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Hillary Clinton recently shared a glimpse of her lavish D.C. home — dubbed “Whitehaven” – with Architectural Digest. And while I’m more of a modern design kinda guy, I have to say it’s definitely a nice pad… especially since it’s not even the Clintons’ primary residence!
Of course, seeing pictures of the lavish home also made me think about a story I originally discussed many years ago… and one that we should keep in mind as a whole new crop of politicians vie for our attention in the next presidential election cycle.
In a nutshell, lawmakers – on both sides of the aisle – are often massive hypocrites.
And in Bill and Hillary Clinton’s case, you know this because of their homes.
Not because their houses are nice or expensive or magazine-worthy or anything like that.
It’s actually what you can’t see – namely, the fact that, at least in the case of their N.Y. house, ownership was shifted into a special type of trust to avoid future estate taxes.
Here’s how Bloomberg explained it:
“The Clintons created residence trusts in 2010 and shifted ownership of their New York house into them in 2011, according to federal financial disclosures and local property records.
“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.”
Now, let me say that I have absolutely no problem with anyone using current law to maximize their own personal wealth, including legally avoiding taxes through whatever means are available.
Estate Taxes
The real problem is that the Clintons are purposely avoiding the very taxes they have always wanted to impose on everyone else.
Just listen to this quote from a speech Hillary delivered back in 2007:
“The estate tax has been historically part of our very fundamental belief that we should have a meritocracy.”
If you really believed that, wouldn’t you be okay with a bigger portion of your own wealth going back to Washington, D.C. upon your death?
Would you really employ advanced financial planning techniques to shelter many millions of dollars in real estate from the estate tax?
Especially if your child already seemed to be doing just fine with her husband, himself the son of two Congresspeople and a former Goldman Sachs banker?
Wouldn’t you figure the future utopian meritocracy would take care of everything for all the grandkids?
Therein lies the rub for me: A meritocracy is simply a place where people get rewarded because of their abilities and choices… not a place where successful people have to be wiped back down to zero once they have accomplished things.
By the way, in a pure meritocracy we would probably all be judged and placed into career paths based on standardized test results, IQs, and other “objective” measures.
Your last name wouldn’t help you get into an Ivy League school… or find a job in finance… or allow you to create your own career because of any type of inherited fame.
There would also not be affirmative action… college financial aid tied to need rather than ability… or many other things that the Clintons have supported over the years.
At any rate, the point here is simple: The Clintons, and most other politicians, like to create arbitrary lines for us… lines that they themselves happily skirt.
They say earning $250,000 a year makes someone “rich” while charging that much for a single two-hour speech…
They say anyone with several million should surrender 40% of that wealth upon death while shifting their own several-million house into a specially-designed tax shelter…
And when it comes to retirement? Don’t even get me started!
Beyond Politics…
It isn’t just politicians, either.
Warren Buffett, who was there for that Hillary Clinton speech back in 2007, is another person who adamantly supports aggressive taxes on the wealthy. Yet as far as I know, he has never written the IRS a bigger check than he has to.
So don’t worry about other people’s houses or how they define “fairness.”
Do what’s best for your own family within the letter of the law because that’s what just about everyone in Washington, D.C. does (and some go beyond the law as well).
Personally, I think the idea of an estate tax is ridiculous.
You’re taxed when you make it.
You’re taxed if you successfully invest it.
You’re taxed when you live in it.
And you’re taxed when you spend it.
So there’s simply no reason you need to be taxed one more time on whatever you have left when you die.
Wherever the money goes next, it will be used to do something else that generates more future taxes. Or, if the heirs are stupid, it will end up finding its way back into the general population very quickly anyway.
And to me, that’s a real meritocratic idea!
No more need for elaborate tax shelters or two-faced political speeches. Just let the money keep cycling through the economy naturally.
Anyone who doesn’t want to create a family dynasty can simply write a rather large check to Uncle Sam or their favorite charity any time they want to.
To a richer life,
— Nilus Mattive
Editor, The Rich Life Roadmap
The post Clinton D.C. Home and a True Meritocracy appeared first on Daily Reckoning.