Jenkins on Trumps Ducking Taxes
By David Henderson
In one way excruciatingly detailed by the Times, however, Mr. Trump and his sire [Fred Trump] are nothing new under the sun. Nobody in their right mind from the compulsive accumulator class pays the punitive federal estate tax. From an early age, such people make sure their lifetime achievements are not sucked up and splattered away in 15 seconds of federal spending. Bill Gates, Jeff Bezos and Mark Zuckerberg, all apparently in the pink of health, have been working for years to shield their assets from the taxman. Sam Walton, the saintly founder of Walmart , in his autobiography advised: “The best way to reduce paying estate taxes is to give your assets away before they appreciate.”
Because politicians find it useful to appease both the envious and the wealthy, the IRS code features both an estate tax and ways to avoid it. A loophole the Times accuses the Trumps of using is a so-called grantor-retained annuity trust, described as “one of the tax code’s great gifts to the ultrawealthy.” Unsurprisingly, it also happens to be a favorite of the Sulzberger family, which owns the New York Times.
This is from Holman W. Jenkins, Jr., “Dogs Bite Men and Trumps Duck Taxes,” Wall Street Journal, October 5, 2018 (October 6 in print edition.)
I checked his 15 seconds of federal spending number. The feds spent approximately $4.171 trillion in Fiscal Year 2018. That amounts to $7.94 million per minute, which is just under $2 million per 15 seconds. So Holman is exaggerating, actually more than I expected before doing the calculation. If Bill Gates’s estate were worth $100 billion on his death and he didn’t play estate tax avoidance games or leave anything to charity, the tax, at a 40% rate, would be approximately $40 billion. So that would fund the feds for a little over 3.5 days.
I’ve spent part of the weekend catching up (only a little) on the last few weeks of my print Wall Street Journals. The article above, by the WSJ columnist I find most insightful, is a gem.
Another great paragraph:
We should always applaud journalistic enterprise even if the Times devotes considerable resources to a tax story that will surprise exactly no one. More interesting in their way are questions like who dumped a decade’s worth of private Trump tax documents in the paper’s lap and why doesn’t the Times devote similar energy to finding out what’s in the secret appendix of the Justice Department inspector general’s report on the strange doings of James Comey in the 2016 race? The press continues to treat Mr. Trump’s election as a terrible accident that never should have been allowed to happen, yet blinds itself to the most interesting part of the story.
One piece of good news on the tax front:
According to economist Brian Erard, only 5% of 3.6 million American households that should be filing forms and paying federal taxes related to household help are doing so.
That’s from Laura Sanders, “You’re Not the Only One Who’s Not Paying Your ‘Nanny Tax'”, Wall Street Journal, October 12, 2018.
Years ago, I learned that Vice-President George H. W. Bush was paying state income taxes as if he lived in Texas, that is, he was paying zero state income taxes, even though everyone knew he lived in D.C. I asked my accountant how I could set up residence in Texas. My accountant didn’t know. I still don’t. But in California I pay a 9.3 percent income tax rate on a large portion of my income. (Social Security is exempt.) And I’ve been doing it for a long time. Thank goodness we’re going to get an allegedly fast train out of it that I’ll probably never use.