A Century of Tax Avoidance Through Trusts in the United States

On June 1, 1937, Franklin Delano Roosevelt, the 32nd President of the United States, penned one of the most famous lines in the history of the U.S. fight against tax avoidance in a letter to Congress:

"Mr. Justice Holmes said, 'Taxes are what we pay for civilized society.' Too many individuals, however, want the civilization at a discount."

As early as 1937, the United States was already grappling with the consequences of tax avoidance by the wealthy. In the same letter, Roosevelt expressed his astonishment at the extent of tax avoidance by the rich:

"This report reveals efforts at avoidance and evasion of tax liability, so widespread and so amazing both in their boldness and their ingenuity, that further action without delay seems imperative."

Although Roosevelt introduced various measures to curb and penalize tax avoidance, these efforts ultimately failed. Among the many tools used by the wealthy to avoid taxes, one has stood the test of time: the trust. This article will delve into the 100-year history of tax avoidance through trusts in the United States and how it has evolved into its modern form.

This article draws heavily on a December 15, 2021, piece by ProPublica titled “The Great Inheritors: How Three Families Shielded Their Fortunes From Taxes for Generations.” For those interested, you can read the original article. However, the structure and content of this article are entirely original, with only the thematic inspiration drawn from ProPublica.