[dwa3592]

Let me simplify it like i would for a 5 year old.

The loophole is that they never pay taxes on the unrealized gains bc they lived on the borrowed money their whole life. They will never sell their stocks, so there will be no taxable event. When they die they will leave their wealth to the children which effectively erases the unrealized gains. So no one pays taxes on that huge chunk of money. Google "buy,borrow,die".

[smallmancontrov]

Yes, but that's only the long term part of the plan. The short term part of the plan is that the marginal propensity to consume drops with income. Poor people earn and spend all their money, both of which are heavily taxed, while rich people "earn" capital gains and invest all their money, neither of which are taxed.

Here's how investment isn't taxed: take out a loan collateralized against the assets with unrealized gains. If the investment works, it can service its own interest, which is deductible. If it doesn't, the capital loss offsets the capital gain made by selling the collateral. Both cases result in approximately zero tax.

This is nuts.

[eudamoniac]

Poor people pay no income tax. It isn't "heavily taxed."

[smallmancontrov]

They pay payroll and consumption tax, which are quite steep compared to the 0% tax bracket for mega billionaires.

[eudamoniac]

I'm not a five year old, you simplified it to the point of nonsense. The workable aspects of it are complex and unusual. I did Google it and understand now, no thanks to your comments.