How Billionaires, like Ron Lauder, Avoid Paying Taxes

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Ever wonder how the super rich avoid paying all those taxes? Well, the New York Times has an interesting takeout here on all the shenanigans folks like Ron Lauder, of Estee Lauder, do to shelter their billions.

According to the Times' David Kocieniewski, Lauder, worth $3.1 billion, donates his vast art collection to his own private foundation, a move that alllows him to take tens of millions in tax deductions. He also sold $72 million in stock to an investment bank effective in 2014 that would give him 75 cents on the dollar today. (The IRS has since banned the practice.)

"His vast holdings -- which include hundreds of millions in stock, one of the world's largest private collections of medieval armor, homes in Washington, D.C., and on Park Avenue as well as oceanfront mansions in Palm Beach and the Hamptons -- are organized in a labyrinth of trusts, limited liability corporations and holding companies, some of which his lawyers acknowledge are intended for tax purposes," the Times writes.

And it gets worse. The super-rich has paying less taxes than ever. "The effective federal income tax rate for the 400 wealthiest taxpayers, representing the top 0.000258 percent, fell from about 30 percent in 1995 to 18 percent in 2008, the most recent data available," the Times writes.

"There's real truth to the idea that the tax code for the 1 percent is different from the tax code for the 99 percent," said Victor Fleischer, a law professor at the University of Colorado, according to the Times. "Any taxpayer lucky enough to have appreciated property is usually put to a choice: cash out and pay some tax, or hold the property and risk the vagaries of the market. Only the truly rich can use derivatives to get the best of both worlds -- lots of cash and very little risk."


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4 comments
Otisah
Otisah

Tom, you are correct. It's the policy, not the person. Then again, that's the entire point.

Joannaz2012
Joannaz2012

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Tom Mullen
Tom Mullen

You tend to indict the person as opposed to the policy, complex as the IRS code is.What do you expect people like Koch or Lauder to do? They simply are following the law. And they also pay whatever they must pay.  

Al Swearengen
Al Swearengen

Here's the dirty little secret.  The rich and corporations LOVE complicated regulations and taxes.  It's what they spend millions on lobbyists for.  The lobbyists go in and get thousands of loopholes added to every law and regulation that allow them to wiggle out.

They don't "follow" the law, they write it.  That's why the loopholes are there.  Wake up and smell the swindle.

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