[koheripbal]

I don't see why we care that they're using an asset as collateral for a loan. They still need to pay back that loan with post-tax money.

Maybe they're kicking the can down the road, but that's their choice.

The real issue here is that super rich are, at the end of that road, donating shares to their non-profits, tax free. ...and that their children then have access to that non-profit and all of its assets, again without income or estate tax.

The big hole here isn't the unrealized gains - it's the "charitable Foundations" that are a complete scam.

[guiambros]

> They still need to pay back that loan with post-tax money.

Unless they pay back said loan with another loan. Given the massive amount of wealth accumulated, you can rinse and repeat indefinitely. Basically you have a free cash flow machine, without ever having to convert that income as proceeds (unless you want to convert between asset types).

Having said I agree with your main point: we need to close the loopholes, and the charitable foundations is the biggest of all, and sadly the article missed the point entirely.

[JAlexoid]

The annoying point is that those foundations are not at all charitable.

[pas]

> and that their children then have access to that non-profit and all of its assets, again without income or estate tax

That shouldn't matter as long as they don't start to enjoy the benefit of those assets.

This means tax rules should separate the estate as a business/investment from the personal use of the funds/wealth.

Sure, at some point it becomes neigh impossible, like let's say Bill and Melinda went to Africa on their marriage anniversary, was that business or personal? (And yes, at that level of wealth, influence, income it's always both.)

When an owner (or close relative or friend of an owner) of a family trusts/foundations/estates/NGOs/church/non-profit conducts business through said entity, that entity should pay some tax corresponding to said expense as if some part of that expense were income to the owner/relative/friend.

[ric2b]

> Maybe they're kicking the can down the road, but that's their choice.

I can't just say "Oh, I'm investing 30% of my income, tax that part when I sell later", I don't have that choice of kicking the can down the road.

[ljf]

In the UK at least, the 'trick' is that the load is never actually repaid, or is continually deferred.

[RhodoGSA]

tldr; The rich, there kids and grandkids will never pay taxes under the current structure.

The problem is you're not kicking the can down the road, you are delaying it forever. Your entire 'Lifestyle' can be funded tax free. Instead of things being your assets, that you spent money on you could have a company plane, car, boat, house. Lavish dinners can be put on the company card as 'business meetings' and travel as 'Business Travel'. This is all taken out of your business profits and the best tax structure for a business is at a loss or barly profitable. Add that to the point OP made about taxing collateral loans is it would semi-eliminate the 'loophole' of never having to pay taxs.

Edit: One more point. Should a $1m donation to scientology be considered a tax writeoff?