[thethimble]

Borrowing against illiquid assets should be considered a taxable event. Seems like this would entirely fix the loophole.

[ch4s3]

So every small business loan should be a taxable event?

[dzhiurgis]

You pay taxes when you are paying off your loan...

[xjm]

Only if you pay it off with taxable income.

If you have a lot of assets you can just refinance your loan with more debt.

[dzhiurgis]

This makes no sense. How is lender going to make money?

[AngryData]

They still charge interest but at a rate lower than the tax rate of earning it as income.

[tenuousemphasis]

Really? What taxes?

[Windchaser]

Rather, you pay taxes on the income you use to repay the loan. Plus you pay the interest on the loan.

This basically defers the taxes to a later date and charges you interest for 'em. Which might be worthwhile, depending on how quickly and reliably your capital is growing.