Our Senior Vice President of Tax Policy, Bob Lord, has been on a roll for the last few weeks – so much so that we’ve decided to devote an entire Closer Look to bragging about him!
You may recognize Bob’s name from some of our past newsletters. Bob joined our team as a Senior Tax Policy Advisor in 2022 and also is an Associate Fellow at the Institute for Policy Studies. Previously, he practiced tax law for almost forty years and ran for Congress in 2008.
Over the course of just eight days this month, Bob scored three major hits in high profile media outlets. The first was an opinion piece that he penned jointly with our Chair, Morris Pearl, for Fortune about the damage that Universal Savings Accounts – a little known proposal in conservatives’ now-infamous Project 2025 – could wreak on our economy and democracy. The second was a mention in Mother Jones about why venture capitalists are wrong to believe that the Biden-Harris Billionaire Minimum Income Tax on unrealized gains would stifle innovation. Lastly, Bob penned another opinion piece for The Hill which outlined the various ways that billionaires are winning the ongoing class war in America.
This isn’t Bob’s first foray into the media. He’s already somewhat of a legend. In just the last two years, Bob’s work has also been featured in outlets like Rolling Stone, Inequality.org, CNBC, Truthout, Salon, Slate, Forbes,
But perhaps Bob’s biggest achievement came last Thursday, September 12, when he testified before the Senate Finance Committee at one of their hearings, entitled “The 2025 Tax Policy Debate and Tax Avoidance Strategies.” The hearing looked ahead to the debate that will unfold next year as many of the individual provisions of the 2017 GOP Tax Cuts and Jobs Act expire, and also highlighted a number of strategies that the ultra-wealthy use to avoid paying tax. Bob and three other witnesses each gave prepared opening remarks and then answered questions from Chairman Ron Wyden (D-OR), Ranking Member Mike Crapo (R-ID), and other members of the committee.
In his opening testimony, Bob detailed some of the strategies that highly-paid tax experts like him have developed over the years to help their ultra-wealthy clients avoid tax, like the “Buy, Borrow, Die” scheme and zeroed-out grantor retained annuity trusts (GRATs). He concluded his remarks by emphasizing that Congress worked in a bipartisan fashion to close tax loopholes in the past, and that they should do so again to close our current tax code’s most glaring and egregious flaws. In the question portion of the hearing, Bob also had a memorable and humorous exchange with Senator Elizabeth Warren about billionaires’ ability to pay tax.
You can watch a video of Bob’s full remarks here:
For your convenience, here is a full transcript of Bob’s opening testimony:
Chair Wyden, Ranking Member Crapo, and members of the Committee, thank you for the opportunity to speak today about tax avoidance by the ultra-rich. After a 3-decade-plus run as a tax lawyer, I recently transitioned into my real passion – my work passion: federal tax policy. I currently serve as the Senior Advisor for Tax Policy with the Patriotic Millionaires, a group of wealthy Americans who use their wealth and influence to try and build a more stable, equitable economy that works for everyone. But it was my career helping clients shrink their tax obligations that gave me insight into just how porous our tax law is and informs my perspective here today.
All tax attorneys remember Judge Learned Hand’s opinion in Gregory versus Helvering from their introductory tax class. It established a bedrock principle of tax law: There is no patriotic duty to pay tax. Taxpayers are free to arrange their affairs so as to minimize their tax obligations. My testimony today pertains to tax avoidance of the type to which Judge Hand referred, and not to criminal tax evasion or civil tax fraud. So my remarks are not intended to impugn the character of rich Americans who engage in such tax avoidance or the advisors who assist them. But I do think Americans are stunned when they learn that some billionaires face a lower effective rate of taxation than they do. Presented with that reality, they feel the tax law is rigged against them.
In my experience assisting ultra-wealthy clients, their concern over taxation was limited to how it impacted their wealth. Unlike for most Americans, tax obligations for the ultra-rich don’t impact life decisions. Some ultra-rich clients of mine opted out of tax avoidance – it just didn’t enhance their quality of life. And that’s important. Limiting tax avoidance by the ultra-rich won’t keep their kid from attending college, delay their retirement, or inconvenience them in any way. They won’t even have to sell their yacht to pay their taxes. They will never want for anything. It will simply reduce the excess wealth they accumulate.
The ultra-rich avoid tax largely through strategies developed by highly-paid experts. Last year, your committee heard testimony on one such strategy, “buy-borrow-die,” where ultra-rich Americans buy investment assets and never sell them. Instead, they borrow against them whenever they need cash. After they die, their inheritors then sell what typically are highly appreciated assets with no income tax consequence.
Avoidance strategies like buy-borrow-die result from exploitation by the ultra-rich of design flaws in the tax system, commonly known as loopholes. One type of design flaw is a rule that assigns vastly different tax consequences to minor differences in circumstances. For example, if a taxpayer sells an appreciated asset one day before his death, he must pay tax on the gain he realizes. But if his inheritor sells that same asset shortly after the taxpayer’s death, the gain, potentially in the billions of dollars, escapes income taxation. That’s the stepped-up-basis rule. It’s the loophole that enables the buy-borrow-die strategy.
In 2013, Bloomberg News reported on an ultra-wealthy family’s use of zeroed-out grantor retained annuity trusts, or GRATs, to transfer $7.9 billion of wealth at no estate or gift tax cost. Shortly thereafter, the tax lawyer who developed the zeroed-out GRAT strategy estimated that wealthy Americans had avoided $100 billion or more of estate tax through GRATs. Closing the GRAT loophole is not complicated. Chair Wyden and Senators Warren and Sanders all have introduced bills that would work. Yet the loophole remains open …over a decade after becoming widely known. That should alarm Americans because these are just the known loopholes; as a former tax lawyer, I can tell you tax lawyers do not share our more ingenious avoidance strategies.
Early in my career, I saw bipartisan efforts successfully address glaring flaws in our tax code. The passive activity loss rules of the 1986 Tax Act, for example, virtually shut down an entrenched tax shelter industry. More successes like that are achievable. But Congress – and Congress alone – has the power to close these loopholes.
My written remarks discuss additional examples of loopholes, the strategies devised to exploit them, and how they could be narrowed or closed. I am eager to chat more with you about them.
Thank you. I’m happy to answer any questions you have.
If you are interested in reading Bob’s full written testimony that he submitted to the Senate Finance Committee ahead of the hearing, click HERE.
After his testimony, Bob appeared on Maggie and the Millionaires TALK MONEY, our new daily, economy-focused, statewide Wisconsin radio show that we are co-producing with our friends at Civic Media. You can listen to a full recording of Bob’s interview with the show’s host, Maggie Daun, HERE.
As a final note, we want to highlight Bob’s budding stardom on social media. Bob has been featured recently on our Instagram and TikTok channels, with over 100,000 total views already. Some of his most popular Reels include billionaire tax avoidance via sports teams, Project 2025’s tax proposals, and Peter Thiel and JD Vance. Be sure to check them out, along with all of our other social content!
Great going, Bob! We are so fortunate to have you on the team!
