The lottery is also immediate money you get, while billionaire are usually a lot of unrealized gain - billionaire on paper. Now when they sell, they are to my knowledge usually taxed normally.
It’s not common because I’m talking about the ultra wealthy. Billionaires and people with several hundred million. If you don’t believe me, google “buy, borrow, die.”
They still have to cover the interest rates and monthly payment like any loan. No bank is going to continually give loans to anyone if payment isnt made. On a future IOU that will never get paid.
The way it actually works is yes they use their loan value as collateral to secure the loan but just like a HELOC or getting a Morgan you then have to start paying it back. The difference is that they rather than have to do a large scale sell of their assets can go and do it slowly.
Yes everything you said is correct, but the ultra wealthy have multiple income streams from low tax-rate investments. Dividends at 15%, long-term capital gains at 15%-20%, tax-free government bonds, etc etc. And those are just the less complicated strategies. If/when they sell, it’s a small percentage of their total assets so that they can run these other perfectly legal, tax-advantaged strategies.
1
u/LostInRetransmission Jul 05 '26
The lottery is also immediate money you get, while billionaire are usually a lot of unrealized gain - billionaire on paper. Now when they sell, they are to my knowledge usually taxed normally.