From: Gary Britt 



John Beckett wrote:
> Gary Britt  wrote in message
> news::
>
  > I don't think you addressed my main concern which is that once a certain
> amount of wealth has been accummulated, an entire industry is available to
> protect the wealth by erecting elaborate schemes to minimise tax. We're
> not talking about shaving a few points of the tax, we're talking about
> income tax being reduced to below the 10% level.
>

I'm afraid that industry is just a myth along with John Edwards 2nd and 3rd
Americas.  Sure bright lawyers and accountants can minimize federal income
tax payments to 30 to 45 percent average tax rate, but there is almost
nothing that can be done for a huge estate to avoid the effects of
confiscatory taxation.  That's why Gates is giving it away, its either give
it away or have it confiscated.  By giving it away at least he can control
where it goes a bit more (except it can't go to himself or his family), but
his family can get some cushy salaried jobs on the boards of the
foundations he funds.  However, those cushy jobs and nice salaries are just
fractions of a penny on the dollar he is forced to give away.

With the confiscatory tax rates and generation skipping transfer tax rules
and a miniscule limit on lifetime tax free giving and an annual exclusion
of less than 15,000 to 20,000 you can't avoid having your estate
confiscated about 70% or more over 2 or 3 generations.  Only way to avoid
having it confiscated is to give it away like Gates.  Sort of a Sophie's
choice.

The era of the mythical tax shelters of lawful phony deductions ended by
1969 with the Tax Reform Act of 1969.  Prior to those reforms non-recourse
debt shelters and other schemes were actually lawful.  Now, as you may read
from time to time in the news those high priced accountants and lawyers are
being put on trial for tax fraud and forced to pay 100's of millions of
dollars in fines for getting just a little too aggressive, much less
reducing people's income taxes to 10%.

So I did answer your question before when I said those engineers,
accountants, and professional managers can't build wealth and create jobs,
because if they could they would be doing it for themselves.  All those
high priced tax accountants and lawyers can do for the rich is to keep them
from screwing up and actually having to pay 50% or so (including state and
local taxation) on their income.  Keeping them in the 35% to 40% range is
all they can do.  Even capital gains are subject to a flat rate of 15%, but
then the alternative minimum tax would kick in to raise that up to the 35%
to 40% again so the really rich don't even get 15% on capital gains for the
most part.

Gary

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