This essential workforce is hustling to help holiday shoppers while also organizing for hazard pay and other Covid-19 protections.
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.