Above: Trump’s millionaire cabinet from Bloomberg News.
Trump’s millionaire cabinet nominees could avoid paying taxes on millions of dollars worth of stock.
The wealth of Donald Trump’s proposed cabinet is unprecedented. According to the Boston Globe, Trump and his top nominees are together worth over $13 billion.
With that unprecedented wealth comes unprecedented potential for conflicts of interest.
Before ExxonMobil CEO Rex Tillerson, billionaire Republican donor Betsy DeVos, and the rest of
As an example, let’s look at the case of Tillerson, Trump’s pick for secretary of state.
Tillerson currently plans to liquidate $180 million worth of ExxonMobil stock — about $100 million of which he can sell today, according to my own calculations. If you or I sold that much stock, we’d pay long-term capital gains taxes — a little under 20 percent — on whatever profits we made.
I don’t know what Tillerson paid for his shares, but it surely wasn’t zero. Let’s say he paid $70 million. That would make his profit $30 million, leaving a tax bill of about $6 million.
But due to this special rule for rich people who are appointed to government positions, he may not have to pay that $6 million. Certainly not now, and possibly not ever.
Unlike you or me, Tillerson could take the $100 million and invest it in a mutual fund that pays him about $3 million per year in dividends. If he stays in that fund for the rest of his life, neither he nor his heirs nor anyone else will ever need to pay any tax on his $30 million in profit.
Because of the “stepped up basis” loophole, which allows assets to be revalued when they’re inherited, his heirs would only pay taxes on any gains in value above what was passed down to them. This means that $30 million of capital gains would never be taxed.
This has never been a trivial issue, but the extreme wealth of Trump’s cabinet nominees makes this special rule even more troubling. Their total wealth is larger than the combined wealth of a third of American households.
These individuals are already incredibly wealthy, and while giving up their private sector positions is clearly a sacrifice, it’s a voluntary one. Public service is an incredible honor that gives them immense power and influence. Should it really allow them to avoid paying tens if not hundreds of millions of dollars in taxes?
We as a nation need to decide whether some of the most powerful people in the country should have access to their own special tax laws.