May 27, 2013
Michael Dell, the billionaire computer tycoon, has saved himself more than one million dollars a year in state property taxes on a beachfront hotel in Santa Monica, California, that he bought in 2006.
According to California’s property tax code, a property may be considered NOT to have changed legal ownership if the buyer of the property is a company which does not have a majority owner!
Dell declared that the hotel had “not changed ownership,” because it had been bought by a partnership made up of him, his wife, and two of his investment advisors, none of whom owned more than 50 per cent of the hotel. That way, property taxes were based on the hotel’s 1999 value of 86 million dollars – instead of the 200 million dollars Dell paid for it.
Dell is certainly not alone. Big corporations, which own large swaths of land in California, have been using this loophole for more than 30 years, evading hundreds of millions of dollars in taxes.
How many more such “legal loopholes” are there? This is a rare occasion where the public is getting to see, in some detail, how state politicians have been shoveling billions of dollars to Big Business. That’s how the politicians, themselves, have been creating budget deficits, which they then use as an excuse to cut public services!