George Soros' $18 Billion Tax Dodge Exposed

Tyler Durden's picture

Authored by Stephen Moore op-ed via The Wall Street Journal,

The wealthy have tucked billions into private nonprofits... where the IRS can’t touch it.

Congress is still scrambling to find ways to pay for its tax cut, so perhaps it should pay closer attention to last month’s news that George Soros had transferred $18 billion of his fortune to a private charity that he controls. There it will be sheltered from the Internal Revenue Service forever. This may be the single biggest tax dodge in U.S. history, yet no one on the right or left seems to have raised an eyebrow.

True tax reform is predicated on the principle that all income should be taxed at a low rate once, and only once. But much of the wealth that Mr. Soros spent years moving into his Open Society Foundations will never be taxed. A gift of billions of dollars of appreciated stock escapes any capital gains tax, and the estate tax as well. So Mr. Soros can donate appreciated stock that Open Society Foundations can liquidate without the government ever taking a cut.

There’s more. When a person donates untaxed, appreciated assets to a private foundation, he may also deduct up to 20% of its market value on his personal return, carrying forward this deduction for five years. This double write-off may be the sweetest deal in the tax code.

The donors also can retain control of the money within the private foundation for years or even decades before it is disbursed. Since the foundation can employ family members at six-figure salaries for life to “administer” it, the umbilical cord to the donor never has to be cut.

Congress should stop ignoring this tax-avoidance scheme. The super rich have already poured hundreds of billions into private foundations, but the figure could soon be in the trillions. Mark Zuckerberg has pledged to give away 99% of his Facebook shares, currently estimated to be worth somewhere around $70 billion, and much of it will go to a foundation his family controls. Bill Gates and Warren Buffett have each put roughly $30 billion tax-free into the Bill and Melinda Gates Foundation. This has left the foundation so flush that it spent $500 million on a 12-acre, 900,000-square-foot office complex in Seattle for its 1,500 employees. This is philanthropy?

I don’t question these billionaires’ right to do with their money as they wish. I’m simply arguing that Congress shouldn’t let the rich and politically powerful use private foundations to escape taxation. This loophole is one reason for an anomaly in our otherwise progressive tax code: The top 1% of earners pay an effective tax rate of 23%, but the top 0.001% pay only 18%.

Mr. Buffett has sanctimoniously denounced the fact that he pays a lower effective tax rate than his secretary. His suggestion is that Congress raise taxes on capital gains. But even if the tax rates were lifted, say, to 50%, Mr. Buffett still wouldn’t have to pay it on the tens of billions of dollars he puts into private foundations, and he would still be able to deduct a fifth of that contribution on future tax returns.

This tax favoritism might be defensible to promote genuine philanthropic activities.

Many billionaires, such as the Gateses and David Koch, have heroically donated to fight cancer and malaria or provide relief to hurricane and earthquake victims.

But others, including Mr. Soros and Michael Bloomberg, have turned private foundations into massive de facto lobbying operations for bigger government and liberal causes like higher minimum wages, gun control, universal health care, and a carbon tax. Mr. Soros’s $18 billion gift alone is the equivalent of maybe 100 Heritage Foundations. This kind of weaponized philanthropy has the potential to undermine the American free enterprise system.

Yes, billions go to groups on the right, too, from Mr. Koch and others. But regardless of ideology, why shouldn’t tax be collected before the money is given away? What message does it send that the Republican tax-reform bills retain this trillion-dollar loophole for the super rich, at the same time as the House plan eliminates the adoption credit for middle-class families who want to help children?

One simple solution would be for Congress to apply the capital-gains tax to assets of more than $1 million before they are transferred to a charity. This could even finance cutting the capital-gains rate to 15% for everyone.

Alternatively (or perhaps in addition) Congress could cap deductions for any given household to $250,000 a year. Under this kind of plan, Mr. Soros would be able to write off only a tiny fraction of his multi-billion dollar gift.

This isn’t an argument against charity. But selfless and effective giving is not motivated by tax breaks. Two-thirds of Americans don’t itemize their deductions, yet millions give until it hurts. In the 1980s, individual donations to charities surged, even as the top tax rate—and thus the maximum value of the write-off—fell from 70% to 28%.

The question is whether a tax code that encourages dynastic family foundations is good for America. If Congress stopped letting billionaires pour money tax free into the foundation-industrial complex, it would go a long way toward lowering rates and making the tax code fairer for everyone. This would help the economy grow faster, which is the best way to help those in need.

 

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K_BX's picture

At least it is for good cause......

 

 

 

 

 

 

NOOOOT

YUNOSELL's picture

and what an F'ing hypocrite to say that the super rich like him should not get a tax cut. He only wanted to stop the tax cut so it would hurt his competition since he'd already figured out an effective way to evade

Never said this about anyone before, but I can't wait to see this monster pass on to the next world, preferably the deepest rung in Hell

Scar Bro's picture

Now now, don't go blaming him cause just cause he's a jew. Many non-jews screw the tax system too you know. I don't see you complaining about them. Look, anti-semite!! Right there by your shoe... it's gone now.

CuttingEdge's picture

Civil Asset Forfeit the criminal's stash.

And pay for the fucking wall with it.

Oh - and deport the cunt to Hungary before he drops dead.

 

DownWithYogaPants's picture

Hungary is not that hungry.  Hungary says you can keep her.  Hungary says she can go any where she likes but she can not come here.

NiggaPleeze's picture

 

The global oligarchs/Bolsheviks have been using "foundations" to escape taxes for decades.  This is what ueber-hypocrite Warring Buffoon did to avoid any taxes on his unearned billions, while complaining that Trump should pay more.

All of the oligarchs are utter shit and run the show.  Until a real revolution happens (not the fake ones, which they virtually all are, used by one group of oligarchs at the expense of another) this will always be the case.  And the amount of distance between the mentailty of the herd to day and what is needed to have a true liberating revolution:  about 100 trillion light years.

NiggaPleeze's picture

 

And as the (forged[1]) Protocols state:  the anti-monarchic revolutions of the late 18th and 19th centuries (incl. the US "war of independence" from GB) were also just that:  the "Jewish" oligarchs getting a conquest over the "blue blood" oligarchs. 

Man has since "civilization" always been the mental slave of one oligarchic group or another.  It is part of the abstraction of politics in large, dispersed groups that allows certain groups to operate in secret.  In a village-tribe, everyone can see who has the power.  Not so in the "US", this fact is extremely well hidden.  As it has always been since "civilization".  Was it the King who was all-powerful, or the bankers?  When did it change?  There is some mention of this riddle in the Protocols ;).

 

[1] It has always fascinated me why Protocols detractors refer to the Protocols as "forged", instead of what one would think is the proper form, "fiction" (like the Holohoax).  What if it's:  forged gives to many the connotation of something false, like a false signature; but there is another meaning of "forged", which is simply, being a copy, i.e., not the original.  Because in all things the original is worth more money.  So is this what is meant by the "forged" claim?  That it is not the original, but a copy of the original?  Or is that stranger than fiction?

philipat's picture

I actually don't have a problem with this (waiting for the downvotes!) providing that the Foundation is actually investing in worthwhile causes which benefit ordinary people (Not Antifa etc.) AND that the Foundation has truly independent Trustees whose remuneration and expenses are strictly controlled. It is these 2 aspects that need reform and suervision. They should also be subject to rigorous Tax Audits to ensure no abuse. The Clinton Foundation in particular needs to be subjected to a full Forensic tax audit. The longer it is delayed the more records can be "wiped", like with a cloth or something.

Where the fuck is Sessions?

NiggaPleeze's picture

Why should it be tax free?  It is money the oligarchs use to advance their agenda - basically their NGO arm.  They fund the media (NPR, more), "arts", social engineering via textbooks, university endowments (whom they then quote in their media as "authority"), think tanks, "black ops", etc.  The "deep state", if you will.  And since this deep state is the one with th real power, it is exempt from taxes, I get it. 

What I don't get is how you don't have a problem with it.  Yeah sure you couch it in some abstract flowery terms that exist in imagination, all these billionaire "do-gooders" (hint:  you do not get to be an oligarch by being a "do-gooder", with the possible exception of Henry Ford ;), but his Ford Foundation has been utterly co-opted), but I am concerned about the real world and how things are really done.

Hoffman Lenz's picture

What the fuck are you talking about?
You're the first to mention jews.
Now that's some psychology, right there. At the top of the comments, too.
How accidental!

NiggaPleeze's picture

 

Errh, that was what's called "sarcasm".  Like:  when Jews are criticized many of their co-tribalists and agents yell "anti-Semite" and try to silence the voice (the term for this type of behavior, particularly when systematically successful, which it is, is: "oppression").  But if you make such a claim about a White nobody will ever yell "anti-White", or if they did, they would be denounced as a "White supremacist".  Capiche?

Hoffman Lenz's picture

Cheers Dude, sorry you had to explain.
I broke my own rule: Never post after drinking beer or vodka.
This time it was Special Brew (9% abv) :D

Cynicles II's picture

The only Cash Cow CONgress hurts are the American citizenry.

brianshell's picture

Charles Ortel has been investigating the Clinton Foundations and can be heard on Jason Goodman's Crowdsource the Truth.

When Charles is finished with the Clintons, he should move on Soros, an even more important target.

By the way, he reads ZH.

He did not know of such an entity as a "private charity", only a private foundation. Charities are public and act as if they are government entities.

FoggyWorld's picture

I believe Charles Ortel has his own website.

pathosattrition's picture

Suddenly, I'm feeling incredibly charitable...

Uncertain T's picture

Keep in mind that the Foundation is generally required to 'give away' 5% per year to non-profit causes.  Would you rather the funds get paid in taxes and disbursed by the gov't?

 

As a Trustee for a Foundation myself, I can tell you we go to great lengths to be certain that the money is used wisely.  We try to work with smaller grantees where we can have the most impact.

 

... And by the way, contrary to the article, a family member cannot be employed by the foundation with a six-figure salary. A family member is a 'disqualified individual' who can only accept compensation under very specific circumstances. 

All in all most foundations are a good thing. (Soros notwithstanding)

DownWithYogaPants's picture

Sorry but I have to disagree.  All it takes is the big 10 foundations and you have quite a bit of mayhem occuring.  

I am thinking Rockefeller Foundation.  Heck McArthur foundation probably started off ok but you know the type these foundations attract.  Bunch of clingons and lefties.

brianshell's picture

Please contact Charles Ortel.

He said that The Clintons amended their Foundation to require family members on the board.

Class A.

NuYawkFrankie's picture

 While SOROS sponsors terrorism tax-free.... YOU get to pick up the tab.

EVER feel like you've been "had"?

 

Troll Magnet's picture

We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.
We must support Israel.

NuYawkFrankie's picture

Don’t worry, we already are...

to the tune of $30+ BILLION (and THAT’s just the TIP of what we know about!) in AID every year, Multi-$TRILLION Middle-East Wars For Israel… and, as if that ain’t enuf, a potential Nuclear Conflagration with Russia via ISISrael’s satanic/psychotic fixation on annihilating its neighbors - with Lebanon & Iran now in the cross-hairs

TruthHammer's picture

@NuYawkFrankie

Those middle-east wars are about international finance, the petro-dollar, and remaining the sole superpower.  Even if Israel didnt exist, it wouldnt change a thing.

It's oil and money, and control of the world's resources, nothing more, nothing less.

Also, better US hegemony than Russian or Chinese hegemony.

JRobby's picture

His return should fly through without review

TruthHammer's picture

Israel is but a drop in the bucket, wake up from your millenial slumber and read a book.

the cork's picture

.

Yo bris-bait - sounds like you watched all the propaganda epics the joos spawned in the 50's and 60's.

The Robe, Ben Hur, Exodus King of Kings, Solomon and Sheba, Esther and the King, Barabbas, the Prodigal, The Big Fisherman, Sodom and Gomorrah,...etc. etc, etc.

Now that we're properly  "groomed" -

Any more questions about our foreign policy?

DavidFL's picture

Welcome to how the world works. My only regret is that I dont have millions / billions to set up my own ittle tax dodge!!

KekistanisUnite's picture

Shocked! I repeat SHOCKED!!!! *NOT*

all-priced-in's picture

Can't get blood out of a Soros.

 

 

 

 

Scuba Steve's picture

Possibly,

But a .308 shell would allow you to open things up and know for sure.

just sayin.

Thebighouse's picture

I am a tax donkey.

There should never be a "private"foundation   

Corrupt corrupt corrrrrrrrrupt

Tax law has not been written yet, correct?

It should be so simple.  

Collect income, pay a tax.  Write offs are BS.

Make a billion,  then pay your share.

Make a buck...pay YOUR share.

max_is_leering's picture

Soros in Hungarian means "swine"... oink, oink bitchez

Dilluminati's picture

This parasitic ghoul needs to be stopped, I mean I'd like to see him hauled off to a motel, hung upside down and watch the money fall out of his pocket instead of him buying off corrupt politicians around the globe.

JailBanksters's picture

He's a Jew, so he hasn't done anything wrong

 

Anteater's picture

Gramm-Leach-Bliley Bankster Coup of 1999

Cheney-Rumsfeld Pentagon Coup of 2001

Bossie -Brown Citizens United v FEC Coup of 2010

Now go back to sleep.

"You have no choice. You are OWNED. They OWN you."

"You will have the best healthcare...the BEST! And

it will be so cheap, and so easy!" Lu-lu-lu-lu-lu-lu-lu'''

 

11b40's picture

Yes, those are the big 3 that flushed America down the toilet. There are a few more, like the legislation that spawned the derivatives explosion, and that which prevents government from negotiating prices with drug companies, but hose are the biggies.

opport.knocks's picture

Russia - flat income tax 13% - Donnie and Mnuchin - you listening?

Before WW1 federal government expenditures were mostly funded by tariffs on imports. MAGA

Stan Smith's picture

   I read this WSJ article,  and to me the 'argument' has some validity.    I can swing either way with this,  but one thing it is doing, at least in my eyes,  is sorta exposing the whole "not-for-profit" thing as a bit (or well more than a bit) of a charade.

   My guess is taxing gains or before it goes into these has some merit.   I cant envisioning it happening at all though.    To many many powerful people making decisions -- on both sides -- have far to much to gain from it.

Paul Morphy's picture

How can this be a tax dodge, when the Tax Code permits this sort of tax avoidance?

Tax avoidance is legal. It may not be moral/ethical but it is legal.

Tax evasion is illegal.

 

Change the tax code to make this sort of activity illegal.

VW Nerd's picture

Go to your local yacht club or air strip.  Check out the lear jets and super yachts.  Research their title and discover they are all "owned" by tax free foundations and not for profit trusts and corporations.

junction's picture

Are you sure of that?  I would say it is more likely that the Gulfstream 550s and the like are owned by corporations and leased back to businesses.  The personal Gulfstream jet Comey flew as FBI director was operated by a leasing entity that then provided its services to the federal government.  Jack Welch when he was head of GE and after he retired always had free access to a private jet that GE provided.  Maybe things have changed now, but for years GE would send the IRS a 50,000 page tax return where it claimed tax credits.  Hillary Clinton always travels for free on charter jets, claiming business travel.  The end result is that if you are a CEO of a corporation, you don't have to wait in line at an airport to be groped or be irradiated by cancer-causing security point scanners.  It's a great life, huh?

VWAndy's picture

 Still thinkin you have a government?  It looks more like the government has you. jus sayin

hooligan2009's picture

these "foundations" are a simple tax evasion device. How can you tell? SImple, just assume EVERYONE dd the same thing.

How much incnome or capital gains tax would be collected.

Double O, Triple O, Fuck all blank.

Maybe the IRS would take note at that time. Certainly the politicians would recognize that they would hvae NO MONEY to gove to their friends and family. Can't have that now can we?

Incidentally, if you want to set up a foundation and pay no tax, just take these 3 simple steps (don't worry, lying, cheating and stealing while you complete them is how Soros, Gates and Buffett evade their taxes, gloat about it and then do a bunch of virtue signalling):

  1. Plan essential elements

    Start by outlining the foundation's goals. Determine how it is to be funded initially and supported on an on-going basis. Determine who is to sit on the board, how much control you intend to maintain over the funds and tax ramifications.

  2. Incorporate the organization

    Choose whether the foundation works best as a corporation or trust. Foundations are governed under state laws, so this decision may depend upon the rules and regulations of your state. To incorporate, it is required that the donor receive formal education on the legal rules governing foundations, which vary by state.

  3. Apply for tax-exempt status

    Submit IRS form 1023, "Application for Recognition of Exemption Under Section 501 (C) of the Internal Revenue Code." The IRS uses the information provided to determine if your organization should be granted status as a 501(C)(3) organization. This status gives your organization recognition as a tax-exempt charity. It also entitles your organization to certain tax deductions.

JRobby's picture

The approval time frame can be very short if you pay the right parties..........

San Pedro's picture

Soros financial empire has become a Weapon Of Mass Cultural Destruction. No wonder he has been banned from Russia and many European Countries. 

MrBoompi's picture

The only reason the oligarchs allowed the federal income tax act to be passed was because they had already set up the tax shelters for themselves via their foundations.  This scheme is the biggest tax dodge of all, and for this reason nobody will be allowed to investigate, change, or eliminate abuse in "charitable" foundations.  

JailBanksters's picture

A Jews gotta do what jews gotta do

Harry Vederchi's picture

There should be a 100% tax on being George Soros.