There’s now another reason for Republicans to hate the Clintons. All that talk about Bill, Hillary, Chelsea and their Global Initiative, trusts and charitable foundations is shining a light on a subject the plutocracy would just as soon keep in the shadows.
It also undermines the Elizabeth Warren impression Hillary has been doing in pursuit of the presidency. Bemoaning income inequality and Republican favoritism toward the wealthy looks pretty silly since the Clintons (Bill net worth, $89 million, Hillary, $21 million, Chelsea, $15 million) have now become the poster children for how rigged the game really is.
From John D. Rockefeller to Bill Gates the family trust and charitable foundation have been the magical vehicles for dodging taxes while simultaneously appearing generous. They combine money laundering with image laundering.
If you have a team of specialized legal, investing and accounting experts. and a whole lot of money, you can siphon funds into entities with a charitable purpose, avoiding the estate tax and capital gains taxes on appreciated assets. At the same time family members can serve as employees or trustees, so the money that escaped taxation can support generations of trustifarians who pretend to work for a living doing good.
Rockefeller created a vast oil monopoly, which at its peak included “20,000 domestic wells, 4,000 miles of pipeline, 5,000 tank cars,” and controlled over 70 percent of the nation’s supply. When ill-paid laborers dared to strike they were shot down by goons in the Ludlow Massacre. Two women and eleven children also died. That’s a serious image problem.
So, a pioneering PR man had the elderly John D. photographed playing duffer golf, attending church and handing out dimes to small children. He advertised the family’s giving of hundreds of millions to charities, medical research that eradicated hookworm in the South and the creation of the University of Chicago, Rockefeller University and so forth. The family still had $300 billion or so, but who’s counting.
Bill Gates, another rapacious monopolist, forced millions to keep updating clunky, flawed, virus prone versions of Windows like 2000 and Vista, but he now wears the charitable face of the Bill and Melinda Gates Foundation, curing malaria and pretending he will give away his fortune.
Don’t count on it. Consider the Walton family of Wal-Mart fame. The estate tax that Republicans love to demonize is so riddled with loopholes, installed by the pet congressmen of donors, that of the $1.2 trillion passed down last year, the government only collected $14 billion from the estate tax, or about one percent.
The Walton family has been particularly proactive and masterful. The patriarch Sam started estate planning when he still owned nothing but an Arkansas five and dime. His wealth protection armor has turned into a byzantine array of 21 trusts which in turn fund charitable foundations. Many are so-called Jackie O. Trusts, named after the late first lady whose money mavens concocted an improved structure to outwit the tax man. Since the full complexity is beyond the layman, here’s a brief explanation cribbed from Bloomberg Business (“How Wal-Mart’s Waltons Maintain Their Billionaire Fortune: Taxes” Sept. 12, 2013).
“The money put into the trusts is ostensibly for charity. If the assets appreciate substantially over the years, though, the trusts have another desirable feature. They can pass money tax free to heirs.” Obviously this defeats the intent of the estate tax. Furthermore, “if Treasury bond yields are low and invested assets perform well, a Jackie O. Trust can theoretically save so much tax that it leaves the family richer than if it hadn’t given a dime to charity.”
How cool is that? You dodge the estate and capital gains taxes, you look charitable on the surface and your children and children’s children, (i.e. the aristocracy), get a stream of tax free dollars. Charity really does begin at home, and often stays there thanks to IRS laws written by the millionaires we elect to Congress.
The two parties may not agree on much else, but they are united in protecting their own assets and those of their billionaire donors. Most of whom, needless to say, are generous benefactors of family foundations and charitable trusts which pretend to do good while allowing the families to do really well.
But let’s not be cynical, the donor and political classes have a dream, that someday all of their constituents will have enough capital and expert legal and accounting help to create foundations to dodge taxes in perpetuity, while giving the younger members of the dynasty well-paying jobs in the family charity or on the foundation board. When that happens, black men and white men, Jews and Gentiles, Protestants and Catholics, will all be able to say, Free at Last, Free at Last, thank the tax loopholes we’re free at last.
Until that happy day, however, if you don’t have capital, don’t expect the government to lend a hand with food stamps and Medicaid and student loans. This is America. Only people with trusts get special treatment.