A well-designed and well-managed dynasty trust is an engine of economic growth and stability, protects its beneficiaries from the whims and tyrannies of corporate and government managers, and allows the freedom of critical thinking and honest conduct that is the essence of a republic. .
Dynasty trusts can take many forms, but a common characteristic is that the trust assets are accumulated and used for the benefit of the trust beneficiaries free of inheritance taxes and free of taxes on transfers that skip generations for many generations. , or even perpetually.
In an article published in the New York Times in July 2010, Ray D. Madoff, a law professor at Boston College, warned that an increasing use of so-called dynasty trusts would create an American aristocracy. Americans prefer meritocracy to aristocracy, Madoff wrote, and then proceeded to repeat some of the usual jargon-filled arguments against trusts without considering their social benefits.
If Prof. Madoff was to imply that the United States today is a meritocracy, then the meritocracy must be a system that rewards its members based on their ability to extract wealth from the economy, regardless of the social, moral, and economic costs. of their activities. It seems that today’s meritocrats, the experts, are adept at seeking recognition, superiority, and money, but they fail to do worthwhile work. The salary of public school teachers is generally based on the number of college credits they accumulate, not on teacher performance. The dependence of professional politicians on donations and gratuities is well documented. The submission of journalism and scholarship to prevailing popular thought and business considerations is an accepted and unfortunate fact. For example, legislators, government regulators, and private sector employees involved in deepwater oil drilling and the failed investment banking industry apparently achieved professional success and were paid well, but did great harm. After September 2001, politicians, academics, clergy, and journalists failed to critically analyze the policies and actions of the United States government regarding the passage of the Patriot Act, the occupations of Iraq and Afghanistan, the secret delivery of kidnapped prisoners, and the war against Islamic militants. But they were well paid for their complacency and complicity. For decades, politicians, academics, and journalists have blatantly failed to openly debate the plausible idea that US support for tyrannical regimes (eg, Egypt, Jordan, Saudi Arabia) in the Middle East and US support for the Israeli Zionist regime (which, as history shows, native Arabs expelled from Palestine in 1948, destroyed their homes and expropriated their lands) could be the real causes of the aggression against the US myths that the United States is being attacked because of the American way of life and western ideals of freedom. Consequently, the actions and omissions of the failed class of corporate-funded salaried politicians and intellectuals undermine the national security of the United States and the personal safety and freedom of its citizens. However, corporate and government payers regularly reward the outrageous conduct mentioned here with large salaries and thus maintain compliance and compliance with the meritocrats. The dynamics of mercenary, servile, and parasitic behavior that is rewarded with economic success may represent social Darwinism, but it detracts from meritocracy.
A proliferation of dynasty trusts would allow a growing number of citizens to act morally and responsibly because they would have an independent source of material support. One can only guess how many otherwise honest and intelligent people do not act on their conscience, or worse, act against their values, because they fear retaliation from a wealthy employer or sponsor. Most people today have to earn a living, that is, they are not financially independent, and the more educated and specialized they become, the fewer job options they have. For example, a climate researcher working for a government agency has very limited options for working in his or her field. If you are fired by your bureaucratic superior for publishing a politically unpleasant report, you may soon be picking up shopping carts in the local supermarket parking lot and unable to support your family. The same occurs, to a greater or lesser extent, with engineers, teachers, journalists and almost everyone who is employed or who depends on public or private goodwill for their livelihood.
Of course, a lot of good and honest work is being done in society, but very little is being done that really challenges the vested interests of the selfish and for-profit.
It could be argued that many of those who sincerely challenge selfish myths and corrupt practices have direct or indirect support from independent sources of wealth. For example, independent journalists and authors who succeed in exposing lies and corruption are often the benefactors of a few wealthy and enlightened individuals and their charitable foundations. They earn patronage on their merits and therefore can be said to be meritocrats. But their financial support comes from privately accumulated and controlled wealth, not from taxes or popular business interests. In other words, a dynasty trust itself can be an independent source of funds to support important social work that would never receive funds from the conventional establishment.
Consider how much more vibrant and truthful our public discourse would be, and how much more efficient and accountable our governments would be, if people could speak and act without having to worry about being fired from their jobs and losing their material livelihood. More dynasty trusts would mean that more people would be isolated, at least to some extent, against the purely mercenary rules of economic Darwinism. Of course, the dynasty trusts are not a guarantee of moral, truthful and responsible behavior. On the other hand, the current circumstances in which corporate wealth and populist myths influence personal and professional decision-making make inefficient and corrupt social behavior inevitable.
Many of the so-called founding fathers of the American republic inherited wealth and were possibly aristocrats. Aristocracy literally means ruling by the best, not ruling by the few (oligarchy) or ruling by the petty and corrupt. In fact, a proliferation of dynasty trusts could lead to the creation of a privileged class, that is, a class of individuals who have the privilege of not being yoked to an increasingly centralized, mercenary and dominated economy. decisions based on maximizing profit or perpetrating lies and myths. In practice, hard work and ingenuity alone are rarely enough to ensure the livelihood of an individual and their family. The material existence of workers at all levels of society is increasingly subject to the arbitrary will of a manager who, therefore, exercises an inordinate amount of power over the actions of the worker. But the beneficiary of a dynasty trust is able to resist the will of a manager (or client or political lobbyist or business sponsor or indirect doctor) because he is not totally financially dependent on him.
Variants of the dynasty trusts include a life insurance policy. Because the insurance company lobby is so influential in national and state legislatures, income from life insurance in an irrevocable life insurance dynasty trust is exempt from income and estate taxes. Therefore, the combination of a life insurance policy owned by an irrevocable life insurance dynasty trust can provide tax-free asset growth, payment of insurance proceeds to the trust free of estate taxes, and greater financial sovereignty for generations.
The logic of the recent NY Times article seems to be that it is better for society as a whole if the custodians of wealth are forced to squander it over two generations, rather than protect, preserve and grow it indefinitely. A common complaint from economists is that public corporations focus on quarterly or annual financial results, rather than long-term business growth. Closed and family businesses, on the other hand, are valued (in principle at least) for their ability to make business decisions that improve long-term business viability. However, in practice, unless a private company is held in trust, it generally disappears, either due to division between heirs or because inheritance and generation transfer taxes force its sale. A dynasty trust provides a vehicle for accumulating and preserving wealth in an increasingly centrally managed economy controlled by large corporations, government monopolies (national and local), and popular myths. Although inheritance taxes are not paid by a dynasty trust, a company owned by a trust must pay income taxes on business and investment income. There is no free tax discount for fiduciary property companies. However, a trust provides the stability and long-term continuity necessary to build a business culture based on honesty, service, quality, and tradition.
Critics of the dynasty trusts raise some legitimate concerns. One is that an individual who absolutely does not need a particular job for survival will be prone to insubordination in the workplace. A related concern is that the beneficiaries of the dynasty trusts will stop contributing to society because they no longer need work to survive. An additional concern alluded to above is that the dynasty trusts could create a privileged class of aristocrats who use an unfair advantage to rule over the less privileged. The hard facts of reality outweigh or completely negate these concerns, which will be addressed in detail in a future article. Let this article end here, however, with the idea that a society full of economically compromised and servile sycophants who do not have financial sovereignty is a greater danger to the republic than the risk of an economically privileged aristocracy. A general benefit of the dynasty trusts for the entire society is the financial independence of the trust beneficiaries from the tyranny of increasingly centralized economic control and manipulated public opinion, whose independence allows freedom of expression and honest and honest behavior. virtuous in a morally corruptible body politic.
Copyright 2010 – Thomas Swenson