Dark Money: The Hidden History of the Billionaires Behind the Rise of the Radical Right

by Jane Mayer

Contributing to Charles’s intellectual ferment at this time were his father’s dinner table diatribes against taxation. Fred saw taxes in America darkly, as incipient socialism. Early on, the Internal Revenue Service had sued his company for underpayment of taxes, requiring a large additional payment as well as penalties and legal fees. He remained vehemently opposed to estate taxes, and told Charles that he feared the U.S. government would tax him so heavily it might force him to sell the family business, diminishing his sons’ inheritances. To minimize future taxes, Fred Koch took advantage of elaborate estate planning. Among other strategies, he set up a “charitable lead trust” that enabled him to pass on his estate to his sons without inheritance taxes, so long as the sons donated the accruing interest on the principal to charity for twenty years. To maximize their self-interest, in other words, the Koch boys were compelled to be charitable. Tax avoidance was thus the original impetus for the Koch brothers’ extraordinary philanthropy. As David Koch later explained, “So for 20 years, I had to give away all that income, and I sort of got into it.”