Our rights do not originate with government, but they are to be "secured" by government.
Formerly: Libertarian Party of Citrus county

Wednesday, October 8, 2014

Gay Marriage – Greatest Tax Dodge Ever Invented

By Tom Rhodes, 10/8/2014

Forget the religious, moral, and cultural arguments for/against gay marriage. It has got to be the best thing to ever happen to cheating the government out of taxes ever conceived. Once the leftists amoral progressives get their way and polygamy is once again legal, the rich will be able to sell off assets at great profit and not pay any taxes.

Think about it. Say a modestly well off guy buys some land and builds a house that cost him $100K 20 years ago, today he can sell that house for $500K, but if he does he has to pay taxes on the $400K profit of the sale. At 15% that’s a $60,000 loss. Make a deal with the buyer, we’ll call that deal a prenup, so instead of a “buyer” we have a “spouse.” They get married, create a joint savings account, and put the spouse on the deed. Then divorce. As part of the of the divorce agreement, in accordance with the prenup, the guy “loses” his house to the spouse, but gets the $400K from their “joint” savings account. Presto change property sold money exchanged and the government gets zero tax dollars. Marriage license and divorce filing fees under $1K so for doing paperwork, the seller realized $59K more in the bank and the government didn’t get $60K in taxes.

Now expand that to a business owner, with a $500Million dollar sports franchise he bought for $800K 10 years ago, and you can see how hundreds of millions of dollars in profits and capital gains can be transferred with zero tax liability. Guy marries another guy, and now they are joint owners of the Charlotte Hornets, new spouse catches him in bed with of all things a “woman” messy public divorce, and the Hornets have a new owner, but because of prenup, half a Billion dollars in their “joint” account goes to the former owner. Imagine an employee given “shares” in the company, no taxes get paid until they are sold and gains are realized. Now that employee gets married, the marriage “fails” and they get a divorce, the employee has a “bad lawyer” and gets taken, and all the shares go to the spouse. The spouse, now ex, has not realized payment from the corporation and can sell the shares tax free as the spouse realized zero capital gains. You get the picture.

The unintended consequence to gay marriage is the rich get another tax dodge, this one bigger than ever. Once the logical extension of gay marriage is realized, legalized polygamy, it’s going to get real interesting. The possibilities for avoiding taxes and moving money will be endless. Unless of course you want to create laws that force a divorced woman to pay taxes on the assets she is already the rightful owner.

Through the use of legally enforceable prenuptial agreements and divorces massive amounts of profits will legally be transferred and generated without any tax liability. Some might say that using marriage to avoid taxes is immoral, but then whose definition of moral are you using, it’s not like gay marriage by thousands of years of tradition and the standard of virtually every religion is moral.

Marriage, has always been used as a political and monetary tool, arranged marriages have brought nations together. Liberal divorce laws along with gay marriage is going to bring a slew of political and monetary schemes never intended. Unlike traditional marriage which always, even in arranged marriages, had a strong moral component; the unintended consequence of legalizing gay marriage with already liberal divorce laws are going to be manifestly greater than anybody has considered. You think inversion is a bad of US tax laws, wait until you see what unintended consequences manifest with gay marriage.

No comments:

Post a Comment