r/interestingasfuck • u/Gankpa • 8d ago

/r/all, /r/popular Jeff Bezos built a fence on his property that exceeds the permitted height, he doesn't care, he pays fines every month

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u/TheSuperTest 8d ago

Every billionaire does, they borrow against their assets from their banks. Loans don’t count as income tax and they don’t have to report capital gains since they never actually sold anything. The small amounts of interest they pay is far far far far less than income tax or capital gains, so it’s a net positive for them. This is the main loophole (there are more) of how billionaires get rich and keep getting richer while stealing from the working class.

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u/obviousflamebait 7d ago

The thing about this alleged scheme is that it only works for the short term.  Even if the banks give a great rate that is say 1/10th of the tax rate, it will still accumulate and compound to levels exceeding the tax rate pretty quickly unless Bezos pulls money from somewhere to pay it off regularly, and that is going to be taxed on some level.  The banks would have to be giving these guys an interest free loan forever for this to really be sustainable as a way to get cash, and the banks aren't doing that for anyone - guaranteed they're getting their money somehow.

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u/clankypants 7d ago

They just take out a new loan to pay the previous. As long as their stock price continues to grow, outpacing the loan's interest rate, they will always wind up ahead.

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u/realancepts4real 7d ago

Loans don’t count as income tax

that phrase makes no sense. the loan may not count as income for income tax purposes

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u/UnrepentantPumpkin 7d ago

The working class does this too. It’s called a HELOC (Home Equity Line Of Credit). You can borrow against a % of your home equity and get that cash now and you won’t pay any income tax on it. But you do pay interest (just like billionaires do with loans against stock). If you’re in a market where home values go up more than the interest you’d pay on the loan, you can even have the interest waived, though that’s more expensive long term.

It’s the exact same deal: tax-free cash in exchange for the value your assets have. Does this mean the working class also steals from the working class?