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Comment Re:$60 Million House - Trickle UP Economy... (Score 1) 360

Not so true. For the very rich creating charitable trusts can be a helpful way of avoiding taxes that normal people would have to pay.

There is a very interesting article in the NY times by David Cay Johnston: http://www.nytimes.com/2003/12/21/magazine/21ENCOU NTER.html?pagewanted=2&ei=5007&en=21e3450ac9e31ab3 &ex=1387342800&partner=USERLAND

Excerpt: ...
Blattmachr's genius is in seeing the whole and these holes in the whole. He then sells this genius to his clients. One of his early insights was that it is entirely and legally possible for the superrich to reap unlimited stock profits without paying a cent of capital gains tax. The rich can do this by manipulating charitable trusts. These trusts are a common enough device used by generous people who own an asset, usually stock, that has appreciated in value. Instead of selling the stock, paying capital gains taxes, and then investing the after-tax proceeds, a person can instead donate the stock to a charitable trust that he controls. The trust can sell the assets tax-free and invest the untaxed proceeds. The income from that investment -- typically 6 percent annually -- is paid to the donor for life. When the donor dies, what remains in the trust goes to charity.

Blattmachr took this clever gimmick and supersized it. He figured out a way to turn that nice little 6 percent annual income stream into a torrent -- 80 percent returns a year for two years. So on stock gains of $100 million, the owners would get back at least $96 million, as opposed to the mere $72 million they would have gotten if they had sold the stock outright and paid capital gains taxes. Then the trust would fold, and some charity would get the remaining $4 million. The government would get less than nothing since the gift to the charitable trust would create an income tax deduction. ...

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