The world’s ultra-rich often come up with unique financial strategies to avoid taxes. And in adopting strategies to reduce tax burden, the world’s richest men like Elon Musk and Mark Zuckerberg are not alone, reports show.
Nvidia CEO Jensen Huang is the 10th wealthiest individual in the US with a net worth of $127 billion. Ideally, estate taxes collected from foundations of such extraordinary value should have exceeded around 50 billion dollars, stated reports.
However, the ‘ideal’ scenario may not transform into reality as the 61-year-old founder would pass on most of his savings to his family, essentially evading $8 billion in taxes, reported the New York Times.
How did the Nvidia CEO avoid taxes
According to the NYT report, Huang’s financial strategies indicate that he would avoid tax liabilities, and pass on most of his savings to his family.
Jensen Huang is just one of the names when it comes to how the ultra-rich are following similar strategies such as the Nvidia CEO to avoid taxes. Blackstone’s Schwarzman, Meta’s Mark Zuckerberg, and top executives at tech giants such as Google are also known to have evaded taxes.
Trusts established by Huang
In 2012, Huang established an irrevocable trust containing 5.84 lakh shares of Nvidia, valued at $7 million at the time. This move was part of a broader plan, referred to in financial circles as “I Dig It,” which was initially approved by the IRS in 1995. This type of trust helps avoid both estate and gift taxes, offering protection for assets that appreciate after being transferred.
In 2016, Huang and his wife, Lori, further reduced their tax burden by establishing grantor-retained annuity trusts (GRATs). This technique allows assets to be transferred to beneficiaries free of estate tax if their value appreciates beyond the amount repaid to the grantor. The shares in these trusts have since surged, now worth over $15 billion.
How much did the ultra-wealthy avoid in taxes?
The US estate tax system has contributed very little to federal tax revenue since the early 2000s. According to the NYT, if the tax had kept up with the growth of the ultra-wealthy, it could have brought in about $120 billion in 2023. Instead, it generated only a small portion of that amount, according to the New York Times report.
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