I Was Taught From A Young Age To Protect My Dynastic Wealth

Following up on my previous posts (links below):  Abigail Disney (The Atlantic):  I Was Taught From a Young Age to Protect My Dynastic Wealth:

When ProPublica published its report last week on the tax profiles of 25 of the richest Americans, jaws dropped across the United States. How was it possible that plutocrats such as Elon Musk, Jeff Bezos, and Warren Buffett could pay nothing in income taxes to the federal government? What sneaky sleights of pen, what subterfuge, what acts of turpitude could have led to this result?

The shock stems, in part, from a disturbing reality: Nowhere does ProPublica assert that these men cheated, lied, or did anything felonious to lower their tax burdens. The naked fact of the matter is that not a single one of the documented methods and practices that allowed these billionaires to so radically minimize their tax obligations was illegal.

What’s worse, these methods and practices—things such as offsetting income with losses in unrelated businesses; structuring assets to grow rather than generate income, then borrowing against those growing assets for cash needs; and deducting interest payments and state taxes from taxable income—are so downright mundane and commonly applied that most rich people don’t see them as unethical. The more interesting question is not how the men in ProPublica’s report were able to avoid paying much or anything in federal income taxes, but why. What motivates people with so much money to try to withhold every last bit of it from the public’s reach?

One factor is the common ideology that underlies all of these practices: The government is bad and cannot be trusted with money. Far better for the wealthy to keep as much of it as possible for themselves and use (a fraction of) it to do benevolent things through philanthropy.

My grandfather Roy O. Disney, who co-founded the Walt Disney Company with his brother Walt, was a fervent believer in this idea. He was so determined to prevent the government from taking any of the money he wanted to leave to his family that he created generation-skipping trusts to end-run the IRS. What he did back then was so effective that most of it is illegal today.

I will protest to my dying breath that he was a good man—one of the best, in fact.

But I will also add, at the very end of that dying breath, that he should not have been able to do that.

Practically speaking, the way the trusts were devised meant that I came into a significant amount of money at the tender age of 21. I became an asset manager before a lot of people get their first apartment. I’m 61 now, meaning I’ve been the recipient of four decades’ worth of tax advice from the decent, good, kind men (yes, they were all men) who were put in place by my grandparents, and then my parents, to ensure that I wouldn’t do anything stupid with what I had been given.

Every single method and practice outlined in the ProPublica report has been suggested to me at one time or another by these decent men as a credible, perfectly legal, and not-at-all-questionable way to manage my assets. And, over the years, I have said yes to many of those suggestions. So it’s true: If you were to get a hold of my tax returns, you would find a record of a person who has adhered scrupulously to the law and, in doing so, has also taken advantage of the many holes our legal system has left wide open. ...

The older I’ve gotten and the more clearly I’ve understood these things, the more the impulse to betray my own class has taken charge of my judgment.

What’s shocking about the ProPublica report is not just that the tax bills are so low, but that these billionaires can live with themselves.

If your comfort requires that society be structured so that a decent percentage of your fellow citizens live in a constant state of terror about whether they’ll get health care in an emergency, or whether they can keep a roof over their family’s heads, or whether they will simply have enough to eat, perhaps the problem does not rest with those people, but with you and what you think of as necessary, proper, and acceptable.

(Hat Tip: Ted Seto)  Prior TaxProf Blog coverage: 

• ProPublica: America's Richest People Pay Little To Nothing In Federal Income Taxes (June 8, 2021)
• Dorothy Brown And David Cay Johnston Discuss Yesterday's ProPublica's Report On The Tax Secrets Of The .001% (June 9, 2021)
• Dorothy Brown On The ProPublica Tax Report, Racial Justice, And The Gig Economy (June 13, 2021)
• Dorothy Brown, What ProPublica Missed About Taxing Rich White Men (June 14, 2021)
• ProPublica: Leading Manhattan DA Candidate/Hedge Fund Mogul Has Repeatedly Paid No Federal Income Taxes (June 23, 2021)