GEORGE LUCAS SELLS OUT TO AVOID TAXES
November 3, 2012
Eduardo Saverin, one of the original founders of Facebook, was accused of renouncing his American citizenship in order to avoid taxes of up to $67 million.
Saverin is originally from Brazil. Fearing that their son might be a kidnap victim, the Saverin family moved to Miami in the early 1990s to find a safe place to live. Saverin’s father was a wealthy industrialist.
Eduardo Saverin has lived in Singapore since 2009 and renounced his U.S. citizenship in 2011.
Saverin has not done one illegal thing. He took advantage of the tax laws as they are written. He should be applauded for his foresight.
Now we learn that George Lucas, the creator of the Star Wars franchise, sold his company LucasFilms in 2012 to Disney for $4.05 billion in cash and stock in order to avoid higher taxes in 2013.
“That Lucas struck a deal in 2012 may be no accident either, advisers say. Long-term capital gains tax from the sale of assets held more than one year are taxed at a rate of 15% for investors in the 25% income tax bracket or above (Lucas’s level), and zero for investors in the 10% or 15% bracket. Those rates are set to jump to 20% and 10%, respectively in January. ‘He probably wanted to take advantage of the lower rate on long-term capital gain while it’s certain,’ says Bill Smith, managing director at CBIZ MHM, a national accounting and professional services provider.”
Lucas is a one-percenter. He is also a big Obama supporter. Lucas said the following about Obama in 2008: “We have a hero in the making back in the United States today because we have a new candidate for president of the United States, Barack Obama.
An article states that Lucas has surrounded himself with the best legal and tax-avoidance minds in the country. (Sounds like Mitt Romney.) Let’s see of Obama and Co. and the people who criticized Saverin for trying to avoid taxes will do the same for Lucas. So far, I haven’t heard a peep from the Democrats.
Just take a look at the prospect of federal capital gains rates jumping from 15 percent to 20 percent next year on Lucas' sale. At a sales price of $4.05 billion, the 5 percentage point tax increase represents a higher tax tab of about $200 million — and that's just the capital gains tax. Half the purchase price in the Disney-Lucas deal is in the form of 40 million shares of Disney stock, which would avoid capital gains.
Then there's the 3.8 percent Medicare surtax on investment income, including capital gains, that kicks in next year. Do you see how the taxes start adding up on a $4 billion deal?
Plus the $5 million gift-tax exemption drops to $1 million, prompting several business owners of far lesser means than Lucas to decide now is the time to sell what took a lifetime to build.
I suspect that the Democrats won’t say a thing about Lucas because he is a big donor to the Democrats and supports the President. As “Deep Throat” of Watergate said in the film All the President’s Men (1976), if you want to know where a person’s loyalties are, “Follow the money.”
I’m glad Lucas is smart enough to avoid taxes; it’s too bad that he’s not smart enough to put some of his money behind defeating Obama on November 6.
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