If non cash rich billionaires have to sell stocks to pay taxes how do they stay in control of their companies?
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Unrealized capital gains are untaxed*, meaning that the profit is only taxed when they sell stock. Any stock sells they perform will be planned with taxes in mind, and for day-to-day expenses they will either have enough money saved** or take loans against the shares at low interest rates.
Many will have taxes due from dividends even if they do not sell stock, however the dividends are typically paid in cash and the tax rate is always less than 100%.
Many others are employed by the companies they own, often in an executive position or on the board of directors. For these positions, they will often be paid a salary*** and bonuses, which are nearly always taxed. The bonuses are often paid in stock, which may require they sell some stock to cover the taxes, however the amount they are required to sell for taxes will be less than what they gained.
* I am not aware of any jurisdictions that tax them, but there are a lot of jurisdictions in the world, and it would not surprise me if there is an exception.
** “Cash poor” may still mean hundreds of thousands in cash or extremely liquid assets.
*** A lot will arrange a formal salary of $1/year – just enough to be able to legally be an employee for tax reasons, both for the company and the employee. The vast majority of their compensation generally comes from stock options and performance bonuses.
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