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by LarsKrimi 4 days ago
Congratulations to the US. I'm sure it must be nice to have a trillionaire

I wish my country had a trillionaire. That would give my day to day life meaning

1 comments

It's not like his checking account has $1T in it, this is just a technicality that sums up all of the hypothetical value of the shares he owns in companies.

If he actually tried to sell it and turn it into cash it would be less than $1T.

Yeah but he can borrow against it and not pay any taxes.
Same as anyone else with a HELOC, asset secured loan, etc. You have to pay loans back, which is why they're not taxed as income.
If you borrow against it you still have to pay interest. If he somehow found someone to loan him $1T, which would probably be practically impossible, the interest would make the total amount he got less than $1T.
if you borrow against it and buy shares of stock, the stockmarket generally can be counted on for at least 7% returns, and the borrowing cost would be 5%, so no, chances are the interest would not eat up the borrowing.
Correct, he couldn't borrow $1T from one person with $1T as collateral.
Do people do that? Can I e.g. borrow against my assets and not pay any taxes? Curious to learn more.
When you get a loan you don't pay taxes. You pay taxes on the income used to pay it back, or the gains when you sell an asset to pay it back.
Yeah I’m confused about this part. Is there some loophole where they never have to pay the loan back? Otherwise they’d be taxed at that point.
The loopholes are well known at this point. They keep renewing loans until they die, then it's tax-free after death. It's called Buy-Borrow-Die.
Taxed on repaying a loan?
Can I e.g. borrow against my assets and not pay any taxes?

If you have a 401(k), yes. It's a way to turn a 25% credit card debt into a 5% loan.

The hitch is that while you can pay the credit card company over 30 years, the 401(k) loan is less than a decade, resulting in higher payments short-term, but money saved in the long term.

This strategy is not a traditional loan with interest and regular payments. If you try to live on regular loans it doesn't make any sense. It's a scheme mostly only available to HNW people where they repay upon death in certain tax loophole ways.
These loans still have interest and regular payments. They are not like your mortgage or credit cards, but interest and minimums still apply.
You won't pay taxes but you will pay interest. Most forms of value (real estate, gold, stocks, your car) you can borrow against in the USA, but the interest you pay almost always makes it a dumb idea.
I mean people get mortgages and carry credit card balances and do margin trading and get helocs. If those are taxable I might need to call the IRS.

For the uber rich it is called "buy-borrow-die".

And this is why the idea of a wealth tax has so many tres comas types up in arms.

So? Imagine he sells all his ownership and this tanks the value of his companies by 90%. Oh no. He only has $100,000,000,000 in the bank. Enough to be ludicrously rich a thousand times over.

I have never once understood this "oh it is only paper money" argument.

I'm just saying that when you say "trillionaire" it evokes the idea that he's hoarding $1T in a bank account. But it's almost entirely just locked up in shares of companies, and if he actually wanted to turn it into cash it wouldn't actually be 1T.
I don't believe that it does. Billionaires and even millionaires don't typically have that amount in a bank account. People understand this.
If it's so worthless, let me have it instead of him.
It's more like "he was already rich before, but now more of his wealth is countable".