The worst offense is "wealth defense"

February 8, 2023 9:09 AM

"The Getty Family’s Trust Issues" (NYer paywall, archive) provides a rare look inside the "wealth-defense industry." (from Season 274 Episode 3 of The Daily Zeitgeist)

"Some advisers to ultra-rich families describe the current era as a golden age of tax avoidance. Last May, Marvin Blum, a Texas lawyer and accountant, gave a seminar for fellow-accountants who were figuring out how to profit from the influx of wealth that needed protecting. Blum told his colleagues, “Conditions for leaving large sums have never been better,” noting that “Congress has not closed an estate-planning loophole in over thirty years.” In a report from 2021, the Treasury Department estimated that the top one per cent of taxpayers are responsible for twenty-eight per cent of the nation’s unpaid taxes, amounting to an annual shortfall of more than $160 billion.

[...]

Critics of global inequality call this stratum of business the “wealth-defense industry,” and have pushed Congress to impose taxes, eliminate loopholes, and restore narrower limits on American inheritance."

posted by slogger (16 comments total)

I thought this was fascinating but also felt that nearly everyone was unlikeable.
posted by suelac at 9:17 AM on February 8, 2023 [7 favorites]

MetaFilter: I thought this was fascinating but also felt that nearly everyone was unlikeable.
posted by cupcakeninja at 9:39 AM on February 8, 2023 [45 favorites]

Either way it's bad, but the article isn't clear whether the "unpaid taxes" are from legal loopholes or from non-payment of taxes due.
posted by CheeseDigestsAll at 9:40 AM on February 8, 2023

Should be called the "theft from the poor" "despoilers of the environment" "weakening of the country's defense" and the "participants need to be flayed in public as a warning" industry.

I stand by my comment here.
posted by lalochezia at 10:07 AM on February 8, 2023 [27 favorites]

If you work in "wealth defense", you should not be allowed in polite company.
posted by NoxAeternum at 10:33 AM on February 8, 2023 [4 favorites]

My favorite part of wealth defense is that in my state in the USA owning property means your name and address goes on a publicity available tax document often available with a simple web-based search.

So police and other law enforcement don't like buying property where they occupy because it makes them vulnerable to web savvy retribution from "the bad guys". So they end up renting houses from bourgeoisie that just happen to be next door to the suburban palace of the bourgeoisie.

And it creates a dynamic that should be familiar to anyone trapped on the wrong side of "upper middle class": those with means to capital love buddying up with those that have means of force.
posted by NoThisIsPatrick at 10:35 AM on February 8, 2023 [4 favorites]

So fascinating to read, as someone wealthy by "normal people" standards but who pays taxes like a regular person.

I'm close to someone who works at the Getty Museum and she's described it as working in a "post-capitalist organization" - they are supported entirely by the Getty Trust (museum admission is free - the parking fees pay for security but not any of the other operations of the museum) so none of their decisions revolve around what brings people through the door. They could continue operating as a museum if nobody came, a pretty unusual circumstance in that world. But in the absence of that survival motive keeping people honest and forcing them to move with the times, most decisions about the museum are made based essentially on cults of personality that have developed around individuals who work there. Any innovation in how they develop exhibits is super controversial. Even measuring how exhibits land with the public is controversial! There's a lot of "this is how we've always done it at the Getty" circular reasoning. It seems pretty weird!

It's actually given her a surprising appreciation for how scarcity can induce clarity and force people to make choices and take risks. Working at a museum with essentially infinite money is surreal, mostly in a bad way. Take that lesson and apply it where you will in your thinking about the Getty family.
posted by potrzebie at 11:08 AM on February 8, 2023 [27 favorites]

Oh and in case you were wondering, they still pay shit lol
posted by potrzebie at 11:10 AM on February 8, 2023 [18 favorites]

“Tax, which is supposed to be a cure, is in fact one of the problems. This is a pattern that recurs throughout history. Capital keeps getting more and more unequal, until there’s a crash.”

This article points out what I see as inevitable and all of my friends say is impossible: a huge furious backlash when working people realize that their futures and their kids' futures are f'd because the game is so fixed. This is true in so many other countries, but most of those countries don't have gun and ammo stores on every block. Insurgent groups rise up when they a. recognize the inequality and b. have the means to punish those responsible.

Often, these groups become suborned , corrupted? by groups with other motives than addressing the equality. Religious or cultural or ? motives are introduced. How many 'Marxist' or 'Maoist' groups would have just stayed inactive if no one had said 'hey, we like the cut of your jib, here's a rocket launcher'? Another question: what if the group didn't fall for the bait, what if they just said 'naw, we're good, you keep your religious pamphlets' and stayed focused on addressing the inequality?

The powers-that-be are good at keeping Americans divided. When that slips, when the magic trick is revealed, it's not going to be like '1984', not here. Americans are good at three things - and one of them is busting through the walls of a gated community. No one has enough money, no one can hire enough private security to be guaranteed safety everywhere, all the time. When the aforementioned crash comes,
posted by flowerofhighrank at 11:40 AM on February 8, 2023 [5 favorites]

I came across the concept of a "family office" at work some years back. Innocent me, I thought it was a work-from-home thing... No, it's not that at all:

A family office is a privately held company that handles investment management and wealth management for a wealthy family, generally one with at least $50-$100 million in investable assets, with the goal being to effectively grow and transfer wealth across generations.

Me, I think cross-generational wealth transfers should be capped at $1M, and the overage taxed at Scandinavian rates.

Welp, due back on planet Earth after that thought!
posted by the sobsister at 12:32 PM on February 8, 2023 [8 favorites]

The Roman emperor Julian ("the apostate"), when he was Caesar (by that time a title meaning something like vice-emperor and heir apparent), clashed with the governor of Gaul over tax policy. At that time, the budget required to maintain the military (and keep it from rebelling) was very high, and revenue was generated from exorbitantly high tax rates. Wealthy citizens, however, took advantage of tax loopholes. They were allowed to defer paying their taxes, often for years at a time, thanks to custom, bribes, and other corruption. Meanwhile, emperors would periodically celebrate certain victories and other notable events by issuing edicts cancelling all outstanding tax debt. The wealthy (who by comparison to our current society controlled an even larger fraction of the total wealth, though today's billionaires are working on closing the gap) were able to "defer" tax payments long enough to span the intervals between debt-forgiveness edicts, and so effectively paid little or no tax. Meanwhile the poor and middle classes paid crushingly high taxes to support the military. Because the legions would revolt practically at the drop of a hat if they weren't happy by this point in imperial history, lowering their wages wasn't an option, and the prefect Florentius planned to further increase the taxes of the already-suffering people of Gaul. Julian countermanded him, instead lowering the overall tax rate, but issuing an edict preventing the ultra-rich from deferring their taxes any more. The result was that imperial revenue went way up, since the ultra-rich had so much tax owed, while most citizens of Gaul were suddenly pulled back from the knife-edge they'd been living on for years. Sadly, after ascending to the role of Augustus, Julian embarked on an ill-advised misadventure in Mesopotamia, took a spear to the liver, and died before he could implement further reforms. His successors in fact reversed many of his reforms, in large part perhaps to explicitly reject the legacy of the last pagan emperor of Rome. The ability of the ultra-wealthy to opt out of paying for essential services for the common good, and instead build increasingly-autonomous fiefdoms over which they alone held total control, was a major factor in the decline of the Western Empire over the following century, and led to the rise of feudalism and the effective enslavement as serfs of the majority of the population of Western Europe.

Anyway, the ultra-rich have been finding ways to avoid paying their taxes for millennia. Indeed, their success in doing so and forcing the burden of paying for social services onto the poor is partly how they become ultra-rich, and I would argue is a major contributor to the collapse of civilizations throughout history. If we don't stop them they will continue to steal from the rest of us until they become outright feudal lords once again.
posted by biogeo at 12:36 PM on February 8, 2023 [41 favorites]

“What gets me most about these people, Daddy, isn't how ignorant they are, or how much they drink. It's the way they have of thinking that everything nice in the world is a gift to the poor people from them or their ancestors. The first afternoon I was here, Mrs. Buntline made me come out on the back porch and look at the sunset. So I did, and I said I liked it very much, but she kept waiting for me to say something else. I couldn't think of what I was supposed to say, so I said what seemed like a dumb thing. "Thank you very much," I said. That is exactly what she was waiting for. "You're entirely welcome," she said. I have since thanked her for the ocean, the moon, the stars in the sky, and the United States Constitution.”

― Kurt Vonnegut, God Bless You, Mr. Rosewater
posted by nikoniko at 7:29 PM on February 8, 2023 [8 favorites]

People are still, if decreasingly, willing to pay 13% taxes on their income to work in California or NYC … but heirs are simply not going to pay those taxes on trusts, and any serious effort to do so is going to reduce total tax collections. Beneficiaries will move so no trust tax collections, and the massive annual contribution to the tax rolls that ultra rich people make simply through their high spending lifestyles would be lost. Gordon Getty and his kids probably put $5 million a year into California state and local tax coffers, before you even start to account for charitable contributions, and that spending would all end up going to Florida.
posted by MattD at 6:05 AM on February 9, 2023

but heirs are simply not going to pay those taxes on trusts, and any serious effort to do so is going to reduce total tax collections.

I mean you do know that CA is like almost 1.5x the GDP of the next state down, right? $5m = who cares, and they'd be better if they let a few rich people go, but also enacted policies to allow more normal income people to move in. That also doesn't account for how much they own via Prop 13 discounts that will live into perpetuity. They might be net drains on the state budget.
posted by The_Vegetables at 8:49 AM on February 9, 2023 [3 favorites]

Gordon Getty and his kids probably put $5 million a year into California state and local tax coffers, before you even start to account for charitable contributions, and that spending would all end up going to Florida.

See, there's just one problem with that argument - they would have to live in Florida. Not to mention that while they might be able to move their money, a good portion of their tangible assets are of the sort attached to the Californian earth and thus can't be moved.

We've been hearing about the threat of wealth flight for some time now, but the reality is that it just doesn't happen because it turns out that the ultra-wealthy live where they do for reasons.
posted by NoxAeternum at 8:55 AM on February 9, 2023 [3 favorites]

The way these people have been allowed to act for generations is a blight on everyone that allows it to continue. They themselves (at least when they're young) don't really know any better, because they've had their entitlement ground into them from birth. Once they grow up, they could, but choose not to, realise the damage they are doing to everyone but themselves.

But it's politicians that perpetuate this bullshit. They are, in the end, the only people that can actually change anything in this scenario. But they don't, because they're bought and paid for by the people that are fucking over most of the people that voted for them.
posted by dg at 2:18 PM on February 9, 2023 [2 favorites]