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We found that broadly speaking, the descendants of Walmart founder Sam Walton could face a tax bill of about $53 billion that would go away if Trump’s proposal became law.
But that figure is based on estimates and without knowing the family members’ tax planning. And another Trump proposal would mean the descendants would face capital gains taxes on their inheritance perhaps in the tens of billions of dollars.
The estate tax
A few preliminary points before we dig into the Waltons’ wealth:
The federal estate tax, as defined by the Internal Revenue Service, is a tax "on your right to transfer property at your death." It consists of an accounting of everything you own, or have certain interests in, at the date of death. For 2016, an estate tax return must be filed if the estate is worth roughly $5.45 million or more.
The Walton family
Three times, twice on statements made by Sanders, we have rated claims that the Walton family owns more wealth than the bottom 40 percent of the American people. (Wealth being assets such as savings and retirement accounts, minus liabilities such as credit card debts and what’s unpaid on a home mortgage.)
In those fact checks, we considered six people as being the Walton family. However, a seventh family member (Lukas Walton) joined the Forbes list in 2016. Here is their wealth, according to "real time" estimates by the Forbes 400 on the day Sanders made his claim:
Alice Walton (daughter): $34.9 billion
Christy Walton (daughter-in-law to Sam): $5.5 billion
Nancy Walton Laurie (niece), $4.5 billion
That’s a total of more than $132 billion.
Under current law, and if the wealth estimates are accurate, that amount would be subject to a federal estate tax of 40 percent when the individuals die -- roughly the $53 billion that Sanders said.
We consulted with five experts: Roberton Williams, a fellow at the nonpartisan Tax Policy Center; Howard Erlanger, a trusts and estates expert and emeritus professor at the University of Wisconsin Law School; Edward Koren, University of Miami adjunct professor in estate planning and a partner at the international law firm Holland & Knight; Texas Tech University Law School professor Gerry Beyer, who edits the Wills, Trusts & Estates Prof Blog; and Alan Viard, a tax policy scholar at the American Enterprise Institute.
According to the experts, there are at least two factors indicating that the actual tax due would be less than $53 billion -- possibly much less.
1. Charitable donations
Wealthy people often designate a substantial portion of their assets to be donated to charity upon their death. Those funds are not subject to the estate tax.
Koren gave this example: If $100 billion of the total $132 billion were designated for charity, the estate tax owed would be $13 billion, not $53 billion.
It’s also possible that some assets could be shielded by tax avoidance techniques, Viard said.
2. Trump’s other proposal
In addition to proposing a repeal of the estate tax, Trump has proposed to repeal a tax rule that, if approved, would result in the Walton heirs paying more in capital gains taxes.
So, under Trump’s plan, there wouldn’t be an estate tax -- under which taxes must be paid essentially right away -- but an increase in capital gains taxes, which don’t have to be paid until assets are sold.
It is impossible to know exactly how much of a capital gains tax the Waltons would face under Trump’s proposed change, but it could be tens of billions of dollars.
On the other hand, unlike the estate tax, the next generation of Waltons could defer paying the capital gains tax for as long as they hold onto the assets they inherit.
Sanders says Trump’s plan to repeal the estate tax would mean the Walton family would "get a $53 billion tax break."
Based on the collective wealth of seven Sam Walton descendants, they could face a tax of about $53 billion under the current estate tax law. But that amount is based on estimates of their wealth and it would be reduced based on any charitable donations the family members might arrange for upon their death.
Meanwhile, Trump also proposes higher capital gains taxes, which could amount to a tax bill of tens of billions for the Walton heirs -- although that tax wouldn’t be imposed until they sell assets such as Walmart stock
For a claim that is partially accurate but needs more information, our rating is Half True.
YouTube, WisconsinEye video (36:30) of Bernie Sanders speech, Oct. 5, 2016
Internal Revenue Service, "Estate tax," Oct. 3, 2016
Interview, Howard Erlanger, emeritus professor at the University of Wisconsin Law School, Oct. 6, 2016
Email, Texas Tech University Law School professor Gerry Beyer, Oct. 6, 2016
Email, Tax Policy Center Sol Price fellow Roberton Williams, Oct. 5, 2016
Email, Bernie Sanders campaign spokesman Warren Gunnels, Oct. 5, 2016
Email, Alan Viard, tax policy scholar at the American Enterprise Institute, Oct. 6, 2016
Email, Holland & Knight partner and University of Miami adjunct professor in estate planning Edward Koren, Oct. 5, 2016
Forbes, 2016 Forbes 400 list (and profiles for Walton family members as of Oct. 5, 2016)
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