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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Almost none of the billionaire company founders hold 50% of their company shares… between co-founders, VC investors early on, shares sold in IPO, founders may remain the largest single shareholder but rarely have anything close to a majority of shares in their company.
However, they don’t pay taxes on shares they still own. Part of the reason billionaires pay so little tax relative to normal people is that they are only taxes on capital gains, when they sell shares.
Most company-founder billionaire types can just sell a tiny fraction of their shares to fund living expenses, without reducing their holdings too much. If somebody’s worth $5B and sells off $50M of shares, that’s 1% of their shares.
But many wealthy just borrow from lines of credit against their shares, delaying any sort of share dilution or tax implications.
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