SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
People participate in a "March on Billionaires" event on July 17, 2020 in New York City. (Photo by Spencer Platt/Getty Images)
How to Hide a Fortune During a Pandemic
The Planning Tools of the Wealth Dynasty Protection Racket
Aug 19, 2020
While some folks are volunteering at the local food bank, the super-wealthy are working to hide their money from future taxation.
It is no secret that the Covid-19 pandemic has been very good to the billionaire class. The richest dozen billionaires now have a combined wealth of over $1 trillion. And since March 18, the beginning of the pandemic lock down, the collective wealth of the U.S. billionaire class has increased over $700 billion.
The pandemic, however, has also provided cover for aggressive estate tax avoidance. There is now an orgy of wealth hiding taking place, as wealth planners for the richest 0.1 percent accelerate the planning tools they created over the last two decades to place trillions outside the reach of the estate and gift tax.
IPS Associate Fellow Bob Lord has written a primer to the tools that wealth managers are using to facilitating this wealth vanishing act. His policy brief, "Covid-19, A Perfect Storm for Estate Tax Avoidance," provides a readable overview to the deployment of two planning devices: the Intentionally Defective Grantor Trust, or IDGT, and the Granter Retained Annuity Trust, or GRAT. Lord explains their workings in his policy brief.
Wealthy families use these planning tools to place billions if not trillions in wealth into "dynasty trusts" and reduce or eliminate their estate and gift tax obligations. According to Lord, it is too late to capture these funds. But one remedy is to put in place an inheritance tax to levy funds as they flow to heirs and beneficiaries of the trusts.
An inheritance tax, such as the one proposed by New York University Law Professor Lily Bachelder, could not be circumvented by trusts designed to avoid estate taxation. As funds flow to recipients, an inheritance tax could serve as a fix and dynasty prevention mechanism.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, The U.S. is on a fast track to authoritarianism like nothing I've ever seen. Meanwhile, corporate news outlets are utterly capitulating to Trump, twisting their coverage to avoid drawing his ire while lining up to stuff cash in his pockets. That's why I believe that Common Dreams is doing the best and most consequential reporting that we've ever done. Our small but mighty team is a progressive reporting powerhouse, covering the news every day that the corporate media never will. Our mission has always been simple: To inform. To inspire. And to ignite change for the common good. Now here's the key piece that I want all our readers to understand: None of this would be possible without your financial support. That's not just some fundraising cliche. It's the absolute and literal truth. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. Will you donate now to help power the nonprofit, independent reporting of Common Dreams? Thank you for being a vital member of our community. Together, we can keep independent journalism alive when it’s needed most. - Craig Brown, Co-founder |
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Chuck Collins
Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org. His near future novel "Altar to An Erupting Sun” explores one community’s response to climate disruption. He is author of numerous books and reports on inequality and the racial wealth divide, including “The Wealth Hoarders: How Billionaires Spend Millions to Hide Trillions,” “Born on Third Base,” and, with Bill Gates Sr., of “Wealth and Our Commonwealth: Why American Should Tax Accumulated Fortunes.” See more of his writing at www.chuckcollinswrites.com
While some folks are volunteering at the local food bank, the super-wealthy are working to hide their money from future taxation.
It is no secret that the Covid-19 pandemic has been very good to the billionaire class. The richest dozen billionaires now have a combined wealth of over $1 trillion. And since March 18, the beginning of the pandemic lock down, the collective wealth of the U.S. billionaire class has increased over $700 billion.
The pandemic, however, has also provided cover for aggressive estate tax avoidance. There is now an orgy of wealth hiding taking place, as wealth planners for the richest 0.1 percent accelerate the planning tools they created over the last two decades to place trillions outside the reach of the estate and gift tax.
IPS Associate Fellow Bob Lord has written a primer to the tools that wealth managers are using to facilitating this wealth vanishing act. His policy brief, "Covid-19, A Perfect Storm for Estate Tax Avoidance," provides a readable overview to the deployment of two planning devices: the Intentionally Defective Grantor Trust, or IDGT, and the Granter Retained Annuity Trust, or GRAT. Lord explains their workings in his policy brief.
Wealthy families use these planning tools to place billions if not trillions in wealth into "dynasty trusts" and reduce or eliminate their estate and gift tax obligations. According to Lord, it is too late to capture these funds. But one remedy is to put in place an inheritance tax to levy funds as they flow to heirs and beneficiaries of the trusts.
An inheritance tax, such as the one proposed by New York University Law Professor Lily Bachelder, could not be circumvented by trusts designed to avoid estate taxation. As funds flow to recipients, an inheritance tax could serve as a fix and dynasty prevention mechanism.
Chuck Collins
Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org. His near future novel "Altar to An Erupting Sun” explores one community’s response to climate disruption. He is author of numerous books and reports on inequality and the racial wealth divide, including “The Wealth Hoarders: How Billionaires Spend Millions to Hide Trillions,” “Born on Third Base,” and, with Bill Gates Sr., of “Wealth and Our Commonwealth: Why American Should Tax Accumulated Fortunes.” See more of his writing at www.chuckcollinswrites.com
While some folks are volunteering at the local food bank, the super-wealthy are working to hide their money from future taxation.
It is no secret that the Covid-19 pandemic has been very good to the billionaire class. The richest dozen billionaires now have a combined wealth of over $1 trillion. And since March 18, the beginning of the pandemic lock down, the collective wealth of the U.S. billionaire class has increased over $700 billion.
The pandemic, however, has also provided cover for aggressive estate tax avoidance. There is now an orgy of wealth hiding taking place, as wealth planners for the richest 0.1 percent accelerate the planning tools they created over the last two decades to place trillions outside the reach of the estate and gift tax.
IPS Associate Fellow Bob Lord has written a primer to the tools that wealth managers are using to facilitating this wealth vanishing act. His policy brief, "Covid-19, A Perfect Storm for Estate Tax Avoidance," provides a readable overview to the deployment of two planning devices: the Intentionally Defective Grantor Trust, or IDGT, and the Granter Retained Annuity Trust, or GRAT. Lord explains their workings in his policy brief.
Wealthy families use these planning tools to place billions if not trillions in wealth into "dynasty trusts" and reduce or eliminate their estate and gift tax obligations. According to Lord, it is too late to capture these funds. But one remedy is to put in place an inheritance tax to levy funds as they flow to heirs and beneficiaries of the trusts.
An inheritance tax, such as the one proposed by New York University Law Professor Lily Bachelder, could not be circumvented by trusts designed to avoid estate taxation. As funds flow to recipients, an inheritance tax could serve as a fix and dynasty prevention mechanism.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.