In the biggest stock sale of his life, former Treasury Secretary Hank Paulson didn’t pay one dollar of capital gains tax. Nearly $500 million worth of Goldman Sachs shares – a profit of hundreds of millions of dollars – and not a red cent went to the IRS. Paulson’s Treasury predecessors Robert Rubin and Paul O’Neil enjoyed a similar tax dodge themselves…as did many other familiar Washingtonians over the last 20 years, like Donald Rumsfeld and Donald Evans.
You could enjoy the shade of this shelter too. All it takes is the President’s blessing.
President George H. W. Bush is the originator of this refuge for the political elite. His Ethics and Reform Act of 1989 – ironically – was a soft-core crackdown on abuse of privilege in government…no more honoraria for federal employees (except Senators, of course), post-employment restrictions on Congressmen, increased financial disclosure and so on. But the Act also introduced Section 1043 of the Internal Revenue Code, a tax shelter available to those that need it the least.
Under the guise of not wanting to “discourage able citizens from entering public service,” Section 1043 is an alteration of the government’s conflict of interest rules. Before 1043, executive appointees (mostly high-up cabinet members and judges) had to sell positions in certain companies to combat conflict of interest – like say, a former Goldman Sachs CEO-turned Treasury Secretary with millions of GS shares. After Sec. 1043, the appointee gets a one-time rollover. Upon their appointment, he or she can transfer their shares to a blind trust, a broad market fund or into treasury bonds. They’ll have to pay taxes on the position one day, but not immediately after the sale… like the rest of us.
http://dailyreckoning.com/dodge-taxes-legally-become-treasury-secretary/
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