Not only does this article touch on these tax breaks for the rich, but
shows just the tip of the iceberg of how the biggest banks and corporations are
so closely inter-connected.
When the Bush tax cuts were extended for two more years, it also dropped the estate tax due from wealthy families down below the
bargain-basement estate tax rates in place during the Bush years. In 2011 and 2012, wealthy couples will be able to
exempt from
estate tax the entire first $10 million of their fortunes — and pay a tax no higher than 35 percent
after various allowable deductions.
Newt
Gingrich calls this "the death tax" and wants to end it
permanently so Paris Hilton and others in the top 1% can continue hoarding the
money supply.
But the tax deal’s ample generosity to America’s most financially favored
went even further. The deal guts a federal tax levy on wealth most Americans don’t even know exists: the “gift tax.”
Wealthy Americans, ever since 1932, have been paying taxes on any substantial gifts they pass on to family and flunkies. Why a “gift
tax”? Without a gift tax in effect, the wealthy could easily sidestep the estate tax by giving away the bulk of their fortunes before they
die. (Read: A History of Federal Estate, Gift, and Generation-Skipping
Taxes)
With a gift tax in effect, the wealthy can still give away whatever they want, whenever they want. But if they try to pass a huge chunk
of change to junior before they die, they have to pay Uncle Sam a tax on that chunk.
This gift tax has always come with exemptions. Gifts to charities have never been subject to gift tax. And deep pockets have also
enjoyed both a “lifetime” and an annual exemption on the gifts they make to individuals. Since 2002, the “lifetime” exemption has stood at
$1 million.
But in 2010 and 2011, the tax deal's fine print stipulates that the lifetime gift tax exemption jumps from $2 million per couple to
$10 million
a couple.
Even better, the tax cut deal (in fine print) lets stand a complicated estate planning technique known as the “Walton grantor retained
annuity trust” — named after the heirs of the Wal-Mart fortune — that allows America’s wealthy to undervalue the actual worth of the
assets they give away.
With a higher new lifetime gift tax exemption and a wide-open Walton loophole, estate tax expert Stephan Leimberg
recently
explained to Forbes, the rich will be able to shift “an unbelievable amount of wealth” beyond the reach of the IRS.
Also the capital gains tax, a key rate for the very
rich, remained at its historically low rate of 15%, while the top ordinary income tax rate
stayed at 35% (of which only a small portion of the top .01% actually pays).
How much will all this “giving” (as in "gifts") cost the federal government in lost revenue? We have no real way of knowing. We do know that the rich
have already — even before the new tax deal— been stashing staggering amounts of wealth in “trusts,” a gift category that minimizes
“estate tax exposure.”
One new estimate of this stash, from a leading financial planning trade journal
editor at Forbes, places the total value of assets currently sitting in personal trusts at $1.1 trillion.
One example of a "giver" might be James Dimon, who is the current chairman, president and CEO of
JPMorgan Chase - and who previously served as a director of the New York Federal Reserve. Dimon was named to
Time magazine's World's 100 most influential people. Dimon also ranked 112nd on the
Forbes Executive Pay in
2011. He's worth about as much as Mitt Romney.
As CEO of the richest company in the world (ranked # 1 on Forbes Global 2,000), Dimon is railing against bashing the rich. "Acting like everyone who's been successful is bad and that everyone who is rich is bad — I just don't get it," said Dimon at the conference, which was organized by Goldman Sachs.
Dimon said he's worked on Wall Street for much of his life and contributed his fair share.
"Most of us wage earners are paying 39.6 percent in taxes." Wages earners? Fair share?
That was his big lie in defense of his fellow Wall Street bankers.
Dimon also said JPMorgan Chase has the authority to repurchase more of its shares. JPMorgan has repurchased about $8 billion in
stock in 2011, the limit. Banks have been eager to buy back their own shares at depressed prices.
The value of Dimon's un-exercised stock-options that are currently exercisable is valued at $59
million; meaning he can sell for a "realized capital gain" and pay 15%
in taxes, instead of the top marginal rate of 35%...his real "fair
share". (Read: How the 1% Bilks the 99%
with stock buy-backs, stock-options, off-shore bank accounts, low capital gains taxes, and "prepaid
forward” deals)
Dimon is married to Judith Kent; they have three children: Julia, Laura, and Kara Leigh.
But Dimon is only 55 years old, so his kids will have to wait for their inheritance before
they'll have to worry about how to avoid inheritance taxes; but in the meantime they can still enjoy "gifts" from dad without
worrying about the IRS.
Other notable members on JPMorgan Chase's board of directors
include:
- James A. Bell Corporate President & CFO The Boeing Company
- Stephen B. Burke Chief Executive Officer NBC Universal and Executive Vice President Comcast Corporation
- David M. Cote Chairman and CEO Honeywell International, Inc.
- Lee R. Raymond Retired Chairman and CEO Exxon Mobil Corporation
- William C. Weldon Chairman and CEO of Johnson & Johnson is mentioned here: Presenting America’s Ten Greediest of 2011
JPMorgan Chase's executive compensation list.
But James Dimon, as the CEO of JPMorgan Chase with only $59 million in reported exercisable shares in the bank, is small potatoes. One of his real bosses may be the CEO of the Vanguard Fund.
JPMorgan Chase currently has 3.8 billion in outstanding shares and the Vanguard Group is the largest institutional shareholder of JPMorgan Chase. With $1.3 trillion in assets, Vanguard is the nation's largest fund company. Here's what Vanguard owns in JPMorgan Chase:
- Vanguard Total Stock Market Index 42.6 million shares
- Vanguard 500 Index Investor 34.8 million shares
- Vanguard Institutional Index Institutional 31.9 million shares
- Vanguard Windsor II Investor 23.9 million shares
- Vanguard Wellington Investor 20 million shares
* Source: Morningstar
Vangaurd's CEO is F. William McNabb III. How much does he earn? "We don’t disclose the compensation earned by any crew member. We believe that compensation matters deserve the same privacy protections that we provide to shareholders and their account information."
But we're sure he also enjoys the lack of estate and gift taxes on the fabulously rich.
How the wealthy are faring:
- Subsidies for the Rich and Famous
- Historical Tax Rates on the Rich (1862 to 2011)
- The Second Gilded Age: History Repeats Itself
- Mellon: The Banker Who Rigged the U.S. Tax Code
- The GOP Tax Plan - Ignorance, Insanity, or Greed?
- We have a Revenue Problem, Not A Spending Problem
- 280 Corporations are "Too Big to Tax"
- Trickle-Down Economics: The Cruel 30-Year Hoax
- You
Pay Hidden Entitlements for the Rich
Other Related Articles
- The Vanguard Chronicles
- Vanguard Gets Personal
- "The richest 1 percent have more financial wealth than the bottom 95 percent combined."
- The total net worth on the Forbes 400 List marks $1.5 Trillion in 2011
- The Global Super-Rich Stash: Now $25 Trillion
- Historical Tax Rates and Time-line
- Capital gains from Citizens for Tax Justice
- 1977 - 2007 tax rates from U.S. Treasury
- Economic Policy Institute on capital gains taxes
- Capital gains explained from U.S. Internal Revenue Service
- The great corporate tax scam
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