OBAMA ADMIN: Tax Loophole Benefiting Romney’s Estate Costs U.S. $1 Trillion Over Ten Years

[kpete]

Tax Loophole Benefiting Romney’s Estate Costs U.S. $1 Trillion Over Ten Years
By Pat Garofalo on Sep 27, 2012 at 1:00 pm

According to Bloomberg News, http://www.bloomberg.com/news/2012-09-27/romney-i-dig-it-trust-gives-heirs-triple-benefit.html Mitt Romney is taking advantage of a tax loophole to pass off a fortune to his children without paying taxes on it. According to administration figures, this loophole costs the government $1 trillion over a ten-year budget window:

In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc.

If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: “I Dig It.” [...]

While Romney’s tax avoidance is both legal and common among high-net-worth individuals, it has become increasingly awkward for his candidacy since the disclosure of his remarks at a May fundraiser. He said that the nearly one-half of Americans who pay no income taxes are “dependent upon government” and “believe that they are victims.” [...]

The Obama administration estimates that closing the loophole Romney used would bring the federal government almost $1 billion in the coming decade.

http://thinkprogress.org/economy/2012/09/27/919601/romney-loophole-trillion/

[Spazito]

1. Whoa!

"In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc.

If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: “I Dig It.” "


Wow.

[Scurrilous]

2. K & R

[louis-t]

3. Is it 'billion' or 'trillion'?

I says both.

[genxlib]

4. Saw the same thing

I suspect that Billion is correct. Tillion would mean that there were 100 Billion lost per year. Even at those higher rates indicated, that would mean that the wealthy were taking advantage of this dodge to the tune of transferring 200 Billion every year. That seems high.

[starroute]

6. It seems to be somewhere in between

From the Bloomberg article linked in the OP:

The Obama administration estimates that closing the loophole Romney used would bring the federal government almost $1 billion in the coming decade.

That’s a “laughable” under-estimate, said Stephen Breitstone, co-head of the taxation and wealth preservation group at law firm Meltzer, Lippe, Goldstein & Breitstone LLP. A single billionaire could pay $500 million more in estate taxes if these trusts are shut down by the Obama administration, Breitstone said.

[benld74]

5. The Mormon CHurch is getting stiffed as well! LOL