Comment by triceratops
5 days ago
If they sell and incur capital gains. But they have so many better alternatives than you or me. And if they do incur capital gains they pay the same tax rate (or maybe 5 basis points higher, depending on your income) as you or me.
What alternatives are those, that enable realizing income without incurring income tax?
Borrowing against assets. Wealthy people get low, low rates, much lower than the hoi polloi would get on a HELOC or brokerage account margin loan. Banks like having them as clients.
Not only they get low rates, but if they have friends in the palace, they tend to be beneficiaries of large governmental contracts; during times of economic upset, they are the beneficiaries of large “monetary injections” that later cause inflation and prices to rise for all of us. During 2008, COVID, and the Mango recession the wealthy got much much wealthier, and all we got was expensive eggs and higher costs of living.
And how do you pay back the loan without realising a gain?
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Really? They're not going to get below prime. Nobody loans out money with a guaranteed prospect of below market returns. It's going to be above prime.
Usually about the lowest rate you can get is a mortgage on your house.
Of course, if your credit is bad, you're not going to get a good rate.
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