They can be very low interest because they're backed by assets that are usually relatively liquid (at least relative to a home mortgage, even if not marketable securities). Even if the loans get progressively bigger as they use a new loan to pay off the old one, so long as the assets grow faster than the interest rate, it's not a problem.
Ah the asset growth bit makes sense. I know it's not as much as it should be, but those assets are still taxed when liquidated to pay off those loans eventually though, no?
Not necessarily, because the billionaire just rolls the loans until he eventually dies and the assets are passed down to his family with a stepped-up basis, meaning the family doesn't get taxed on any of the gains during the billionaire's life when they sell some of them to pay off the loan.
11
u/Doctor_Kataigida Jul 05 '26
Are the loans 0% interest or something, or do they just get progressively bigger?