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Comment by raincom | Hacker News Reader

There are more secret billionaires, who don't appear on the billionaires list. I know of two such billionaires. One is super, super secretive, who passes off as a multi millionaire.

There are special trusts that billionaires make use of. Treat a trust like a corporation, with its own independent existence. Such trusts can be set up for multiple generations: these trusts (corporations) are run by professionals, while the offspring gets monthly paychecks (that's why they are called trust fund babies).

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The great American tax haven: why the super-rich love South Dakota: https://www.theguardian.com/world/2019/nov/14/the-great-amer...

For more on this, which I really don't recommend, google "South Dakota Dynasty Trust."

Why don't you recommend it?

Because it's depressing.

But what about it a Trust is depressing exactly? It's just a legal agreement for how wealth can be spent.

0 taxation on assets or income and it's available to people living outside of the state.

So rich people can avoid paying taxes.

It’s for avoiding federal taxes. The federal government can fix the situation anytime it wants, and it won’t matter where in the US people live.

Specifically for avoiding tranfer/inheritance taxes.

Any money actually paid out of the trust to a beneficiary is subject to that individuals federal income taxes.

> [A functioning federal government could] fix the situation anytime it wants

Money is a social construct, and it seems you are starting from the base assumption that wealth can be transferred infinitely and unrestricted between generations. Not everyone holds that view of money.

Isn't that the idea behind a nation or any other governance structure? The wealth built within the entity can be transferred infinitely and unrestricted between generations?

What's the difference if the structure is a government, religion, guild, corporation, cartel, mafia, family or Mars colony?

> Money is a social construct

Money and wealth, though often used interchangeably, are very different things. Money is one form of wealth. So whilst you are correct, it’s not the point you’re trying to make.

Wealth is absolutely not a social construct and never has been.

I’m not sure you actually read up about South Dakota Dynasty trusts nor the general context from these comments/post.

Instead, you appear to be asking a “simplistic” question feigning ignorance, rather than a serious attempt at understanding the problem.

You weren't lying.

> When Citibank based its credit card business in Sioux Falls, it could charge borrowers any interest rate it liked, and credit cards could become profitable. Thanks to Janklow, Citibank and other major companies came to South Dakota to dodge the restrictions imposed by the other 49 states. And so followed the explosion in consumer finance that has transformed the US and the world. Thanks to Janklow, South Dakota has a financial services industry, and the US has a trillion-dollar credit card debt.

> Fresh from having freed wealthy corporations from onerous regulations, Janklow looked around for a way to free wealthy individuals too, and thus came to the decision that would eventually turn South Dakota into a Switzerland for the 21st century. He decided to deregulate trusts.

> A Dynasty Trust can be free of estate taxes and protect the assets from potential creditors.

> Further, Dynasty Trusts can take the greatest possible advantage of a grantor’s gift tax exemption

> currently $12.92 million per taxpayer and $25.84 million per married couple in 2023

> and generation-skipping transfer tax exemption

> $12.92 million per taxpayer and $25.84 million per married couple in 2023

You weren't kidding... So how much wealth does one need to have in order to get one of these things?

> "Dynasty trusts can be created in South Dakota for families who do not live in the state. South Dakota allows trusts to continue in perpetuity, avoiding federal transfer taxes for generations. The state does not impose any form of taxation (income, dividend interest, capital gains) on these trust assets."

Can it be created by non-resident e.g. EU citizen?

Aren't there federal taxes?

What is the point for South Dakota if they don't collect taxes? Just being conservative assholes against the other states? Being ideological jerks?

There are still high-paying jobs for those maintaining this infrastructure as well as income for law and accounting firms serving them. Cashflow is always good even without taxes to collect.

I liked the trust funds where you only get the monthly paycheck when you have a job. No matter just a 35 hours work week otherwise no pay. E.g. only get like $8-10k/mo when you work.

I like this model too, except it should function (maybe pro-rated?) at lower number of hours/week--not everyone should work "full-time"--and also include volunteering. Maybe also other unpaid labor like child-rearing and open source software development.

This still won't keep people from "calling J.G. Wentworth", blowing all their net worth on methamphetamines and then crashing into the hospital ER of the USA support systems:

https://www.youtube.com/watch?v=pdPM6j1Q4sg

Can you go into a little bit more depth about what life is like for these people? What do they do? How do they keep it so secret? Etc.

I’m fascinated you can have so much wealth and benefit from it in proportion to its scale without giving the game away

The wealthiest and most secretive are probably the members of the Rothschild family.

   Today, the family's total net worth is estimated at an eye-watering $400 billion, with some estimates ranging to an astonishing $1 trillion.

Ref: https://www.msn.com/en-us/money/personalfinance/the-richest-...

Archive: https://archive.is/pMypx

Anders Aslund, a Swedish economist and author, estimated this year that Putin has somewhere between $100 billion and $130 billion in assets—a calculation based on the wealth of Putin’s oligarch confidants, which could be between $500 million and $2 billion each.

Ref: https://time.com/6151695/vladimir-putin-wealth-assets-freeze...

That reads like something out of a tabloid in the checkout aisle of a grocery store.

It links to a website called “celebritynetworth”, which just based on the URL, has no credibility.

It seems like you stopped after the first paragraph.

Why should I? It even claims the richest family member is worth $10B, which is nowhere near the top of the list these days. It says $1T in the headline, how big is this family?

More likely is that this is a garbage clickbait article with no credible source.

> which just based on the URL, has no credibility.

It seems like you're proudly flaunting your own ignorance? The site has been around for more than a decade. What about a web site such as "Hacker News"? Sounds like I might get a virus if I visit that page!

What does the length of time the site is around have to do anything? The subject of the website, unverifiable information that they certainly do not have access to, is what makes it uncredible.

https://en.wikipedia.org/wiki/CelebrityNetWorth

If it was a .gov URL where the government is using tax returns and property data to estimate net worth, then it might be credible.

Discrediting a website just because of the name is not a valid argument against the content. Even though most hackers worship the government as a god, I can assure you that tax returns or property data won't even be close to accurate for getting the net worth of billionaires. They have funds and shell companies where the US government can't touch them.

The nature of this information is that it will always be unverifiable, but unless you have any sustainable criticism against the numbers on that website, you shouldn't disregard it completely.

> Even though most hackers worship the government as a god, I can assure you that tax returns or property data won't even be close to accurate for getting the net worth of billionaires.

I know, that is why I wrote “might” be credible, but most celebrities are not at that level, so tax returns and property ownership information might work.

> The nature of this information is that it will always be unverifiable,

>you shouldn't disregard it completely.

How you are squaring the above 2 thoughts is beyond me. I am going to continue disregarding it completely, because as you wrote, it is unverifiable, therefore the website is pulling the numbers out of their ass.

> How you are squaring the above 2 thoughts is beyond me.

A late reply so might not be seen, but that is what we as humans have to do every day. If you're in highly competitive business or if you're investing, it is just a fact that information you get will be unverifiable. You just have to act on the information you have, to your best judgement. It's even worse in politics and in war, where you have to expect active disinformation from every angle.

Well, can't be the most secretive given how everyone knows that they are "secretive". I'd ascribe them more to being private.

The secretive are the ones that we don't even know exist (i.e. a google search would give very little), let alone that they are billionaires.

Super interesting and not very well known history. Here’s a decently well done YouTube documentary about the family: https://youtu.be/IbWl40xgw0A

It's very funny to see Rothschild described as "secretive"; I thought they were one of the most well-known families in the world or at least in Europe.

How many of them an average person can name? And how many of those are still alive?

Name is known, but I don't think they are as individuals known very much at all.

There are multiple Rothschilds on the Forbes and Bloomberg billionaire lists. The family name is attached to many endowments, scholarships, museums, think tanks, hospitals, etc.

Virtually everyone who cares to look knows they're wealthy, but some conspiracy theorists prefer to act like they're a secretive cabal controlling the world, lol

Almost by definition billionaies are the cabal if nothing else due to their purchasing power.

The ones in the four comma club rule entire nations and fund wars and stay wealthy by obtaining ownership rights of conquered territories for a relatively low cost.

I don't know any of their first names but I also can't name the first names of any other well known wealthy families (off the top of my head walton, koch (I just know they are "Brothers"), dupont, bush)... I don't need to know the first names to know the families are billionaires

Dictators don't have wealth, they only have power. As soon as dictator dies all this "wealth" will disappear in a moment in thousands of hands.

They don't appear on the lists because their companies are usually private and hard to value because Forbes and Bloomberg et al don't even know who owns what.

Take, for example, Jeff Yass, who didn't appear on Forbes until 2021. Well, according to the ProPublica tax leaks, he was not just a billionaire but someone who made over $1 billion in annual income(!) from 2012 upwards [1]

1 - https://www.propublica.org/article/jeff-yass-susquehanna-tik...

Yes, there are many such cases.

Many billionaires out there that people do not know are billionaires. Not all wealth accumulated has been broadcasted out in the public for everyone to know, only the broadcasted has been broadcasted.

Assuming we're not talking "I have a retirement plan and a house so my net-worth is over a million" type of millionaire, isn't passing oneself off as a multi-millionaire instead of a billionaire a distinction without a difference? I guess I don't run in those circles, but it's still fabulous wealth either way.

It's the difference between someone having $2k and $1 million dollars.

I think with the "distinction without a difference" bit they meant that if you look like you have $2k instead of looking like you have $1m, what is the difference in your life than just having $2k?

The answer to that is: you have $1m of peace of mind to live your comfortable lifestyle of someone with $2k. Now living the lifestyle of someone woth $2k might not be particularly desirable to most, but living the life of a multi-millionaire with that relatively same level of peace of mind sounds like a crazy nice way to live.

Yes, exactly. If you live like you're making minimum wage as a millionaire that's obvious, but if you're living like a multi-millionaire instead of a billionaire how could you even tell?

Depends on how many multis you're talking about. A billionaire who wants them can have a large yacht, private jet, multiple large homes, staff for everything. Someone with $10 million will be living an upper-middle-class lifestyle, but without needing to work. Maybe a second house or a boat or plane they pilot themselves, but no full-time staff. $100 million could start having the billionaire stuff but at a smaller scale.

Vast difference in political influence, too.

You could tell by the 1000x difference in spending.

But the differences there are material - rent, food, utilities, these all function on a scale of thousands. Millions to billions? You don't need to care about any of those. You've very much left the mundane monetary worries behind.

Being worth 50 million puts you in the ultra high net worth category (>30M$) and you live an incredible lifestyle obviously.

But your entire net worth is 5% yearly interest on a billion dollars.

It's hard to imagine for regular people just how far a billion dollars is, you're essentially royalty at that point as far access to anything in life is concerned.

Yes, by the numbers million vs billion is massive, yes, but for quality of life and for worrying about monetary things? You no longer need to be concerned about food or any type of shelter. It's a matter of the size of yacht you can buy.

As someone in my 20s, I couldn't even retire with $1m. On the other hand, I could live off the interest alone in a savings account with $1b.

(Obviously putting $1b entirely into a savings account is a terrible idea, just making a point)

And that's why I drew a distinction between the "owning a home and having a retirement plan" millionaire and the truly wealthy multimillionaire sort.

> I could live off the interest alone in a savings account with $1b.

I mean, you could live off the interest alone in a savings account with $5m (you can easily get 2.5% at the moment.)

Or more realistically, the matter of the politicians and media narratives you can buy.

For $50 million a year you can run a good few think tanks and make a good few campaign donations.

But that won't be apparent in how you pass yourself off.

50 million is still not an 'I have staff and a house in every major city' kind of thing. But once you get to the billions you have an 'I can make significant changes to the world' button. Want to redevelop North St Louis? Get 1:1 time with any politician I want to influence them about any hobby project? Make a university build a dorm without windows, because I pay them?

It's very different than just caring for food and shelter, but at those levels, personal luxury isn't really the most important thing. And really, for many things, even a billion isn't enough. Imagine you wanted to personally make high speed train happen between two US cities. A billion doesn't even begin to fund your real life Sim City project.

> It's hard to imagine for regular people just how far a billion dollars is

I heard it put this way once before and it really stuck with me: the difference between a million dollars and a billion dollars is a billion dollars. If that doesn't make sense, consider how that is proportionally the same as saying: the difference between one dollar and a thousand dollars is a thousand dollars. One dollar is literally nothing next to a thousand dollars.

If you bought something for $1k and you were overcharged $1, lots of people wouldn't even notice. Of course, someone greedy enough to be a billionaire would probably notice though :P

You might not have to worry about your or your kids getting kidnapped if you're "only" a millionaire. There are probably other security considerations, too.

If you are "only" a millionaire in a HCOL area, you might still have to worry about crimes against your children. However, they will be random crimes that occur within the city you live rather than targeted crimes.

I have a friend living overseas. His children go to school with a Russian oligarchs kids. Visiting the oligarch's home for a birthday party was wild.

It's probably a easier to target a low multi-millionaire than to mess with a billionaire.

Statistically, many "average" upper middle class people are very able to become low tier multimillionaires through a well educated upbringing and a good job, and good financial decisions over a long period of time.

But many of those people take their entire lives to go from "pretty well off" to "technically a multi millionaire, after many years of hard work, and planning" and got there from very reasonable expectations.

Now a billionaire is literally about a thousand* times richer than any of those people. We're talking "I literally make a difference in elections without anyone knowing my name" rich.

Maybe this is a good example of how rich billionaires don't need to be. The mere fact some people can't even imagine the difference between a factor of a literal thousand* (how ironic of me).

In the US a billion is 1,000 million, not one million million.

Is it different in other countries?

https://en.wikipedia.org/wiki/Long_and_short_scales#Current_...

"A billion dollars isn't cool. You know what is? A billion dollars."

Historically, in the UK, Australia, and other countries, "one billion" meant "one million million" (i.e. 1,000,000,000,000). Officially, at least in the UK, it now means the same as the US (i.e. 1,000,000,000)

Note that 'billion' and 'trillion' themselves have multiple meanings [1] [2], even though most people use only the short scale.

[1] https://en.wikipedia.org/wiki/Billion

[2] https://en.wikipedia.org/wiki/Trillion

Yeah. It's called the long and short scale:

https://en.wikipedia.org/wiki/Long_and_short_scales

literally a thousand…

1000.

> Statistically, many "average" upper middle class people are very able to become low tier multimillionaires through a well educated upbringing and a good job, and good financial decisions over a long period of time.

That's why I addressed that. Retirement savings and home is a different sort of millionaire than someone with 50 million in the bank. What lifestyle choices are going to be visible in someone with 50 million vs a billion? The number of private jets they own?

Yes, there is a psychological difference. Super wealthy have hard time trusting people including their family, friends, etc. Some of them even suffer from paranoia. Just a couple of bad experiences are enough for them to become like that. For ordinary mortals like us, we just write off our bad experiences with other people as natural, not some extraordinary. Being lied to, being backstabbed, lying, backstabbing, colluding, etc are all part of human existence: either one directly experience it or heard through others' experience. That is a cost to pay to live among people.

In other words, the experience of one whose wealth is $2B is not same as the experience of one whose wealthy is $50M plus $1.955B. What one experiences in the world depends on how much weight one puts on everything one is involved in. Poor people give different weightage than rich people. Same event doesn't give the same experience to everyone.

But you said: "One is super, super secretive, who passes off as a multi millionaire."

To say they "pass themselves off as" means there is a visible difference in either what they own or how they act. What does that look like? Are you saying they pretend to trust? How is that apparent? I can't figure out what the obvious visible difference would be.

If a millionaire passes themselves off as someone with much less wealth they'll drive an old Corolla instead of a Mercedes. What's that equivalent here?

In some actions, yes, he wants to appear as successful multi millionaires. In some other actions, he sounds like a billionaire. That's why he is seen as a weird multi-millionaire. He is not cheap either, but doesn't trust anyone: he feeds you information, to see whether you share that with other people; he says, he trusts you, later he can send a private detective to see what you are up to.

I think, the root cause is this: just as FAANG engineers's social circle is fellow people working from FAANG, it is the same for wealthy, super, uber wealthy. You don't see a FAANG guy living in a mobile home surrounded by people who work in the blue collar folks.

Some folks don't want to involve in many social activities of the class they belong to, but want to be part of the lower classes. That's what I mean by 'pass themselves off as'.

If you think about it in terms of what kind of income you would make off interest of ~3% of the principal it’s easier to understand the difference between someone with 5 million vs say 50 and 500 million.

It’s the difference between $150k, $1.5 million, and $15 million dollars in yearly income. At 5 million you can decide to not work but you are only really able to afford an upper middle class lifestyle. Depending on where you lived that might be a working class income these days. So there is a massive difference across the spectrum of multi-millionaires.

You think $5 million a year only gets up upper middle class lifestyle? I don't think we share definitions...

That’s 5 million in assets from which you can derive a yearly income of $150k per year adjusted for inflation as time goes on.

Yes I consider 150k per year upper middle class.

Ah, I see. I misread your previous comment.

>who passes off as a multi millionaire.

What does this look like?

Has a nice house, a second beach house, and drives a Lexus. Doesn't own any super-cars and flys business class rather than in a private jet. People think he's worth $3 million, not $1.3 billion. (I just made all that up.)

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