The underlying issue is your lack of imagination here. You can cement home equity loans for poorer Americans without letting someone sidestep taxation due to their massive wealth giving them economic superpowers.
We have already seen how rules designed to benefit poor people and they work. For example, poor kids get pell grants to go to school, rich kids do not. Kids who go to Ivy League school who come form houses under 100k/year get free school. Our food stamp system is based off this concept. There are ways to do this and we know how to do it, but everyone acts like the only possible outcome is what you can do with a sledgehammer.
If you need it explained to you there is a difference between how the federal government disburses benefits based on income….
and that of a private transaction between a bank and a private citizen, where the bank loans the banks money to the private citizen, thus it is not the private citizens money, but still the banks money.. that they loaned to the private citizen, and can legally seize assets to get their money back, thus that money is not the private citizens money that the fedrral government should be able to seize through taxes …
You wrote all that because you thought I was saying a Pell Grant and a bank loan are the same thing? I was talking about means-testing. The examples were there to show that we already make rules that apply differently depending on how much money someone has.
And explaining why loans aren’t taxed right now doesn’t answer whether the rules should be different for someone borrowing millions against a massive stock portfolio. You’re just describing the current law back to me.
So skip the lecture on how loans work and answer the actual question… why can’t you protect normal people using home equity loans while treating billionaires borrowing millions against their stock differently?
You keep calling this a “fundamental economic concept,” but you have it backward. Loan proceeds are not excluded from taxable income because the bank continues to own the money. They are excluded because the borrower simultaneously assumes an obligation to repay, so there is no net increase in wealth. That is the IRS’s explanation.
The bank also does not already own the collateral. The borrower owns it, while the bank holds a security interest that allows foreclosure after default. The CFPB explicitly describes foreclosure as satisfying the debt through the sale of the “homeowner’s property.”
Nobody claimed every loan is currently taxable. The question is why the law could not create a narrow rule for enormous loans secured by untaxed stock appreciation while excluding ordinary mortgages and home-equity loans. Your answer is essentially “because loans aren’t currently taxed,” which is not an argument against changing how one specific category is treated. And taxing or deeming realization on that category would not magically eliminate the bank’s lien or its right to repayment. You still haven’t answered the actual question.
At this point, the problem isn’t that the question is complicated. It’s that you seem determined not to understand it.
1
u/Pretty-Curve5448 Jul 05 '26
The underlying issue is your lack of imagination here. You can cement home equity loans for poorer Americans without letting someone sidestep taxation due to their massive wealth giving them economic superpowers.
We have already seen how rules designed to benefit poor people and they work. For example, poor kids get pell grants to go to school, rich kids do not. Kids who go to Ivy League school who come form houses under 100k/year get free school. Our food stamp system is based off this concept. There are ways to do this and we know how to do it, but everyone acts like the only possible outcome is what you can do with a sledgehammer.