Bloomberg News has an article reporting on estate-tax-reduction maneuvers including a "Walton GRAT" and a "Jackie O. Trust." The article reports that:
Estate and gift taxes raised only about $14 billion last year. That's about 1 percent of the $1.2 trillion passed down in America each year, mostly by the very rich, former Treasury Secretary Lawrence Summers estimated in a December blog post on Reuters.com. The contrast suggests "our estate tax system is broken," he wrote.
"Only" $14 billion? That's a lot of money to the people who paid the taxes. And it's a framing game: compare $14 billion to $1.2 trillion and it looks small. But compare it to some other number, like, say, the $14.6 billion that was the entire revenue of the federal government in 1942, and it looks large.
The article says:
America's richest family, worth more than $100 billion, has exploited a variety of legal loopholes to avoid the estate tax, according to court records and Internal Revenue Service filings obtained through public-records requests. The Waltons' example highlights how billionaires deftly bypass a tax intended to make sure that the nation's wealthiest contribute their share to government rather than perpetuate dynastic wealth, a notion of fairness voiced by supporters of the estate tax like Warren Buffett and William Gates Sr....Not all of Rockefeller's Gilded Age contemporaries sought to found dynasties. Andrew Carnegie donated almost his entire fortune to charity, building thousands of libraries across the country. In this era, Warren Buffett and William Gates III have pledged publicly to give away all but a nominal amount to philanthropy.
"We shouldn't have a situation where gimmicks allow rich people to avoid estate taxation," Gates's father, William Gates Sr., the author of a 2004 book that advocated for the estate tax, said in an interview. "A value in our lives is having children who make their own way to some extent. It's unfortunate to have people who, when Mom and Dad pass on, they leave you a billion dollars for which you'd done nothing."
The notion that Mr. Buffett is somehow unlike the Waltons and doesn't want to leave his children anything is just totally bogus — so far from the truth that it's hard not to attribute it to the stereotypical view on the left and in much of the press that Walmart is somehow evil because it pays low wages and is non-union, while Warren Buffett is some kind of hero because he advocates for higher taxes and pals around with Barack Obama. As the New York Sun reported back in 2006, when Mr. Buffett announced his charitable intentions:
three foundations headed by Mr. Buffett's three children, Susan, Howard, and Peter, will get hundreds of millions of dollars. Tax documents show that in 2004, Peter Buffett and his wife Jennifer each took a $40,000 a year salary for what they reported was 30 hours a week each of work on the foundation.
Mr. Buffett's son Howard is a director of Berkshire Hathaway and of Coca-Cola, according to the bio posted at the Howard G. Buffett Foundation. NPR reported that "his father gave him money to run his foundation — about $2 billion so far."
I don't think there's anything wrong with the Waltons leaving company stock to their children or grandchildren, or with Warren Buffett leaving company stock to a foundation his son controls. But the idea, conveyed by the Bloomberg article, that it is somehow vastly morally superior to leave an heir $2 billion in a foundation the heir controls, as opposed to putting the stock in a trust that the heir controls, is ridiculous. Walmart, by providing jobs and low-priced merchandise, probably does more good than the Buffett Foundation does.
The Bloomberg article does not explore how much money lawyers and accountants make for helping clients with these estate-tax avoidance measures, nor does it really get into the question of why not abolish the estate tax altogether if people are just going to figure out ways around it.
The whole article is a frustrating read, because while it raises some newsworthy issues about these estate-tax avoidance maneuvers, the set-up of the Waltons as the villains and the Buffett-Gates duo as the heros is so transparently bogus.