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Yeah but borrowed money needs to be eventually paid back, so you're (at best) just deferring the problem. Even if a wealthy founder took out a collateralized l
by bhupy 6y ago
Yeah but borrowed money needs to be eventually paid back, so you're (at best) just deferring the problem.
Even if a wealthy founder took out a collateralized loan, in order to pay back the loan, they have to realize some gain somewhere (which is already taxed). That money isn't free. Even to simply pay back the interest, they would have to liquidate some of their stock (which is already taxed). Eventually when the principal needs to be paid back, the only way to do it is to liquidate (and divest) the equivalent value in their company (which is already taxed).
- lokar 6y agoIf you can borrow against shares to buy a big house, mega-yacht, etc you can do so to pay your taxes.
- bhupy 6y agoNo, your argument would be like saying "if you can borrow against shares to buy a big house, mega-yacht every single year, you can do so to pay your taxes". PG's essay shows that the wealth tax compounds every year. That just doesn't happen with consumption. Bezos doesn't have 20 homes and 20 yachts.