One loophole seems to be taking a loan against stocks that a billionaire owns. This way one does not receive an income which would be taxed. All while stocks can continue to give dividends and are immune to inflation. This can be googled with public statistics.
This demonstrates that Musk pays a very small amount of income tax, but the whole structure of what he’s doing sort of implies that the feds would take their cut at some other point in the chain
I’m also pretty sure it’s inappropriate to equivocate between loans and income? maybe if we had some reason to believe that musk would never need to pay the loan back, I could see it. but it would be a really bad idea to tax liabilities.
It may initially seem so, but in fact this strategy even gets called “buy, borrow, die”. In the end loan is practically closed without taxes as well, and feds don’t get their cut. Main factor seems to be that value of assets grows overtime, which hacks tax formula.
… Actual “buy, borrow, die” planning is enormously complicated and involves dozens of tools and techniques implemented over the course of many years.
First, this type of planning is generally not economically feasible unless the taxpayer has a net worth exceeding around $300M. Why? If you’re worth less than that, you’re not going to be able to command attractive financial products from investment banks. …
One may say that such system is obviously flawed and is unlikely—but most probably it’s just a consequence of the fact that billionaires are heavily involved in law making process. (Lobbying, networking-corruption, etc)
Quoted phrase is just a big simplification.
One loophole seems to be taking a loan against stocks that a billionaire owns. This way one does not receive an income which would be taxed. All while stocks can continue to give dividends and are immune to inflation. This can be googled with public statistics.
Articles like one below also partially describe what goes on with taxes in big companies like Tesla. https://itep.org/tesla-reported-zero-federal-income-tax-in-2025/
This demonstrates that Musk pays a very small amount of income tax, but the whole structure of what he’s doing sort of implies that the feds would take their cut at some other point in the chain
I’m also pretty sure it’s inappropriate to equivocate between loans and income? maybe if we had some reason to believe that musk would never need to pay the loan back, I could see it. but it would be a really bad idea to tax liabilities.
It may initially seem so, but in fact this strategy even gets called “buy, borrow, die”. In the end loan is practically closed without taxes as well, and feds don’t get their cut. Main factor seems to be that value of assets grows overtime, which hacks tax formula.
https://smartasset.com/investing/buy-borrow-die-how-the-rich-avoid-taxes
Or this explanation
One may say that such system is obviously flawed and is unlikely—but most probably it’s just a consequence of the fact that billionaires are heavily involved in law making process. (Lobbying, networking-corruption, etc)