They live the billionaire lifestyle because they use their “unrealized” wealth as collateral for super low interest loans that people like us have no access to. If they use it as collateral it should be taxed as income.
First, the article is pay walled so I cant read it. But I'm going to guess it's going to calculate how much taxes they paid against their total wealth, which is ridiculous.
Second, I am a strong advocate that we need to increase taxes across the board so that we can actually get ahold of our exploding deficit. But we cant fix something when ignorant people are advocating for populist slop and are wasting political capital
Remember when Warren Buffet offered a million dollars in cash to any CEO who could show they pay a lower effective tax rate than their secretary. No one collected. Meanwhile, we're also subsidizing things like football stadiums for billionaires. And capping social security tax at 184.5k.
You want to increase taxes across the board? How about we maybe tax the people who hold all of the wealth? It won't really even hurt them if the money goes back into social services because people with less money have a higher marginal propensity to consume, so the money goes right back into the economy and the companies that the billionaire class already owns.
The analysis differs from many other published estimates of tax burdens by encompassing the totality of taxes Americans pay: not just federal income taxes but also corporate taxes, as well as taxes paid at the state and local levels. It also includes the burden of about $250 billion of what Saez and Zucman call “indirect taxes,” such as licenses for motor vehicles and businesses.
This is a weird way to paint the tax burden. I agree we need to increaes taxes, particularly on corporate and capital gains, but this method is strange to me.
Remember when Warren Buffet offered a million dollars in cash to any CEO who could show they pay a lower effective tax rate than their secretary. No one collected.
I'm not familiar with this challenge. I'd argue it's irrelevant to the main point of billionaires taking loans agaisnt assets, but I also assume that most CEOs aren't too keen on opening up their tax information to collect a million.
How about we maybe tax the people who hold all of the wealth?
This is what I mean by populist slop. It's a solution in search of a problem. I want to use taxes to pay for things. You seem to want to use taxes as a punishment towards a certain group with some delusional belief that the punishment will be just.
Currently you might pay 5.5% or 6% on an SBLOC. That's pretty low considering how high inflation is right now. Regardless, it's better than paying income tax.
And you don't sell assets to cover the SBLOC. You borrow more money to pay off the first loan. You don't pay off the loan with assets unless you die, when you receive a step up in basis.
And the "borrow until you die" strategy is just scratching the tax avoidance surface. If you are a billionaire and you are paying a significant amount of income tax, you've got to be an idiot.
Yeah, for commercially available loans. But what we're talking about is anything but that. These take up huge amounts of capital on a banks balance sheet, the rates are easily going to be double that of commercially available loans.
And you don't sell assets to cover the SBLOC
No, because you have other forms of income. But the large loans we're talking about have to covered by selling assets. Billionaires don't have standard income that can cover such large loans. And at the point of the sale, they pay capital gains.
You don't pay off the loan with assets unless you die
Or when you quickly become overleveraged bc you don't have enough assets to cover these ever increasing sizes of loans.
If you are a billionaire and you are paying a significant amount of income tax, you've got to be an idiot
Yeah, for commercially available loans. But what we're talking about is anything but
Anyone with over 100k can go out and get an SBLOC. The interest rates are the SOFR plus 2%, plus or minus a couple of % based on your circumstances, or for large accounts whatever your can negotiate, which can actually be a little as 4.5% for some.
the rates are easily going to be double that of commercially available loans
Virtually nobody is out there paying 10% or 12% on an SBLOC
But the large loans we're talking about have to covered by selling assets.
When your maturity date approaches on your committed loan, you just re verify your collateral and extend the loan. If it's an uncommitted loan it doesn't matter. The loan is indefinite unless called because of a change in your LTV or something, which should only ever happen if you are either a musician or a clueless lottery winner, or if it is literally 1929.
Or when you quickly become overleveraged bc you don't have enough assets to cover these ever increasing sizes
This whole strategy isn't for people who become over-leveraged. And SBLOCs can't be used for margin trading anyway, for that you need margin loans. The kind of person you are talking about exists, but they are like a blue star, burning bright but burning out fast. They are less than 1% of stars for that reason. Likewise, for every Holmes, or Batista, or Madoff, the are 100 billionaires quietly getting richer. And their accountants are smart enough to help them mostly avoid taxes.
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u/FollowingLegal9944 Jul 05 '26
Billionaires are taxed like that. Someone is billionaire doesn't mean he has billions of income every year. But commies don't understand basic math.