Why Wyoming's Laws Make It An Easy Tax Haven
DAVID GREENE, HOST:
The Panama Papers - you know, those documents leaked from a law firm that creates shell companies - well, they've revealed the names of powerful people around the world who might be hiding assets. And Wyoming's secretary of state says 24 of the businesses mentioned in the papers are registered there. Bob Beck of Wyoming Public Radio tells us how that state's tax laws made it an easy tax haven.
BOB BECK, BYLINE: Shell companies are corporations or limited liability companies that don't do any real business. They all have a phone number and a listed contact, but when I tried to call one of the 24 Wyoming companies listed in the Panama Papers, it went like this.
I'm trying to see if I can get in touch with somebody from Authentic Produce.
UNIDENTIFIED WOMAN: Oh, no, I can't find anybody right now. What's this all about?
BECK: I wanted to talk to them about their business and what it does and that sort of thing.
UNIDENTIFIED WOMAN: I try to pass you information. Can you give me your name and phone number, OK?
BECK: Is there somebody I could call directly?
UNIDENTIFIED WOMAN: No.
BECK: In other words, there frequently is no physical company. To be clear, shell companies can be a place to keep your money as you prepare to launch a new business or for legitimate companies to reduce their taxes. But as the Panama Papers' investigation points out, they also can be used as a place for millionaires and criminals to hide their identity and stash assets.
Due to its lax laws and low taxes, Wyoming has become a hot spot for fake companies. A few years ago, the state was called the Cayman Islands of the American prairie.
MARK HAYS: Wyoming, Delaware, Nevada and a few other states lead the pack when it comes to providing secrecy and lax incorporation standards for companies in this country. To put it simply, we're sort of the offshore's offshore.
BECK: That's Mark Hays, a senior adviser at Global Witness, an anti-corruption advocacy group that reports on shell companies. He says that Wyoming has passed laws requiring commercial registered agents who act as the company's local proxy to live in the state. Hays' concern is state law allows owners of these businesses to be anonymous.
HAYS: Particular players like some of the law firms you've seen there have taken advantage of that, essentially, loophole or gap in disclosure and used it to really aggressively position companies based in the U.S. and elsewhere as vehicles to move illicit finance or illicit money.
BECK: Hays notes that only 20 of the more than 450 agents have been audited by Wyoming since 2009. Hays wants the names of people behind those businesses to be made public. Wyoming Senate President Phil Nicholas disagrees.
PHIL NICHOLAS: That's a policing problem, and it needs to be policed. But that doesn't mean that you change all of the advantages for people doing legitimate business activities.
BECK: Nicholas knows a lot about this issue since he too is a registered agent for a shell company. He says the growth of shell companies is good because they put a lot of cash into Wyoming banks, which leads to such things as job creation. Wyoming Secretary of State Ed Murray says Wyoming wants a business friendly state and current laws are fine.
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ED MURRAY: In my office, we'll continue to do everything it can under those laws, as well as other initiatives, on pursuing to combat any illicit activities while maintaining Wyoming's competitive business friendly environment.
BECK: Murray said in a press release that his office is not naive to the importance of the release of the Panama Papers but that they will not compromise the privacy of customers in the state of Wyoming. For NPR News, I'm Bob Beck in Laramie. Transcript provided by NPR, Copyright NPR.