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> Or he can borrow 100 million from any bank and they will accept the shares as collateral. He does not pay capital gains at this point Nope, but when he does

> Or he can borrow 100 million from any bank and they will accept the shares as collateral. He does not pay capital gains at this point Nope, but when he does sell those shares, he will (except for the step-up in basis rule on death). And he has to make payments on the loan, which has to come either from income (which is taxed), sales of capital (which is taxed) or other loans (which will then be paid off with money which will ultimately be taxed in some way). Remember that the loan is a liability. The only issue here is the step-up in basis. Everyone gets distracted by the big loan, but ignores the actual step where taxes can be avoided. If we eliminate the step-up in basis then there is no non-taxable issue.

lifeisstillgood 2y ago
If I understand “step up in basis” this is where Jeff Bezos never sells his shares, dies and leaves his shares to his son for example. The (US) tax law then “steps up” the value of shares - so instead of saying the shares were orignally worth 1 cent each and now with 100 dollars each, they are treated as being worth 100 dollars when the son gets them and so he has to pay no capital gains. I think I over simplify. And you suggest eliminating that is a good idea. I agree - but suggest we don’t have to wait till Jeff dies - there are other taxable “liquidity events” that are freely entered into and do not rely on third party valuations, and that achieve the goal of (the Modern Monetary Theory goal) of taxing and so eliminating money. And yes the loan is a liability - but under current tax law (which is some version of buy, borrow, die) the wealth remains untaxed or under-taxed, kind of defeating the point of governments printing the money. In short we want wealth to circulate not congregate.