Current Events > Video on how the ultra wealthy get out of paying taxes

(+) Yeah! (+)

https://www.youtube.com/watch?v=lK3q1lO58js

Crucially, she goes over the "Buy, Borrow, Die" cycle. The short version being:

Buy: Ultra wealthy people put as much of their net worth into non-liquid assets (like stocks and real estate) as possible. Sometimes even assets they expect to lose value (she explains in the video).

Borrow: When they want money to make big purchases or for anything really, instead of selling some of their assets (which would cause them to be taxed on the realized gains) they take out loans. Because they have so much in assets that they can use as collateral they can borrow at extremely low interest rates.

Die: If they sell the asset during their lifetime they pay tax on the value it gained since they bought it. If they hold it until they die and pass it on to an heir and the heir sells it, they only pay tax on the value it gained since the transfer, not since it was originally purchased. This allows the inheritor to get all the realized gains on an assets with most or all of those gains never being taxed. This is the stepped-up basis loophole.

She goes over some other methods such as how many things can be written off as business expenses, and how the rich have exploited Roth IRAs (which were intended to help middle and working class people) to avoid taxes on large amounts of wealth.

I think the biggest point to take is that it isn't a matter that we don't know how the richest people are avoiding taxes. It's that the methods they use largely require you to already be very rich to take advantage of and the laws are written in such a way to allow them to keep doing it.

Leeja Miller. Great person to follow for objective content.

Soon they won't even need this loophole

GATTJT posted...

Soon they won't even need this loophole

One thing not even mentioned in the video is the GOP starving the IRS of funding so they don't have the resources to audit wealthy people. That was reversed somewhat under Biden but we're obviously about to go back to it.

UnsteadyOwl posted...

One thing not even mentioned in the video is the GOP starving the IRS of funding so they don't have the resources to audit wealthy people. That was reversed somewhat under Biden but we're obviously about to go back to it.

She mentioned this in her Project 2025 video in the past. But that's a great point too.

Seems easy enough to close if they wanted, loans start counting as income and repayments of loans count as deductions. Obviously that won't happen.

Hey you just gotta get business savvy and start investing right.

Step 1: form company
Step 2: split your stock in to trillions of useless shares
Step 3: Sell ONE unit of stock to a few of your friends for grossly inflated price
Step 4 ???

INFINITE MONEY EVALUATION

UnsteadyOwl posted...

Die: If they sell the asset during their lifetime they pay tax on the value it gained since they bought it. If they hold it until they die and pass it on to an heir and the heir sells it, they only pay tax on the value it gained since the transfer, not since it was originally purchased. This allows the inheritor to get all the realized gains on an assets with most or all of those gains never being taxed. This is the stepped-up basis loophole.

This is the part that should be changed. When you die, all your unrealized gains should be taxed.

uwnim posted...

This is the part that should be changed. When you die, all your unrealized gains should be taxed.

It's definitely a loophole, but it's hard to fix because you wouldn't want a non-rich person to suddenly be on the hook for taxes because they inherited their non-rich parents' house. Or really anything. Maybe it could only kick in after a certain large value and be paid out of the estate prior to inheriting it?

tankboy posted...

It's definitely a loophole, but it's hard to fix because you wouldn't want a non-rich person to suddenly be on the hook for taxes because they inherited their non-rich parents' house. Or really anything. Maybe it could only kick in after a certain large value and be paid out of the estate prior to inheriting it?

Essentially, people actually like loopholes because they can imagine it benefitting them

tankboy posted...

It's definitely a loophole, but it's hard to fix because you wouldn't want a non-rich person to suddenly be on the hook for taxes because they inherited their non-rich parents' house. Or really anything. Maybe it could only kick in after a certain large value and be paid out of the estate prior to inheriting it?

It would be the bold. Die, unrealized gains get taxed. After the government gets paid, the heirs get whatever their share is.
For like a non-rich person inheriting a house, it would probably be pretty similar to how things currently work when there's still some sort of mortgage or whatever on the house.

I've heard this before. Love off the loans borrowed off your assets? How do you pay your loans?