The role of trusts in taxing the rich

James R Hines

Oxford Review of Economic Policy, 2023, vol. 39, issue 3, 460-477

Abstract: Trusts play important roles in the financial, estate, and tax plans of wealthy families. Evidence from US taxpayers indicates that the tax savings that they obtain from using trusts are rather modest, with one of the major tax benefits providing aggregate savings equal to just 0.05 per cent of the annual income of the top 0.01 per cent of US taxpayers. Trusts are primarily used to facilitate intergenerational and other transfers. Restrictions imposed by trusts can have the effect of preserving high levels of wealth and income, creating greater opportunities for governments to tax the rich.

Keywords: trusts; tax avoidance; estate and gift taxation; foreign trusts; perpetual trusts; grantor trusts; Crummey trusts; asset freeze (search for similar items in EconPapers)
Date: 2023
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