Pascrell Probes Wyoming’s Metamorphosis into a Massive Tax Haven

Pandora Papers revealed scores of wealthy hiding their money to avoid paying taxes in the Cowboy State, another part of the Grand Cayman of the Great Plains archipelago

PATERSON, NJ – U.S. Rep. Bill Pascrell, Jr. (D-NJ-09), the Chairman of the House Ways and Means Subcommittee on Oversight, continued his investigation into the growth of tax havens in America by asking Wyoming Governor Mark Gordon about the Cowboy State’s increasing use as a hiding place for rich people trying to avoid taxes. The Washington Post yesterday published information obtained from the Pandora Papers documenting the use of Wyoming as a haven for the wealthy to stash their assets.

“Is Wyoming a tax haven?  What are the state and federal tax advantages and disadvantages of Wyoming’s designation as a tax haven?” Chairman Pascrell writes the governor of Wyoming. “How many of these secretive trusts or arrangements have been formed in Wyoming and what is the total value of assets held by such trusts?”

On December 8, 2021, Chairman Pascrell convened a hearing on the Pandora Papers and the growth of tax havens in the United States that allow the wealthy to hide their money to avoid paying their fair share in taxes. Chairman Pascrell invited South Dakota Governor and former Ways and Means member Kristi Noem to appear before the committee on her state’s emergence as a leading tax haven for people trying to hide their money, but Noem refused to testify or send a representative. The Subcommittee is awaiting her response, due today, to the letter it sent asking her questions similar to those in the Gordon letter.

As Chairman of the Oversight Subcommittee, Rep. Pascrell has made tax fairness one of his highest priorities. Pascrell is the main sponsor of the Carried Interest Fairness Act, legislation to close one of the most egregious loopholes in the federal tax code.

The full text of Chairman Pascrell’s letter to Wyoming Governor Gordon is below.

December 22, 2021

The Honorable Mark Gordon

Wyoming Office of the Governor

State Capitol

200 West 24th Street

Cheyenne, Wyoming 82002

Dear Governor Gordon,

The Committee on Ways and Means Subcommittee on Oversight held a hearing entitled “The Pandora Papers and Hidden Wealth” on December 8, 2021.  The witnesses at that hearing raised serious questions about the impact that various state laws are having on the creation of tax havens in the United States.  Recently, the Washington Post reported that wealth has moved from traditional tax havens in Europe and the Caribbean into Wyoming.

To help clarify how and why this is the case, I ask that you respond to these questions as we follow up on issues raised during the Subcommittee’s hearing:

1. Is Wyoming a tax haven?  What are the state and federal tax advantages and disadvantages of Wyoming’s designation as a tax haven?
2. The Washington Post reports that, [i]n Wyoming, trust industry representatives have promoted a secretive financial arrangement dubbed the ‘Cowboy Cocktail’.”^[1] According to the report, this arrangement involves “a trust and layers of private companies with concealed ownership” whereby families can own assets through a limited liability company which is owned by the trust with a second company reportedly formed to oversee the trust.  Describe state oversight of these trusts.
3. How many of these secretive trusts or arrangements have been formed in Wyoming and what is the total value of assets held by such trusts?
4. Our witnesses have testified during the hearing that this secrecy enables illicit activities like money laundering and tax evasion.  At the very least, it appears to provide absolute asset protection for the wealthy against creditors, including for child and spousal support claims. How do you defend the Wyoming trust regime against these assertions?

Please respond to these questions by January 14, 2022.  Thank you for your prompt attention to this matter.

Sincerely,

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[1]  Debbie Cenziper and Will Fitzgibbon, The ‘Cowboy Cocktail’: How Wyoming Became One of the World’s Top Tax Havens, The Washington Post, (Dec. 20, 2021), https://www.washingtonpost.com/business/interactive/2021/wyoming-trusts-finance-pandora-papers/?itid=hp-top-table-main