As far as I understand it, a billionaire’s wealth is wrapped up in stock, which is used as collateral to borrow money to actually spend. So how do they pay off those loans? With other loans? Loans all the way down?
In: Economics
This is simplified but the point is to rent the money from the bank for less than it would cost to pay the taxes that would be due if they sold the stock. When they die and the stock is sold there are no taxes on the sale. This means they are never paying back the loan as why should they? On top of it they are making more money off of their holdings than they are paying in interest anyway.
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