President Joe Biden’s nominee for the number-three position at the Department of Justice has up to $55 million stashed in an account commonly used by wealthy people to avoid paying taxes when passing money on to future generations.
Vanita Gupta, Biden's choice for associate attorney general, listed between $11,000,003 and $55,000,000 in multiple grantor retained annuity trusts (GRAT), an estate-planning tool that is commonly used by the rich to dodge the estate tax. Gupta’s total net worth is between $42 and $187 million, which would make her one of the wealthiest members of the Biden administration if confirmed.
Family wealth has become a political liability for Gupta, a self-styled "idealist" and chemical heiress whose family structured its wealth to dodge tax liability. Gupta's use of these accounts could put her at odds with Biden's promise to make the wealthy "pay their fair share of taxes," in part by raising the estate tax.
Gupta lists three GRATs on her financial disclosure form, which together are valued at up to $55 million. The assets held in the trusts are not disclosed to the public, because all three are classified on the disclosure as "excepted trusts." According to the U.S. Office of Government Ethics, trusts can be "excepted" if they were not created by the holder or their immediate family and when those same parties have "no specific knowledge of the trust’s holdings."
Gupta's confirmation path has already hit several speed bumps due to her father’s myriad business connections in industries around the world. The Washington Free Beacon previously reported that Gupta, who supports raising the minimum wage, holds up to $1 million in the Mexican subsidiary of a company run by her father where workers make as little as $1.30 an hour.
According to the Journal of Accountancy, GRATs are used to facilitate intergenerational wealth transfers from parents to children. "At the end of the term, the assets are distributed to noncharitable beneficiaries—typically, the grantor's children," the journal notes. Because Gupta is using the "excepted trust" status, she did not have to disclose the beneficiary of the GRATs. They could be set up for Gupta’s father to transfer millions of dollars tax-free to her, or for her to transfer millions of tax-free dollars to her two children.
Evidence points to the latter. Elsewhere in her financial disclosures, Gupta lists two family trusts of which she is the beneficiary. Additionally, Biden’s government reform platform states that he will "require that any member of his Administration who is a beneficiary of a discretionary trust disclose all of its holdings." If Gupta herself is the GRAT beneficiary, she would be in direct violation of a key Biden campaign promise.
Gupta’s three GRATs are the only elements of her financial disclosure in which the underlying investments are not disclosed. By listing the GRATs as "excepted trusts," Gupta is claiming to be unaware of the underlying investments and therefore cannot disclose their contents.
While Gupta is likely to receive enough votes to be confirmed, Republicans have made her a key figure in their confirmation battles. The Judicial Crisis Network has run ads urging Sen. Joe Manchin (D., W.Va.) to reconsider his support for Gupta, citing her stake worth tens of millions of dollars in Avantor, a company tied to Mexican heroin production.
During Thursday's Senate Judiciary Committee hearing on Gupta's nomination, Democratic senator Dick Durbin (Ill.) cut Sen. Tom Cotton’s (R., Ark.) questioning short and moved for an immediate vote. Cotton responded, saying, "I object to the chairman cutting off my remarks. I guess he found them too persuasive." Warning his Democratic colleagues, Cotton said, "I assure the chairman that what comes around goes around."
Gupta was then advanced out of committee on a partisan, 11-11 vote.
In a floor speech this week, Sen. John Cornyn (R., Texas) announced he will oppose Gupta’s confirmation in part because of her conflicts of interest. "The Department requires professional detachment from even the appearance of impropriety and this conflict of interest of Ms. Gupta's goes far beyond simple appearance," Cornyn said.
The Biden administration declined to comment on Gupta's use of GRATs and whether it puts her at odds with the administration's position on taxes.
Published under: Senate Judiciary Committee , Taxes , Vanita Gupta