Good afternoon,
Is Joe Biden having a China moment?
The term refers to Cold Warrior President Richard Nixon, who decades ago decided to restore relations with the Asian nation.
The left-leaning New Republic sees signs that the Biden Administration is moving toward cracking down on shell companies that are used as a front for questionable activities via Treasury Department reporting rules.
Pressure for a crackdown has been building, especially within the progressive wing of the Democratic Party.
Biden, by contrast, spent his Senate career defending the state’s corporate veil, which has helped balance the budget since New Jersey tightened its corporate formation rules a century ago.
Never mind that the shell companies were sometimes used by Russian oligarchs, drug kingpins, money launderers, and other unsavory characters.
The argument from Delaware was that a federal approach was necessary. Otherwise, rival states like Nevada, South Dakota, and even Wyoming would rake in the proceeds.
Accompanying these shell companies are complex but often legal, financial vehicles that allow the wealthy to pay minimal taxes and pass on wealth through vehicles such as dynasty trusts.
But in recent years, a wave of coverage of Panama and, more recently, the Pandora Papers led to more embarrassing revelations and growing calls for a crackdown as it became clear that the U.S. rivaled secretive havens like the Caymans.
A few years back, Delaware tightened requirements and shut down entities tied to criminal issues.
In the Pandora Papers, Delaware was more of a supporting cast member, with South Dakota taking a lead role, especially in the area of complex trust vehicles that are sketchy but legal.
Even if the Biden Administration goes full bore on a crackdown based on legislation, the effort will face powerful opponents who profit from the current system, warts and all.
At the same time, a national strategy could be good news for Delaware, which has a robust incorporation system as well as the nation’s top court for dealing with often complex corporate disputes. – Doug Rainey, chief content officer.
