Friday, October 22, 2021

Philanthropy - Keeping it in the family


Nike founder and billionaire, Phil Knight, is worth an estimated $58 billion. Knight has seen his fortunes almost double during the pandemic. The value of Knight's assets increased from $29.5 billion in March 2020 to $57.9 billion on October 15, 2021, an increase of 96.4 percent.

While Knight has declared he intends to give most of his wealth to charity, the Bloomberg expose documents that for years, Knight has "been using a range of legal techniques to ensure his heirs keep control of most of his assets and profit from them in the process, quietly transferring vast piles of money in a textbook example of how the rich avoid taxes."

Helen Flannery and Chuck Collins of the Institute for Policy Studies point out in this blog post how Knight's philanthropic activity mostly takes the form of donations to his own private family foundation of highly appreciated Nike stock. Billionaires like Phil Knight are the largest beneficiaries of the tax reductions provided in our tax code. As we've documented, for every dollar a billionaire like Phil Knight gives to charity, taxpayers chip in 74 cents in lost tax revenue. Yet for billionaires like Knight, charitable giving becomes an extension of their tax reduction planning and power and influence.

IPS associate fellow Bob Lord, in an article is "The Hidden Ways the Ultrarich Pass Wealth to Their Heirs Tax Free."  While Knight has declared he intends to give most of his wealth to charity, the using public SEC filings and other publicly available data, Lord “reverse engineered” an analysis of Knight’s tax planning techniques.  Knight has already transferred about $10 billion in wealth free of estate and gift tax (avoiding roughly $3.6 billion in tax) and could avoid estate tax on up to an additional $9 billion if he died today.

"Phil Knight's estate plan demonstrates beyond doubt that loopholes in America's estate and gift tax have rendered it useless." 

Knight created a series of Granter Retained Annuity Trusts (GRATs), a popular tax avoidance mechanism deployed by many of the super-wealthy.

GRATs "have the basic goal of making wealth look much smaller than it really is.  It's possible to have your gifts appear to be worth almost nothing, even as you move millions or even billions of dollars tax-free."  They "construct a legal fiction that this is a normal transaction and not a taxable gift to the trust."

Opinion | Phil Knight: A Case Study in to How Dodge Over $3.6 Billion in Taxes | Chuck Collins (

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