I’ve received a request from a reader for my thoughts on the Royal Gazette article “Bermuda has 102 ultra wealthy residents”. To be honest, I’m rather surprised and humbled that someone bothers to read my drivel, thus it is hard to turn down such a request. Unfortunately there are many ways to interpret such an article so it raises the question of where to begin.
To start off with, the article is a great example of classic media bias. As a for profit media outlet, you can presume that they will opt to sensationalize a topic to drive more people to read it. This is the very first thing that jumps out about this article. It is titled “Bermuda has 102 ultra wealthy residents”, and the opening sentence highlights this with more detail. Then, the rest of the article is about a supplement booklet highlighting Bermuda’s position as a worthy location for trust business. The title doesn’t fit the content of the article because most people only really focus on the provocative headlines. Newspapers make headlines provocative because, very simply, they are what drive advertising views and subsequently fund the organization. If you wonder why the newspaper often makes a big deal out of nothing, whether its is for the incumbent or for the opposition, this is usually why. Newspapers need to be keenly aware of the bottom line if they’re a private enterprise or they’ll cease to be in business.
The next thing that jumps out about the article is the response. Most people only read headlines and thus, if you look at the comments, they are dominated by a discussion of the ultra wealthy with no discussion of Bermuda’s trust business. The idea that there are individuals who are super rich provokes an emotional response from readers. The ever widening gap of inequality between those who can comfortably afford to live on island and those who struggle causes animosity to any display or suggestion of wealth. Unfortunately such an attitude betrays a misunderstanding that Bermuda likely has no homegrown billionaires and Bermuda’s ultra wealthy residents are primarily here because they choose to be, not because it is crucial to making them rich. Bermuda isn’t a place that individuals come to make billions, they come here to either enjoy their wealth or leverage it to make more.
This leads to another issue that appears in the comments. There are some who believe the narrative that Bermuda is a tax haven. They believe that people come to Bermuda to evade taxes. Bermuda is not a tax haven. Bermuda is not a place that promotes tax evasion, it is a place that promotes tax efficiency. There is a subtle but crucial difference between the two. Tax evasion involves breaking the law to avoid paying taxes. Tax efficiency involves studying and understanding the tax laws well enough to figure out how to pay as little as possible within the law. The reason being is that governments tend to use taxes as a means to encourage certain activities and discourage others. Inherently when you use taxes as such a tool, people figure out ways to leverage the laws to their advantage.
Finally there is the actual focus of the article, Bermuda’s trust business. Despite 95% of the article focusing on this it readily seems to be glossed over by most. It is likely that few really understand what a trust business is and why there is a substantial difference between Bermuda registered trusts and Bermuda resident wealthy individuals.
So it begs the question of where to begin? Media bias. The impact of wealthy residents. Tax evasion vs. tax efficiency. Or finally, what are trusts and why do they matter to Bermuda?