The tax avoidance playbook

Beginning in the early 20th century, a new ethos for taxes took hold: Taxes should be imposed on the basis of means, with the greatest burden falling to those with the greatest capacity to pay.

Such “tax the rich” sentiments informed the design of the two tax rules at the core of the modern tax system: the income tax, adopted in 1913, and the estate tax, adopted three years later, in 1916. The income tax had “progressive” tax rates, meaning taxes were higher for people with more taxable income; and it exempted many lower-income Americans altogether. And the estate tax was designed to impose a separate tax on the richest Americans as they pass their wealth to the next generation.

These two taxes originally applied to only the very wealthy, leaving more than 95 percent of Americans unaffec