Evan Osnos exposes the many ways in which the ultra-wealthy shield their income from taxes even when they die, using loopholes that are not available to ordinary people. They do this while claiming to be philanthropists by putting their names on things, which are also forms of tax avoidance. But one the main ways they avoid taxes is by means of creating elaborate trusts that ensure that their children and their children pay little or no taxes on their inheritances when they die. These trust fund babies continue their tax avoidance schemes. The consequences are apparent.

And yet, in recent times, the fortunes of many prominent American clans have soared…. In 1978, the top 0.1 per cent of Americans owned about seven per cent of the nation’s wealth; today, according to the World Inequality Database, it owns eighteen per cent.

A century ago, American law handled the rare pleasure of a giant inheritance with suspicion. Instead of allowing money to cascade through generations, like a champagne tower, we siphoned off some of the flow through taxes on estates, gifts, and capital gains. As the Supreme Court Justice Oliver Wendell Holmes wrote in 1927, “Taxes are what we pay for civilized society.” But, since the late seventies, American politics has taken a more accommodating approach to dynastic fortunes—slashing rates, widening exemptions, and permitting a vast range of esoteric loopholes for wealthy taxpayers. According to Emmanuel Saez and Gabriel Zucman, economists at the University of California, Berkeley, the average tax rate on the top 0.01 per cent has fallen by more than half, to about thirty per cent, while rates for the bottom ninety per cent have climbed slightly, to an average of twenty-five per cent.

That lucrative maneuvering is the realm of specialized attorneys, accountants, and money managers, many of whom work for family offices: in-house financial teams that typically include a dozen or so full-time attendants… They tend to have no public presence—Gordon Getty’s family office is known, inconspicuously, as Vallejo Investments—but by some estimates they control about six trillion dollars in assets, a larger sum than is managed by all the world’s hedge funds.

Osnos says that the wealthy have in-house teams of lawyers and accountants whose job it is to find ways to avoid taxes. Since these are closed shop operations, few details get out about how they operate. But recently Marlena Sonn, one of these wealth advisors who was working with the heirs of J. Paul Getty, had a falling out with her clients Sarah and Kendalle Getty.

Gordon cut his daughters in on the Getty fortune using a trust fund—in essence, an imaginary legal lockbox that can shelter assets from taxes, creditors, and ex-spouses. Though trusts have been around since the Middle Ages, they have recently experienced a surge of innovation and popularity, as wealthy people pursue ever stronger ways to avoid publicity and taxes. The trust that Gordon created was named Pleiades, for a set of sisters in Greek myth who had dalliances with Olympian gods and were immortalized as stars in the night sky. It was arranged to grow until Gordon’s death, at which time the sisters would gain control of a pile of assets that Sonn estimated would be worth about a billion dollars.

Sarah and Kendalle Getty hired Sonn to find ways to assuage their supposedly progressive consciences but they ended up suing each other, and the legal filings shed light on the elaborate measures these people will resort to. For example, in the case of the Gettys, they went to extraordinary lengths to avoid paying California state taxes, such as setting up an office in Reno in the low-tax state of Nevada where they claimed the operated their trust even though they never went there.

To enjoy the financial advantages of Nevada, the Gettys did not have to move there. The Pleiades Trust was officially administered from a small office complex a block from the Reno-Tahoe airport: Airport Gardens, which shared a parking lot with a private investigator and a hobby shop selling electric trains. In all the years Sonn worked with Kendalle and Sarah, they had never, as far as she was aware, set foot in Airport Gardens.

One particular ritual was sacrosanct: four times a year, to maintain the claim that their trust was not run from California, they boarded jets to some locale beyond the state border, before casting their official votes on investment decisions. “It would be a different place every quarter,” Sonn said. “New York, Seattle. Once a year, it would be in Nevada, usually in Las Vegas, because none of the family members wanted to go to Reno.” Buried in the details of California law was a statute that said that, as long as they could make the case that they never did the “major portion” of their business in California, they might each be able to dodge tens of millions of dollars in taxes on the inheritance.

Another way the rich avoid taxes in ways that ordinary people cannot is to take their income in the form of loans, which are not taxable.

The simplest way to avoid income taxes is to avoid “income.” If you run a company, alert the press that your salary is a dollar a year; then, for walking-around money, summon your banker to provide a “portfolio loan,” which uses your stock as collateral. Because it’s a loan, you’ll owe no taxes on the cash. Better yet, if you cling to your winning stocks until you die, the moment that your soul departs your body it will take your capital-gains obligations with it. Whatever taxes you would have had to pay on the rising value of the stock vanish into a loophole known as the “stepped-up basis”—or, as admirers call it, the “angel of death.”

Osnos then proceeds to address the question of why people who have far money than they will ever need go to such lengths to avoid giving any of it up in taxes.

What motivates those who already have so much to strategize so hard to have a little more? Greed is not always about money for money’s sake. For some, it’s power. (“The prize of the general is not a bigger tent but command,” Oliver Wendell Holmes said.) For others, cheating on your taxes is a nihilistic triumph. (“That makes me smart.”) For more than a few, it’s about fear. Luke Weil, an heir to a gambling-industry fortune, once told a documentarian that the prospect of losing his inheritance haunted him like the threat of “losing a parent or a sibling.”

The deepest motive may be even more primal, an innate appetite for status. “If you measure the blood levels of the chimp on top of the hierarchy, they tend to have high serotonin and testosterone levels, which are mood-enhancing,” Harrington, the sociologist, said. Putting that in human terms, she continued, “If you don’t preserve the wealth enough so that the intermarriage and education and status-maintenance activities continue, then you’re also letting the institution crumble.” Perpetuity, after all, is priceless. “The fortune is the monument you build to yourself,” she said.

Osnos quotes an adage that says that the arc of an American fortune goes from shirtsleeves to shirtsleeves in three generations.The Japanese version is that “The third generation ruins the house” while the Germans version goes “Acquire it, inherit it, destroy it.” In other words, succeeding inheritors of wealth tend fritter away the money that they did not earn. But thanks to these in-house teams of professional money managers, that does not seem to hold true anymore in the US at least, and so we have dynasties of very wealthy people living off the wealth created by a single ancestor.

in recent times, the fortunes of many prominent American clans have soared. Between 1983 and 2020, the net worth of the Kochs, who prospered in fossil fuels and became right-wing mega-donors, grew twenty-five-fold, from $3.9 billion to $100 billion. The Mars-family fortune, which began in the candy business, grew by a factor of thirty-six, to $94 billion. The Waltons, of Walmart, expanded their fortune forty-four-fold, to $247 billion.

What is happening in the US is the creation of a quasi-feudal society where power and wealth is held by those who obtained them through family lineage instead of ability.