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I admit I don't know how this all works. But just a few naive questions: if these folks are taking out loans backed by the shares of their stock, how do you rep
by dayk995 5y ago
I admit I don't know how this all works. But just a few naive questions: if these folks are taking out loans backed by the shares of their stock, how do you repay that loan without triggering a taxable event (ie selling shares). If we as a society want to prevent this from happening, can the government force the banks to raise the rates on these types of loans so it becomes less attractive for these individuals. The US could then require that some % of that loan to account for taxes.
- germinalphrase 5y agoApparently, you roll the original loan into a new loan until you die?
- camel_Snake 5y agoMy understanding is the essentially take out loans indefinitely using their assets as collateral. Loans to pay back previous loans, etc. The 'grift' is that when they die, their inheritors are able to sell off said collateral to pay off the debt avoiding any cap gains on those sales due to the step-up basis after death.
- imtringued 5y agoCharge a negative interest rate on their bank accounts. If their income is derived from selling assets they will lose a lot from the negative interest rates because they take the loan ahead of time.