Of course, the mainstream media is failing to question why such taxes should be in existence at all. -Allen

Billionaires' tax loophole could complicate passage of health reform --------------------------------------------------------------------------- Copyright 1996 Nando.net Copyright 1996 The Associated Press

WASHINGTON (Apr 28, 1996 1:47 p.m. EDT) -- A once white-hot, but still smoldering, partisan dispute over taxation of expatriate billionaires could further complicate enactment of a popular measure making health insurance portable from job to job.

[...]

But an effort to plug a loophole that's allowed a handful of wealthy people to avoid taxes by renouncing their citizenship could put another hurdle before a health bill all sides say they want.

Competing expatriate billionaire provisions are tucked into separate health bills that cleared the Senate last week and the House in March.

In an approach recommended by the Clinton administration, the Senate would impose an immediate capital gains tax on the assets of wealthy people when they renounce their citizenship.

However, the House bill, crafted by Ways and Means Chairman Bill Archer, R-Texas, takes an entirely different approach that Democrats and the administration say leaves the loophole wide open.

House and Senate lawmakers haven't met yet to work out the differences between the two health bills. But if past negotiations on the expatriation issue are any indication, the House version will emerge victorious.

[...]

Instead of imposing a large and immediate tax on wealthy citizenship renouncers, the House version tightens current law. It requires expatriates with a net worth of $500,000 or more to pay taxes on capital gains and other income from U.S.-based assets for 10 years after they renounce their citizenship.

But critics say it will accomplish little more than forcing accountants and lawyers to find more creative ways around the rules on behalf of billionaire citizenship renouncers such as Campbell soup fortune heir John Dorrance III and Dart Container Corp. President Kenneth Dart.

The House version would be extremely difficult to enforce and would allow patient expatriates to avoid the tax by holding their assets for 10 years before selling, they say. In the interim, they could raise cash by borrowing against the assets.

[...]

However, Archer says his committee's version is actually tougher. The administration's proposal would create an incentive for people who had recently inherited their wealth to expatriate before their newly acquired assets started to appreciate, he said.

"The reality is their proposal is weaker than ours," Archer said. "Some of the most egregious cases are where there have been heirs that have been recipients of estates who can under their proposal leave and never pay anything."