Related Stories
Buy, Borrow, Die: How to be a billionaire and pay no taxes
Key Excerpts from Article on Website of The Atlantic
Posted: April 1st, 2025
https://www.theatlantic.com/ideas/archive/2025/03/tax-loopho...
A three-step process called “Buy, Borrow, Die” ... allows people to amass a huge fortune, spend as much of it as they want, and pass the rest—untaxed—on to their heirs. The technique is so cleverly designed that the standard wish list of progressive tax reforms would leave it completely intact. The ... wealth [of the superrich] consists almost entirely of stock in the companies they’ve built or invested in. Instead of selling their assets to make major purchases, the superrich can use them as collateral to secure loans, which, because they must eventually be repaid, are also not considered taxable income. You might think this couldn’t possibly go on forever. Eventually, the rich will need to sell off some of their assets to pay back the loan. That brings us to step three: die. According to a provision of the tax code known as “stepped-up basis”—or, more evocatively, the “angel of death” loophole—when an individual dies, the value that their assets gained during their lifetime becomes immune to taxation. Those assets can then be sold by the billionaire’s heirs to pay off any outstanding loans without them having to worry about taxes. All of this is completely, perfectly legal. The strategy has basically killed the entire concept of an income tax for the wealthiest individuals. The result is a two-tiered tax system: one for the many, who earn their income through wages and pay taxes, and another for the few, who accumulate wealth through paper assets and largely do not pay taxes.
Note: Average individuals also pay more in taxes than major corporations. For more along these lines, read our concise summaries of news articles on financial inequality.
Related Stories
Latest News
Key News Articles from Years Past
