Washington. D.C. — Nike founder and billionaire Phil Knight, worth an estimated $58 billion according to Forbes, is the subject of an exposé informed by research conducted by IPS associate fellow Bob Lord, published by Bloomberg Businessweek along with explanatory graphics.
Using public SEC filings and other publicly available data, Lord “reverse engineered” an analysis of Knight’s tax planning techniques. Knight has already transferred about $10 billion in wealth free of estate and gift tax and could avoid estate tax on up to an additional $9 billion if he died today, according to an interview with Inequality.org.
According to the Bloomberg article “The Hidden Ways the Ultrarich Pass Wealth to Their Heirs Tax Free,” while Knight has declared he intends to give most of his wealth to charity, the Bloomberg exposé documents show that for years, Knight has “been using a range of legal techniques to ensure his heirs keep control of most of his assets and profit from them in the process, quietly transferring vast piles of money in a textbook example of how the rich avoid taxes.”
“Phil Knight’s estate plan demonstrates beyond doubt that loopholes in America’s estate and gift tax have rendered it useless,” said Bob Lord in a statement to IPS and Inequality.org. “But this story is not about Phil Knight — it’s about the abject failure of Congress to address this situation for several decades now. With Bloomberg’s exposé going to press at the same moment Congress is considering tax reform to fund vital social needs, we’ll either see the loopholes closed once and for all or know the system is irreparably broken.”
Lord is available for interviews on the Phil Knight findings and the Bloomberg exposé, as well as billionaire tax avoidance and how tax reforms could help ensure that billionaires like Knight pay their fair share.
Knight has seen his fortunes almost double during the pandemic, according to an analysis of Forbes data by Americans for Tax Fairness and the Institute for Policy Studies. The value of Knight’s assets increased from $29.5 billion in March 2020 to $57.9 billion on October 15, 2021, an increase of 96.4 percent.
Knight’s wealth defense industry advisors created a series of Granter Retained Annuity Trusts (GRATs), a popular tax avoidance mechanism deployed by many of the super-wealthy, according to a recent exposé by ProPublica.
As the Bloomberg article observes, GRATs “have the basic goal of making wealth look much smaller than it really is. It’s possible to have your gifts appear to be worth almost nothing, even as you move millions or even billions of dollars tax-free.” They “construct a legal fiction that this is a normal transaction and not a taxable gift to the trust.”
IPS and Inequality.org feature an exclusive interview with Bob Lord about this research (the full extensive interview can be found here).
IPS researcher Helen Flannery and Chuck Collins, director of the Program on Inequality and the Common Good at IPS, point out in a new blog post how Knight’s philanthropic activity mostly takes the form of donations to his own private family foundation of highly appreciated Nike stock. Billionaires like Phil Knight are the largest beneficiaries of the tax reductions provided in our tax code. As IPS has documented, for every dollar a billionaire like Phil Knight gives to charity, taxpayers chip in 74 cents in lost tax revenue. Yet for billionaires like Knight, charitable giving becomes an extension of their tax reduction planning and power and influence.
To speak with Bob Lord for an interview or further comment, contact Olivia Alperstein at (202) 704-9011 or firstname.lastname@example.org.
About the Institute for Policy Studies
For nearly six decades, the Institute for Policy Studies has provided critical research support for major social movements and progressive leaders inside and outside government and on the ground around the United States and the world. As the nation’s oldest progressive multi-issue think tank, IPS turns bold ideas into action through public scholarship and mentorship of the next generation of progressive scholars and activists.