The ugly face behind Estée Lauder

The ugly face behind Estée Lauder November 28, 2011

Men, hang tight, I need to speak to all the ladies for a minute. You’ll get your chance to chime in a minute.

Okay, ladies, confession time. How many of your have used, are using or hope to use Estée Lauder products?

Do you binge on their wrinkle repair creme?

Or perhaps you prefer Estée Lauder’s fabulous mascara?

Or maybe you’re the puritan who goes sans make-up but have to have a splash of your favorite perfume?

Estée LauderWe both know that Estee Lauder does not come cheaply. If it’s bargain price cosmetics you seek, try Cover Girl or Rimmel. Shop Wal-Mart. Estee Lauder is the brand of Nordstrom groupies.

There’s a reason for that.

Men, you are welcome back to the conversation now. You are going to want to study this latest report from the New York Times.

Family Billions Artfully Sheltered.

The article reveals the lengths that Estée Lauder shareholders are taking to keep from paying their fair share in taxes.

That’s right.

While we women scrape together enough quarters for a $25 tube of mascara on our barely higher than minimum wage jobs, Estée Lauder heirs are figuring out ways to keep all  of that $3.1 billion we shelled into their coffers.

Consider this:

While the family’s wealth was created by hard work and ingenuity, it was bolstered by aggressive tax planning, a skill that has become Ronald Lauder’s specialty. When Mr. Lauder’s father, Joseph, died in 1983, family members fought the I.R.S. for more than a decade to reduce their estate tax. The dispute involved a block of shares bequeathed to the family — the estate valued it at $29 million, while the I.R.S. placed it at $89.5 million. A panel of judges ultimately decided on $50 million, a decision that saved the estate more than $20 million in taxes.

Estée Lauder Companies went public in 1995, and Ronald Lauder and his mother cashed in hundreds of millions of dollars in stock but managed to sidestep paying tens of millions in federal capital gains taxes by using a hedging technique known as shorting against the box.


Yep. While American mothers are weeping Estee Lauder mascara at the gravesides of their sons and daughters sent home in flag-draped caskets, Mr. Lauder and his clan are counting all the ways in which they can avoid paying taxes. In other words, the people who are always trying to sell us on this notion of a beautiful life are being downright ugly when it comes to paying their fair share in taxes for public schools and health care for our nation’s veterans.

All those high gloss ads just lost all their sheen.

Turns out, Estée Lauder is that ugly-acting aunt who spends way too much time in Vegas, and pitches a hissy-fit in public whenever she doesn’t get her way.






Browse Our Archives

Follow Us!

What Are Your Thoughts?leave a comment
  • While I’m on board with you in general — being against corporations avoiding taxes –I have no problem with avoiding estate taxes. Estate taxes are evil and should be done away with. And for the record, I’m not wealthy and have no rich relatives, so I have no personal stake in this.

    • Karen Spears Zacharias

      Can a tax be evil?

    • Anonymous

      I know estate taxes are a controversial subject, but when you say they are “evil” it sounds like you have some Scriptural reason for that assessment. Can you elaborate?

      I readily admit that there is little in Scripture that would directly support an estate tax, but some of the most common arguments for it are that it discourages income disparity and it prevents people from having an influence in society that is out of proportion to their intelligence and work ethic. I can think of several Scriptures that support these reasons, such as the Year of Jubilee (designed to prevent accumulation of wealth at the expense of the poor) and admonitions to work hard to earn one’s keep.

      • I have no scripture. I just don’t like the idea of taxing money that has already been taxed. I don’t like the hate-the-rich mentality that causes such laws to be supported. I work for what I have and want the best for my kids. I hate the idea that I worked for, hoping to pass down to them, will be taken and given to someone who isn’t my kid.

        And for the record, I’d not rich, so I know that the estate tax doesn’t apply to me. I’m speaking about the principle.

        • Anonymous

          Thanks for your honesty. I sympathize with the seeming wrongness of working hard to provide for your children and having some of that hard work be redirected elsewhere. However, I think most kids can get by just fine with what’s left over after taxes.

          If I had a lot of money to leave to my children, I would hope that my priorities would be on giving it to those who need it, not making it possible for my children to live lavish lives without having to work for it. Ironically, some of the most outspoken supporters of the estate tax are the ones most affected by it (e.g., Bill Gates).

          • I respectfully disagree. And this has nothing to do with lavish lives, but even so, that goes back to the hate-the-rich mindset which I am convinced causes more harm than good.
            Whether they can “get by” is not the point. If, after paying my taxes, I have $100, $100, or a million dollars, it’s not right for the govt to decide how much I need to get by. My priorities of who to give my money to are my business, not the govt’s.

            By the way, any person in the US is permitted to voluntarily write a check to the govt or to the IRS, above and beyond their lawful taxes owed. So if Bill Gates wants to give the govt more of his money, I applaud him. My contention is with those who want to make it not voluntary.

          • Anonymous

            Bill Gates is not interested in giving his money to the IRS any more than anyone else; he has chosen to give his money away rather than have his heirs be heavily taxed. So, no, we do not need to tell rich people how to spend their money, but we should be able to provide incentives for people to give their money to charity. The charitable deduction already does this; the estate tax is just another method.

            If conservatives are going to say that helping the poor is a private responsibility, then they should support policies that encourage charitable giving. And everybody should support policies that discourage greed and selfishness and that promote hard work and ingenuity.

          • Are you saying that estate taxes will go to help the poor? I seriously doubt it.
            I also disagree with your idea that policies which tax money which has already been taxed will discourage greed and selfishness. Rather, it’s selfishness rooted in envy which has led to movements like OWS and other hate-the-rich activities.

  • WandaV

    This is a great article-ette! Would enjoy your going deeper into the whole issue. You certainly engendered a lively discussion in my home here. 🙂

    Estate money or not, the fact that the uber-rich in many industries (beauty and war) can avoid paying taxes is part of what is spurring the Occupy movement of today.

  • Luke

    I definitely think estate taxes on the uber-rich (read more than 50 million) are essential. We have a saying in Turkish “Çok laf yalansız olmaz, çok mal haramsız olmaz” (Loose translation – ‘Where words abound so do lies, and the abundance of possessions cannot be gained legitimately’) There is no way any one person’s work (read contribution to society measured in money) can be worth billions of dollars and even if it were, it does not mean that their ‘heirs’ should be able to purchase the labor of others for their entire life without contributing some labor of their own. Yes, the year of Jubilee is a very similar idea. Not popular with today’s conservatives, but then the Bible is not ‘conservative’. It is just true.

    Luke Montgomery (Twitter at LukeM_author)

    • But Luke, where does that stop? Why not tax the guy who left $49 million? And if you do, why does the guy who left $30 million to his kids not have to be double-taxed?
      This is about the principle, and all laws should apply to all people equally.
      Another problem with the estate tax, by the way, is that it screws people out of family-owned assets, including businesses like farm and other businesses. But that’s just a complication of estate taxes, not my main point.

  • Sherwood8028

    I am among many of your readers who will be incensed at this expose of the nation’s elite – living off the hog, while most of the rest of us have to eat pork chops – IF we can afford them.

    But let us not fall into the proverbial trap – of cursing the goose who lays the golden eggs and forgetting to take care of those whose job it is to feed the goose.

    Take time now to copy this article and send it to your so-called representatives in Washington and demand that they take action to withhold such privileges until they have paid off our debts and balanced our federal budget.

    And – DO IT NOW!!!!

  • AF Roger

    Complex questions defy simple answers, but that’s usually about all we have time to contemplate. Our tendency is to look for the “home run” answer–the doing of one simple thing or the other that would solve the problem so we can move on. We decry Wall Street practices–except when they make our 401K grow a little.

    Forget the Lauder tax dodge for a moment. Her’e something closer to home: Here in Oregon, a now-retired head football coach/athletic director at one of our state universities was for years the state’s highest paid public employee–by FAR. He now works as a commentator for ESPN and may very well earn even more. But being “retired”, he now gets $41,253 per month (month!!) in public employee retirement pay. This must continue, by law, regardless of the economy, cuts to anything else, or borrowing costs, until the state cuts/scrapes up the money, the rest of us pay higher taxes, or we go into state bankruptcy. Meanwhile, my wife who is an Education Assistant in one of the state’s poorest schools has taken a 6% pay cut and 12 furlough days so that the state can save money and try to close the budget gap. Her monthly take-home pay has now dropped below $1K, programs and staff are cut and class sizes have grown. For one year of the example’s retirement pension, the school could hire back six full-time teachers, pay their full benefits, and give back my wife’s pay cut. Another job for her? W/ health insurance at age 63? Unlikely considering the economy and her recent brain tumor history.

    We could dwell on such things, but the bigger picture is always what promotes the common good. How does that affect all decisions we make as a society?

    To James W: Valid question about double taxation of estates. That assumes, of course, that the money has in fact been taxed in the first place. Considering who pays what and how the tax code gets manipulated, odds are that the more you have the more you are able to avoid taxes on it in the first place as Warren Buffett has found.