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This is the case of "Buy, Borrow, Die" or "kick the can". The top 0.01% paying a lower percentage of taxes than even the lower tax bracket worker class. If you

This is the case of "Buy, Borrow, Die" or "kick the can". The top 0.01% paying a lower percentage of taxes than even the lower tax bracket worker class. If you are a wharever-ionaire you could put your gains in index S&P 500 shares, then use them as collateral, paying everything you need with credit and having a $1 annual salary. So technically, that $1 it's their only income to the IRS. But what about interest? with that collateral, you have a special rate close to (or even lower than) inflation. Then you die, the bank takes your shares to pay your debt, and that's it. https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583 https://www.wsj.com/articles/buy-borrow-die-how-rich-america...

GDC7 5y ago
but that isn't very smart strategy because it prevents you from spending every dollar that you have ever earned. At some point you want to open the floodgates so you don't leave any quality of life on the table. You can't do that on margin loans, whereas you can if you are able to engineer a tax efficient way to cashout without paying capital gain tax
- nikitaga 5y ago
  Nobody who uses this strategy will come even close to spending every dollar that they earned, they spend all they want yet still end up leaving all their wealth to their kids when they die.
  - GDC7 5y ago
    > Nobody who uses this strategy will come even close to spending every dollar that they earned But why? It's a lot of quality of life left on the table.
    - yifanl 5y ago
      After the first hundred million dollars spent on personal expenditures, what material gains to quality of life are there?
      - GDC7 5y ago
        However small, isn't it better than losing them? I think yes. Because you can't bring that "quality of life potential" in the grave
        kadoban 5y ago
        It's not small, it's zero or even negative. If you already have everything you want, buying more is just extra crap you have to deal with.
        Spooky23 5y ago
        Many people with money like this flip; preserving capital and reducing risk becomes the destination, not the journey. It’s the way humans are wired, and there’s a whole industry of lawyers, accountants and others to support it.
        gabrielhidasy 5y ago
        Really depends, I can see a lot of quality of life on leaving family set for the next few centuries. And a lot of headache on managing the next personal island.
        Jasper_ 5y ago
        The FT runs a magazine called "How To Spend It" with ideas for what cheeky stylish thing to buy this month after you already spent it on what you want to. That this is apparently a lucrative business possibly tells you that you can max out your quality of life and still have money leftover. https://www.ft.com/htsi https://www.ft.com/htsi
AmericanChopper 5y ago
You missed a couple of steps. > Then you die > The bank takes your shares to pay your debt > The IRS taxes this against your estate as income > The entire value of your estate is taxed for any capital gains at the “fair market value” of all your assets at the time of your death > and then that's it.
- Aerroon 5y ago
  Doesn't this mean that it all still gets taxed, but if nothing goes wrong, then it's paid after you die?
  - AmericanChopper 5y ago
    Yes, every single piece of it is taxed. But a lot of people really don’t want you to think it is. Apparently a couple of articles about the calendar years in which some billionaire didn’t pay very much tax did the trick on the parent commenter.
  - kyteland 5y ago
    You should read about the step up in basis loophole that happens when you die. That's the biggest one I'm aware of where your estate doesn't pay taxes after death that you would have owed in life. I'm sure there are many others I'm not aware of, but this is one everyone should know about. > https://www.investopedia.com/terms/s/stepupinbasis.asp https://www.investopedia.com/terms/s/stepupinbasis.asp
- rapind 5y ago
  And of course it's more nuanced than that, with stuff like accelerated depreciation, preferential tax rates on investment income, charitable lead annuity trusts, etc. ad infinitum.
- Spooky23 5y ago
  That’s what the talk radio shills and similar right wing folks tell you. The reality is that when you have enough cash to justify, you roll your assets into a series of South Dakota trusts and that money is perpetually tax-free. Another tactic is to use Nevada and Delaware corporations to buy real property everywhere, and use that to avoid most taxation.

GDC7 5y ago

but that isn't very smart strategy because it prevents you from spending every dollar that you have ever earned. At some point you want to open the floodgates so you don't leave any quality of life on the table. You can't do that on margin loans, whereas you can if you are able to engineer a tax efficient way to cashout without paying capital gain tax

nikitaga 5y ago
Nobody who uses this strategy will come even close to spending every dollar that they earned, they spend all they want yet still end up leaving all their wealth to their kids when they die.
- GDC7 5y ago
  > Nobody who uses this strategy will come even close to spending every dollar that they earned But why? It's a lot of quality of life left on the table.
  - yifanl 5y ago
    After the first hundred million dollars spent on personal expenditures, what material gains to quality of life are there?
    - GDC7 5y ago
      However small, isn't it better than losing them? I think yes. Because you can't bring that "quality of life potential" in the grave
      - kadoban 5y ago
        It's not small, it's zero or even negative. If you already have everything you want, buying more is just extra crap you have to deal with.
      - Spooky23 5y ago
        Many people with money like this flip; preserving capital and reducing risk becomes the destination, not the journey. It’s the way humans are wired, and there’s a whole industry of lawyers, accountants and others to support it.
      - gabrielhidasy 5y ago
        Really depends, I can see a lot of quality of life on leaving family set for the next few centuries. And a lot of headache on managing the next personal island.
      - Jasper_ 5y ago
        The FT runs a magazine called "How To Spend It" with ideas for what cheeky stylish thing to buy this month after you already spent it on what you want to. That this is apparently a lucrative business possibly tells you that you can max out your quality of life and still have money leftover. https://www.ft.com/htsi https://www.ft.com/htsi

AmericanChopper 5y ago

You missed a couple of steps. > Then you die > The bank takes your shares to pay your debt > The IRS taxes this against your estate as income > The entire value of your estate is taxed for any capital gains at the “fair market value” of all your assets at the time of your death > and then that's it.

Aerroon 5y ago
Doesn't this mean that it all still gets taxed, but if nothing goes wrong, then it's paid after you die?
- AmericanChopper 5y ago
  Yes, every single piece of it is taxed. But a lot of people really don’t want you to think it is. Apparently a couple of articles about the calendar years in which some billionaire didn’t pay very much tax did the trick on the parent commenter.
- kyteland 5y ago
  You should read about the step up in basis loophole that happens when you die. That's the biggest one I'm aware of where your estate doesn't pay taxes after death that you would have owed in life. I'm sure there are many others I'm not aware of, but this is one everyone should know about. > https://www.investopedia.com/terms/s/stepupinbasis.asp https://www.investopedia.com/terms/s/stepupinbasis.asp
rapind 5y ago
And of course it's more nuanced than that, with stuff like accelerated depreciation, preferential tax rates on investment income, charitable lead annuity trusts, etc. ad infinitum.
Spooky23 5y ago
That’s what the talk radio shills and similar right wing folks tell you. The reality is that when you have enough cash to justify, you roll your assets into a series of South Dakota trusts and that money is perpetually tax-free. Another tactic is to use Nevada and Delaware corporations to buy real property everywhere, and use that to avoid most taxation.