I think you're missing that someone gave them money at some point, usually their parents.
this post was submitted on 24 Aug 2025
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Yeah and then they evade taxes
That's usually how they evade taxes.
Are they successful or corrupt/nepo baby?
The right most one there is a problem. Feels like people shouldn't be allowed to do that, but I don't know the best mechanism to make it illegal.
That one doesn't make sense. They're paying interest on the money they borrow, and they still pay the taxes when they sell the stock, which they inevitably must, in order to pay off the debt. It's just been time shifted, they didn't save that money. If the stock is appreciating, they end up paying higher tax on it.
I'm sure there are better loopholes than this that are too complicated to show in an infographic.
The interest is very low, since it's guaranteed by assets. The cost of the interest is less than taxes. So, as soon as one loan expires you take out another. You keep taking them out until you die, then your estate pays the loans back out of the estate and then the rest passes on to your offspring. If you want to know more, there isn't more to know really but you can Google it. This buy-borrow-die scheme wasn't made public until the last few years and details are still scant.
They pay very low interest on the loans, and they only pay taxes on the stock if they sell (and realize the gains). If they die, their heirs don't pay taxes because of the step up basis rule.
But they still have to pay the bank back, so it just pushes the question to where they get the income or assets to do that. It would be weird to pay interest on the debt for decades until they die and their heirs can pay it.
- Have a few million in stock and other assets
- get a loan against these assets at a very low rate
- do literally anything with that money that has a higher return than your interest rate
- never pay income or capital gains taxes
I'm sure it gets more complicated than that. "Buy borrow die" is a common strategy
What's the mechanism for getting one of these very low interest rate loans? Isn't that unprofitable for the bank? Or is this option unavailable when interest rates are high? 5 years ago I got a fixed mortgage at 2.5% but I couldn't do that today, does that change if I'm rich enough?
I'm not rich enough to know the details. You can probably find answers online since it's not like a secret. I think if the amounts are large enough, the rates can be lower so the bank still makes money. Also the collateral is worth more than a house, I think. Usually. More liquid.
The whole concept of interest is fucked up and a tool for the rich to extract money from the poor. That should be illegal.
Interest payments from money sitting in a bank account are basically a rounding error on most rich people’s balance sheets. By far the most wealth they accumulate comes from the growth of stocks they own.
Yes, but that wealth will tie one way or another into the banking system (for example a rich person could take an ultra low-interest loan to invest it), which is fueled by money extracted from working class people by restricting necessities of life such as housing and education. I mean banks certainly aren't building up their wealth by giving loans to the rich essentially for free. It's no exaggeration to say that the whole system runs on human suffering with the purpose of making the rich richer.
I'm pretty sure it used to be considered bad and sinful
https://en.m.wikipedia.org/wiki/Usury
In many historical societies including ancient Christian, Jewish, and Islamic societies, usury meant the charging of interest of any kind, and was considered wrong, or was made illegal
bad and sinful
Lpt: you can use the Bible as an excuse to not push credit cards on customers in retail.
Deuteronomy 23:19 is quite clear when it says “You are not to charge interest to your countrymen: interest on money, food, or anything that may be loaned on interest"
Banks charge interest on credit cards.
If I push a credit card, that is the same as me pushing interest on my fellow countryman, and as I am a devout Christian (lmao no, I have donated money to TST to help pay for their clinics) I cannot in good conscience offer a credit card to anyone.
So far no retail manager has pushed back on it. Probably because they know I'm full of shit but if pressed I absolutely will make it a problem for them, and since I'm solidly in the Bible belt of the US (send help please), nobody wants to chance a court case.
Stocks as compensation are taxed as income.
My retirement is going to take 30 years to make it where it needs to be at 8% buuuut the rich get to avoid 37% tax annually.
Tax avoidance*
Yes. Tax evasion is a crime. Tax avoidance is paying only the taxes you’re legally required to pay.
If you’re going to blame someone, blame the legislators who created really complicated tax codes with a million different exemptions, loopholes, carveouts, and rebates. Very simple tax systems don’t have these issues so no one ends up paying more than they owe.
It's both
mostly avoidance, specially because they are typically smart enough (or more accurately their accountants are) to realize that going to court with the feds is expensive and paying the minimum amount of tax (and accompanying shenanigans to reduce taxable income) is much cheaper.
Couldn't be more wrong, if it tried.