The super rich have skipped out on paying $100 billion dollars in estate taxes since 2000. And, that incredible number doesn't even factor in the billions that they saved using loopholes like capital gains, or by stashing their money in tax havens around the world. A new report from Bloomberg News says that special tax loopholes used primarily by the super rich have made the estate tax system “essentially voluntary” for those at the top.
By funneling money into and out of various trusts and other legal structures, the wealthy have managed to eliminate taxes on money they pass down to their heirs, and even make a tax-free profit while doing so. Basically, billionaires like Shelly Adelson and the Walton family set up special trust funds, like the Walton-created “grantor-retained annuity trust” or GRAT, in which they stash millions of dollars worth of stock. Once those GRATs expire – typically after two years – the billionaires cash out the stock, keep their original investment, along with a profit, and pass on the balance to their heirs. All the while, avoiding taxes on the whole scheme.
By using these completely legal, but highly unethical, tactics, the super wealthy have stashed away $100 billion in a little over a decade. That amount is enough to pay for every child in our nation to go to preschool for ten years, and it could wipe out the entire first round of sequester cuts. One hundred billion could have provided a substantial benefit to our nation, and it's only one of many tax loopholes that the super rich use to get out of paying their fair share.
The Thom Hartmann Program weekdays 3 PM to 6 PM on WWRL 1600.