“How low have tax collections from the estates of wealthy Americans fallen?” asked tax attorney Bob Lord. “This low: In all likelihood, the fees the wealthy pay to their tax planners each year now dwarf our $14 billion in annual estate tax revenue.”
Those who can afford to hire the best tax planners can exploit an abundance of loopholes that exist in our increasingly complex tax code in order to avoid paying their fair share. It’s perfectly legal, but it deprives the government of much needed funds.
Today, Bloomberg‘s Zachary Mider reports that one of those loopholes accidentally written into law by Congress in 1990 has made it possible for billionaires like Sheldon Adelson to avoid paying billions of dollars in taxes.
Sheldon Adelson makes no secret of his disdain for the estate tax.
“How many times do you have to pay taxes on money?” the casino magnate asks, leaning on a blue cane on the cobblestones of Wall Street on a crisp October morning.
A gravel-voiced man whose accent recalls his blue-collar Boston roots, Adelson, 80, has just rung the bell at the New York Stock Exchange. Shares of his Las Vegas Sands Corp. (LVS) are at a five-year high, making him one of the world’s richest men, worth more than $30 billion.
Federal law requires billionaires such as Adelson who want to leave fortunes to their children to pay estate or gift taxes of 40 percent on those assets. Adelson has blunted that bite by exploiting a loophole that Congress unintentionally created and that the Internal Revenue Service unsuccessfully challenged.
By shuffling his company stock in and out of more than 30 trusts, he’s given at least $7.9 billion to his heirs while legally avoiding about $2.8 billion in U.S. gift taxes since 2010, according to calculations based on data in Adelson’s U.S. Securities and Exchange Commission filings.
Hundreds of executives have used the technique, SEC filings show. These tax shelters may have cost the federal government more than $100 billion since 2000, says Richard Covey, the lawyer who pioneered the maneuver. That’s equivalent to about one-third of all estate and gift taxes the U.S. has collected since then.
Read Mider’s entire report at Bloomberg News.