Mitt Romney ‘I Dig It’ Trust Gives Heirs Triple Benefit: In January 1999, a trust set up by Mitt Romney for his children and grandchildren reaped a 1,000 percent return on the sale of shares in Internet advertising firm DoubleClick Inc. If Romney had given the cash directly, he could have owed a gift tax at a rate as high as 55 percent. He avoided gift and estate taxes by using a type of generation-skipping trust known to tax planners by the nickname: “I Dig It.”…
The Obama administration proposed cracking down on the tax benefits in February…. Romney or his trust received shares in DoubleClick eight months before the company went public in 1998. The trust sold them less than a year after the IPO…. Multimillionaires use such trusts to avoid… taxes… [by] assign[ing] a low value to assets they donate to the trust….DeLong thinks this amounts to tax fraud, although IRS doesn't prosecute this, presumably because the valuation of the asset when put in the trust is hard to determine.
Not that I'm calling Mr. Romney a cheat. It's just taking logic to an extreme. My alma mater solicits for donations of assets (or did, before the stock market and real estate tanked) as a good tax strategy.
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