Why Are the Super Rich Are Fretting About Their Great-Great-Grandkids?

by | Sep 10, 2022 | Money Over People

Photo by designer491, iStockphoto

Why Are the Super Rich Are Fretting About Their Great-Great-Grandkids?

by | Sep 10, 2022 | Money Over People

Photo by designer491, iStockphoto
Happy tax times — for the rich — don’t come carved in stone. Tax laws can and do change. Public anger can increase the tax-auditing pressure on grand private fortunes.

The people who may know America’s super rich as well as anyone — their tax attorneys and financial advisors — are noticing a new angst within their client ranks. Our most fortunate are fretting about their family tree’s financial future.

“More than ever,” says Vince Annable, the CEO of VFO Advisory wealth management, “we’re seeing a growing number of ultra-wealthy families thinking further down their generational line.”

“In working with very wealthy families,” adds Cliff Oberlin, the chief exec at Oberlin Wealth Partners, “the topic of expanding their fortunes to benefit their great-great-grandchildren regularly comes up.”

And how can today’s wealthy best go about guaranteeing fortunes to their future family generations? Deep pockets, points out Private Wealth magazine’s Russ Alan Prince, have two “complementary” paths to dynastic wealth. They need to both ratchet up the return on their investments and “mitigate” the taxes they pay on those returns.

Over recent years, our richest haven’t had too much difficulty on either score. Wall Street has regularly come up with new investment vehicles that promise and deliver healthy returns, most typically by squeezing workers and fleecing consumers, a two-step that outfits like the private equity industry have so lucratively perfected.

Taxes on grand incomes and fortunes, meanwhile, have shrunk to levels not seen since the go-go years right before the Great Depression, thanks to a combination of historically low tax rates and tax code loopholes that bring the taxes the wealthy actually pay down to shockingly low levels. Between 2010 and 2018, a Biden administration analysis last year concluded, America’s 400 wealthiest families paid on average a mere 8.2 percent annual tax on their income from earnings and investments.

But happy tax times — for the rich — don’t come carved in stone. Tax laws can and do change. Public anger can increase the tax-auditing pressure on grand private fortunes. Political landscapes can become minefields where the wealthiest among us have to watch their every step.

All these horrors will fill the futures of our most financially fortunate, the reclusive billionaire Barre Seid has apparently come to believe, unless today’s deepest pockets take aggressive political steps to future-proof their fortunes. Seid has moved to do just that.

The Chicagoan Seid last year dropped a whopping $1.6 billion — what may be the largest single contribution ever to a politically focused nonprofit — on a right-wing advocacy fund run by the long-time conservative activist Leonard Leo.

Political analysts generally see Leo as the mastermind behind the long-term effort that’s handed the political right its current 6-3 supermajority on the U.S. Supreme Court. His new $1.6 billion windfall, notes the New York Times, will likely “cement” Leo’s kingmaker status and “give conservatives an advantage in a type of difficult-to-trace spending that shapes elections and political fights.”

That sort of spending usually goes by the tag of “dark money.” Political nonprofits like the Marble Freedom Trust — the recipient of Seid’s $1.6 billion — don’t have to reveal where they get their money or how they’re spending it to influence the outcomes of political races.

But ace reporting has stripped the secrecy off Seid’s mammoth political outlay to Leonard Leo and revealed that Seid and Leo carefully structured that outlay to generate as much as $400 million in tax savings for Seid. Their tax-time maneuvering began with Seid transferring all the shares in his privately held Tripp Lite, the computer company at the core of his wealth, to the Marble Freedom Trust. The Trust then sold the shares to an Irish conglomerate for the over $1.6 billion.

If Seid had sold the shares first and then donated the proceeds to Marble Freedom, he would faced a massive federal tax on his capital gain. By handing the stock off to Marble Freedom, Seid has totally sidestepped that levy.

How epic an “achievement” has Leonard Leo pulled off with his new $1.6-billion haul? Seid’s largesse, notes a ProPublica analysis, has handed Leo nearly quadruple the multiple millions Leo had raised over the entire previous 16 years.

Leo, even before Seid’s windfall, had won renown as a fundraiser extraordinaire. Last December, for instance, the watchdog Open Secrets marveled at how his wizardry a year earlier had raised a “record” $50 million “for a shape-shifting network of secretly funded conservative nonprofits.”

Seid’s generous $1.6-billion gesture of right-wing solidarity can now bestow upon Leonard Leo, year after year, some $100 million for his pet right-wing causes, assuming a modest annual investment return on the original $1.6 billion.

Billionaires and the corporations they run, journalist David Sirota reminds us, aren’t expecting much of a pushback to this or any other torrential flow of dark money. They’re counting on the political fatalism that courses through the American electorate, the notion that the rich always win, no matter what the rest of us may do.

But the rest of us, Sirota notes, can limit the oligarchic threat we face. For starters, we can push to overhaul the federal rules on political contributions “so that Americans can at least know who is trying to influence their votes, their representatives, and their court system.” That work would get a big boost with the passage of the DISCLOSE Act, the legislation Sheldon Whitehouse, a senator from from Rhode Island, has been introducing every year since the 2010 Supreme Court ruling in Citizens United “unleashed an enduring flood of dark money into politics.”

The DISCLOSE Act, Sirota and his colleague Joel Warner go on to explain, “would force dark money groups to disclose any of their donors who give more than $10,000, require shell companies spending money on elections to disclose their owners, and mandate that election ads list their sponsors’ major contributors.”

That could all add up to a good beginning to a more democratic future. The great-great-grandchildren of today’s super rich might find that future a bit constricting. The rest of us would do just fine.

Republished with permission from Inequality.org, by Sam Pizzigati

Inequality.org

Inequality.org

Inequality.org has been tracking inequality-related news and views for nearly two decades. A project of the Institute for Policy Studies since 2011, our site aims to provide information and insights for readers ranging from educators and journalists to activists and policy makers.

Our Inequality.org contributors come from the United States and around the world. Our focus throughout: What can we do to narrow the staggering economic inequality that so afflicts us in almost every aspect of our lives?

Comments

Follow Us

Related Articles

Feb 02 2023

Profiteering Nursing Home Owners Grabbed Cash During the Pandemic While Their Residents Deteriorated

Owners of multiple nursing homes operated as virtual slumlords, neglecting buildings, staffing and patient care all the while paying themselves and their families...
Jan 27 2023

Chevron Follows Up Massive Price Gouging With a Massive Stock Buyback

Chevron’s announcement came as they and other big oil producers are set to announce a record $199 billion in collective 2022 profits, 50% higher than the previous...
Jan 25 2023

Your Money or Your Life: The Travesty of America’s Healthcare System

Universal healthcare is not that complicated. But the people who promote its perceived complexity are the same people who are creating that complexity—for their own...
Jan 21 2023

Are Airlines Committing Fraud by Scheduling Flights They Can’t Fulfill?

U.S. Transportation Department is reportedly investigating whether three airlines have scheduled flights they know they can’t staff.
Jan 19 2023

TitleMax, the Nation’s Biggest Title Lender, Sells Loans Designed Never to Be Paid Off

A review of more than two dozen Georgia title pawn contracts found that annual interest rates in typical TitleMax contracts ranged from 119% to 179%.
Jan 18 2023

Conference for Health Care Investors Convenes Amid Fears Their Bubble Will Burst

There are three words that don’t belong together: “health,” “care,” “Investors.” Yet a San Francisco conference just showcased...
Jan 12 2023

How Private Equity Is Amplifiing the Abuses of Predatory Lending

Payday lending is inherently predatory and private equity is turbocharging its abuses, enlarging the burden it places on low-income individuals and borrowers of...
person in white coat holding silver and blue ring
Jan 10 2023

Medical Private Equity Firms Are Targeting Another Specialty for Profits: Orthopedics

Critics warn that profit-hungry private equity ownership could result in higher prices for patients and insurers, more unnecessary surgery, and less access to care for...
Jan 05 2023

The Dangers of ‘Predatory’ Medical Credit Cards

Banks have identified medical credit cards as a lucrative opportunity to profit off of the worsening crisis of patients who are unable to afford their medical...
Dec 31 2022

Southwest Airlines Spent $5.6 Billion on Shareholders Rather Than Invest in Infrastructure

Southwest Airlines made a risky gamble that mass layoffs and spending billions of dollars on handouts to investors rather than fixing infrastructure would pay off with...
Subscribe for Updates!

Subscribe for Updates!

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!

Pin It on Pinterest

Share This