Gates, Bezos, Yankovich, Buffet all have a theorhetical fortune. I assume none of them have a Scrooge McDuck like vault of coins on a hill somewhere. So how do they convert their wealth into purchases. One would assume they have some walking around money. But if they want to buy a speed boat or a pallette of rice-a-roni, do they have to sell stock? How do you convert equity worth billions into everday cash?
In: Economics
So the Bezos method for buying something expensive is to take out a loan against his fortune. A bank is cool with giving him the absolute lowest rate since clearly he’s good for it. So he takes a loan of $100M and buys a yacht, and then he doesn’t owe the 35% tax associated with regular income and he doesn’t owe Cap Gains tax of 20% but he does owe 3% against the loan. From there you decide if you want a higher salary to pay the loan, taxed at 35%, or to sell a small amount of stock, 20% tax, so then he opts to gradually sell stock. This plan works awesome if your stock is growing at like 15-20% annually and the loan is growing at 3%.
https://www.businessinsider.com/american-billionaires-tax-avoidance-income-wealth-borrow-money-propublica-2021-6?amp
Latest Answers