Famous Tax Loopholes
Let’s explore all the tax loopholes that have allowed the rich and the famous to legally benefit. The people who tend to take advantage of these loopholes are those who contribute generously to political campaigns. So while we are all working and struggling to keep up with constant taxation, the rich have found a way to get richer!
The Jackie O. Trust provides those who are already rich, to hold billions in untaxed dollars. It protects assets from being taxed due to the Charitable Lead Annuity Trusts. What this means, is appreciated assets are donated to charity and then eventually generates income and causes tax deductions due to contributions. This can be done one of two ways. The first is Inter Vivos, which is funded and operational during a grantor’s life. The next is testamentary, which is funded and operational after a grantor’s death.
Another loophole is referred to as The Gitlitz Loophole. What happens here is losses are claimed on S corporations. This loophole was shutdown in 2002, but individuals like President Trump were able to benefit from it while it lasted. To clarify, owners of businesses could claim investment losses with no cap on amount claimable. Loss rollover could then eventually rid S corp owners of tax liabilities for years to come.
Country singers and songwriters are also finding a way around the system with the Sheryl Crow Sellout Loophole. This pertains to those living in states such as: Kentucky, Tennessee, and Texas. Those who fit the requirements can avoid paying medicare and social security taxes. It gets its name because Sheryl Crow has been found to be one of the artists that benefited most from it. Not only were the beneficiaries exempt from paying the mentioned taxes, but they could also sell their publishing rights at lower rates than others.
Another loophole, named after the brilliant Mark Zuckerberg, takes advantage of the congressional loophole in the tax code. This happens when companies divvy up shares before going public. Money can be deducted for company costs without even spending money.
Lastly we have The Sports Team Shuffle. This occurs when professional sports team managers ask for the taxpayers to provide money for stadiums to be built in their hometowns. The taxpayers give their money, but then a better offer is made and the stadium is moved to that city, while still receiving the money from the previous city! One of the most recent examples of this is the St. Louis Rams moving to Los Angeles. The team is not obligated to stay in their home cities, so why not go where they are going to financially benefit the most?
Just when you thought the rich could not get any richer, they have found a way to legally take advantage of the taxpayers. Tax loopholes are not commonly used because they are not widely known. However, those who have discovered them and know how to use them are benefiting in huge ways.
