you all to chip in from the bill here.'”
He later added: “This is totally fixable. Start with enforcement, outlaw the bad trusts, increase transparency in reporting and disclosure, and then join with our global partners to clean up the global system. We could reverse it in 10 years.”