Economist Robert Reich summed up the sale of Donald Sterling’s Los Angeles Clippers this way on his Facebook page:
Donald Sterling will be grousing about his sale of the L.A. Clippers to Steve Ballmer for $2 billion all the way to the bank. According to The New York Times, Sterling bought the team for $12.5 million in 1981.
That's a 15,900 percent gain over those 33 years, for an annual return of 16.6% -- not even counting his share of profits earned during those years. He and his estranged wife will probably avoid paying taxes on this windfall through a trust that holds the money while they take out their living expenses.
When they die, their heirs will continue to avoid taxes on these gains by using a rule in the tax code that raises the value of all assets to the market price at the time of the benefactors’ death -- thereby eliminating all taxable gains (the so-called “stepped-up basis at death” rule).
Ballmer will surely use the same techniques to avoid paying capital gains taxes on most of his Microsoft stock, which already has appreciated 55,700 percent since Microsoft’s public offering in 1986.
When it comes time for this country to get serious about tax reform, these and other billionaire loop-holes need to be shut.
The fanfare over Sterling’s racist rants prompted the NBA to suddenly get tough on bigotry—or so it appeared, but with this windfall, punishment never looked so darn good.
Sterling is in his twilight years, but as Reich pointed out, his heirs will certainly be enjoying the fruits of the sale for their and their children's, children’s, children’s lifetimes.
So what have we learned about this scolding of Sterling?
First, forcing him to sell his team is not punishment. Pulling in that kind of profit is a stunning deal, not banishment to the poorhouse to lick his wounds after public disgrace.
Second, the push to make him sell his team was hypocritical and disingenuous to begin with. If the NBA was truly intolerant of racism, they would have cut ties with Sterling decades ago when he was not only sued by the feds for housing discrimination, but was accused of treating his team like a plantation.
Players continued to play for him despite those accusations. When the tapes of his crazed ranting were released, the team turned their jerseys inside out as a symbol of protest. What would have been more effective and believable was a complete boycott.
Third, our tax code is in need of an urgent overhaul. Very wealthy folks like Sterling hide behind loopholes to hold onto most of their assets, while our politicians in Washington bypass tas reform to obsess over nonsensical partisan ploys like endless attempted repeals of Obamacare and Benghazi hearings.
Revamping the tax system is not on their agenda, and understandably so. Many of our legislators are part of the 1 percent crowd taking advantage of the “death tax” loophole themselves, and their campaign donors who funnel millions into their re-election are wealthy as well. Who wants to bite the hand that feeds them?
Sheldon Adelson is said to be worth more than $30 billion and is a prime example of an expert working those tax loopholes. The 80-year-old casino magnate wants to keep as much of his money as possible and, even if he may not have many more moons to go, is making sure his heirs get his gazillion-dollar fortune.
According to Bloomberg News, accidental tax breaks have saved the wealthiest Americans $100 billion since 2000. Adelson, like many other millionaires and billionaires, thinks paying the 40 percent estate tax is too much so he shuffles his assets into trusts.
Adelson has reportedly managed to give his heirs $ 7.9 billion while skimming $2.8 billion in estate or gift taxes since 2010. Former Republican presidential candidate Mitt Romney is also quite familiar with this ploy. http://www.allvoices.com/contributed-news/17188838-did-the-nba-punish-sterling-or-reward-him
No comments:
Post a Comment