eli5 what do people mean when they say billionaires dont get taxed
In: 9253
Billionaires don’t get that rich with normal salaries. They get that rich because of appreciation in asset values. But asset growth (or capital gains) are only taxed when they sell. And capital gains tax rates are lower than most income tax brackets.
They may sell a tiny portion of their wealth to cover living expenses and pay taxes on that, but it’s a tiny portion of their wealth. Say somebody’s worth $1B and sells $10m in stock to fund their lifestyle. They pay 20% tax, or $2m, which is nothing relative to their net worth.
But billionaires don’t even really need to sell, as they can typically get lines of credit that allow them to borrow at crazy low interest rates, while their assets keep appreciating in value. Someday they may sell assets to cover their loans and pay taxes, but they may wait for advantageous tax law changes, or may just keep rolling debt until they die and let their estate settle up on the debts and taxes.
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