I think you’re missing that someone gave them money at some point, usually their parents.
Yeah and then they evade taxes
That’s usually how they evade taxes.
Are they successful or corrupt/nepo baby?
The right most one there is a problem. Feels like people shouldn’t be allowed to do that, but I don’t know the best mechanism to make it illegal.
deleted by creator
They pay very low interest on the loans, and they only pay taxes on the stock if they sell (and realize the gains). If they die, their heirs don’t pay taxes because of the step up basis rule.
deleted by creator
- Have a few million in stock and other assets
- get a loan against these assets at a very low rate
- do literally anything with that money that has a higher return than your interest rate
- never pay income or capital gains taxes
I’m sure it gets more complicated than that. “Buy borrow die” is a common strategy
The interest is very low, since it’s guaranteed by assets. The cost of the interest is less than taxes. So, as soon as one loan expires you take out another. You keep taking them out until you die, then your estate pays the loans back out of the estate and then the rest passes on to your offspring. If you want to know more, there isn’t more to know really but you can Google it. This buy-borrow-die scheme wasn’t made public until the last few years and details are still scant.
The whole concept of interest is fucked up and a tool for the rich to extract money from the poor. That should be illegal.
I’m pretty sure it used to be considered bad and sinful
https://en.m.wikipedia.org/wiki/Usury
In many historical societies including ancient Christian, Jewish, and Islamic societies, usury meant the charging of interest of any kind, and was considered wrong, or was made illegal
deleted by creator
Interest payments from money sitting in a bank account are basically a rounding error on most rich people’s balance sheets. By far the most wealth they accumulate comes from the growth of stocks they own.
Yes, but that wealth will tie one way or another into the banking system (for example a rich person could take an ultra low-interest loan to invest it), which is fueled by money extracted from working class people by restricting necessities of life such as housing and education. I mean banks certainly aren’t building up their wealth by giving loans to the rich essentially for free. It’s no exaggeration to say that the whole system runs on human suffering with the purpose of making the rich richer.
Stocks as compensation are taxed as income.
My retirement is going to take 30 years to make it where it needs to be at 8% buuuut the rich get to avoid 37% tax annually.
Tax avoidance*
Yes. Tax evasion is a crime. Tax avoidance is paying only the taxes you’re legally required to pay.
If you’re going to blame someone, blame the legislators who created really complicated tax codes with a million different exemptions, loopholes, carveouts, and rebates. Very simple tax systems don’t have these issues so no one ends up paying more than they owe.
It’s both
mostly avoidance, specially because they are typically smart enough (or more accurately their accountants are) to realize that going to court with the feds is expensive and paying the minimum amount of tax (and accompanying shenanigans to reduce taxable income) is much cheaper.
Couldn’t be more wrong, if it tried.
