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
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.
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This country and this world are at a monumental crossroads. In a few short weeks, US voters will have an opportunity to beat back the forces of fascism and confront the billionaires who are rigging the economy, our media system, and our democracy, making it increasingly impossible for ordinary people to get by. We’re not just talking about the election. We’re talking about what must be done once these fascist elements are vanquished from power. We need a bolder set of solutions than what either major party has so far been willing to offer and a working-class movement ready to fight like hell for it. Trump didn't emerge from nowhere. The conditions that fueled MAGA authoritarianism were created by decades of radical neoliberal economic policies and a corrupt political system dominated by corporate interests. They slashed taxes on the super-rich, promising that the benefits would trickle down. They said giveaways to the corporate titans would make life more affordable for the rest of us. It was all bullshit. And when a bitter, betrayed populace searches for someone to blame, right-wing demagogues have little trouble finding scapegoats. People know when they're being lied to, but you won't hear any of this from the corporate media. Only independent journalism—powered and funded by people who believe in building a better world—can deliver truly trustworthy daily news. Our Fall Campaign is underway, and we need your help. To power our newsroom through the rest of the year, we need to raise $125,000 by midnight on October 31. So if you share our vision, please contribute whatever you can to sustain our work. |
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.
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.