The ultra-rich tend to devise imaginative ways to avoid taxes. Reports show that the world’s richest men, including Elon Musk and Mark Zuckerberg, are not alone in using strategies to lessen their tax burden.
Nvidia’s CEO Jensen Huang has a net worth of $127 billion, ranking 10th in the United States. As reported, ideally, estate taxes paid by foundations with such extravagant values should have been more than about 50 billion dollars.
But the ‘perfect’ outcome might never come to fruition as the 61-year-old founder would leave most of his fortune to family members, thereby circumventing an estimated $8 billion tax bill, the New York Times said.
How CEO of NVIDIA Skip Taxes?
As the NYT report mentioned, Huang would skip taxes, and transfer almost all the money he saved onto his family members.
There are also some well-known names on the list, like Nvidia CEO Jensen Huang — and he isn’t the only one, as it turns out, who — like the ultra-rich-assets in general — is using similar strategies to avoid taxes. Schwarzman of Blackstone, Mark Zuckerberg of Meta, and other tech titans like Google can be added to the list of people who haven’t had to pay taxes.
Trusts Established by Huang
In 2012, Huang created an irrevocable trust for 5.84 lakh shares of Nvidia, which was worth $7 million at the time. This was part of a larger scheme, known in financial circles as “I Dig It,” which the IRS initially signed off on back in 1995. This kind of trust can help avoid estate and gift taxes, protecting assets that are appreciated after they’re transferred.
In 2016, Huang and his wife, Lori, slashed their tax liability even more by creating grantor-retained annuity trusts (GRATs). Assets are transferred to beneficiaries free of estate tax as long as they are worth more than the amount paid back to the grantor. The shares in these trusts have skyrocketed since then, and now have a combined worth of over $15 billion.
By How Much Did the Ultra-Rich Escape Taxes?
The US estate tax is such rarely used tax that since the early 2000s it has contributed negligibly to federal tax revenue. If the tax had grown with the ultra-wealthy, it would have netted approximately $120 billion in 2023, according to the NYT. Instead, it produced far less, the report said.
