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Good For Thee, But Not For Me?

- January 13, 2016

​Clinton's Tax Plan Conveniently Keeps Loophole For Her New York Mansion

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TOP TAKEAWAYS

  • Yesterday, Hillary Clinton called for raising the estate tax to 45%, applying it to all estates worth more than $3.5 million, and closing "loopholes."
  • However, Clinton's new estate tax plan did not address the loophole her family is exploiting to save themselves hundreds of thousands of dollars in taxes.

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HILLARY CLINTON'S NEW PLAN FOR THE ESTATE TAX TO CLOSE "LOOPHOLES" DOESN'T ADDRESS THE ONE HER FAMILY IS EXPLOITING

Clinton's Plan Would Raise The Rate To 45% And Make Any Estates Over $3.5 Million Taxable

On Tuesday, Hillary Clinton Called For Both Raising The Estate Tax And Making More Estates Subject To That Tax. "Clinton on Tuesday proposed making more estates taxable -- those worth more than $3.5 million per person or $7 million per couple. She also wants to raise the rate to 45 percent. The increased tax would apply to four out of every 1,000 estates in the country and raise $200 billion over 10 years, according to a Clinton campaign aide who asked not to be named." (Lynnley Browning, "Clinton's Estate-Tax Plan Doesn't Address Her Own Tax Planning," Bloomberg , 1/13/16)

"Bill And Hillary Clinton Have Long Supported An Estate Tax To Prevent The U.S. From Being Dominated By Inherited Wealth. That Doesn't Mean They Want To Pay It." (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

"Without The Estate Tax, Hillary Clinton Said, The Country Could Become 'Dominated By Inherited Wealth.'" "'The estate tax has been historically part of our very fundamental belief that we should have a meritocracy,' Hillary Clinton said at a December 2007 appearance with billionaire investor Warren Buffett, who supports estate taxes and is using charitable donations to reduce his eventual bill. Without the estate tax, Hillary Clinton said, the country could become 'dominated by inherited wealth.'" (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

But Clinton's Plan Fails To Address The Estate Tax Loophole Her Family Is Exploiting

The Clintons, Who Are In Top .01 Percent Of Income Earners, Have A Minimum Net Worth Of $11 Million. "The minimum value of the Clintons' financial assets is $11 million, according to Hillary Clinton's most recent campaign disclosure, which requires reporting within broad ranges of value. The couple has earned at least $30 million since January 2014, according to the disclosure. That income places them among the top .01 percent of American taxpayers, based on Internal Revenue Service data. Campaign disclosures show that the Clintons also own life insurance trusts, which can also reduce estate-tax bills." (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

Clinton's Call To Raise The Estate Tax And Close Loopholes Failed To Address Techniques Used By The Clintons To Shield Their Own Estate From The Estate Tax. "Democratic presidential candidate Hillary Clinton's call Tuesday to increase taxes on the wealthy and close 'loopholes' didn't address the candidate's own moves to shield at least part of the value of her New York home from the estate tax." ( Lynnley Browning, "Clinton's Estate-Tax Plan Doesn't Address Her Own Tax Planning," Bloomberg , 1/13/16)

THE CLINTONS USED TAX PLANNING "BEFITTING THE TOP 1%" TO REDUCE THEIR OVERALL ESTATE TAX BURDEN

The Clintons Split Their Home Into Two Equal Trusts, A Move Which Could Save Them Hundreds Of Thousands In Estate Taxes

"To Reduce The Tax Pinch, The Clintons Are Using Financial Planning Strategies Befitting The Top 1 Percent Of U.S. Households In Wealth." (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

The Clintons Split Ownership Of Their Property Into Separate Trusts To Help Minimize Their Exposure To The Estate Tax. "According to county property records, the Clintons split their ownership of the house into separate 50 percent shares, and then placed those shares into trusts. That maneuver has multiple potential benefits, starting with the fact that any appreciation in the house's value will now happen outside the estate. Additionally, using IRS interest rates, they can assume a discounted value for the house. Splitting the property into 50 percent shares also allows a valuation discount, because a partial interest in an indivisible house isn't worth as much as a complete interest." (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

  • The Tax Advantage Could Save The Clintons Hundreds Of Thousands Of Dollars. "Among the tax advantages of such trusts is that any appreciation in the house's value can happen outside their taxable estate. The move could save the Clintons hundreds of thousands of dollars in estate taxes, said David Scott Sloan, a partner at Holland & Knight LLP in Boston. 'The goal is really be thoughtful and try to build up the nontaxable estate, and that's really what this is,' Sloan said. 'You're creating things that are going to be on the nontaxable side of the balance sheet when they die.'" (Richard Rubin, "Wealthy Clintons Use Trusts To Limit Estate Tax They Back," Bloomberg, 1/17/14)

On September 1, 2011, Bill Clinton Transferred His Share Of The Deed To The Clintons' NY Mansion Into "2010 Trust A." (Chappaqua WJC to Trust, Westchester County Recorder, 9/1/11)

On September 1, 2011, Hillary Clinton Transferred Her Share Of The Deed To The Clintons' NY Mansion Into "2010 Trust B." (Chappaqua HRC to Trust, Westchester County Recorder, 9/1/11)


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