L.F. Ross
@marshflower.bsky.social
159 followers 447 following 44 posts
Comic Artist by day, rambling idiot by night. Ep. 3 of Scrap Metal is up now on Webtoons!
Comic Artist by day, rambling idiot by night. Ep. 3 of Scrap Metal is up now on Webtoons!
![Under current US law, if you founded a company and it has become very successful and you own a lot of its stock, there’s really no reason for you to pay taxes. You don’t have to take a salary, and the company doesn’t have to pay dividends (it can just reinvest profits in its business), so you don’t pay taxes on any cash flows from the company.[3] You also don’t have to sell any stock, so you don’t pay any capital gains taxes.
How do you buy groceries? Well, classically, a bank will lend you a bunch of money secured by your stock, at a fairly low interest rate (because the loan is pretty safe), and you use that money to buy groceries and houses and yachts and things. The loan is not a taxable event. You never really have to pay it back: You just borrow more to fund your lifestyle (and to pay the interest on the loan), and if your company keeps succeeding, the loan compounds at a lower rate than your stock. You keep this up for the rest of your life, and then when you die your heirs can sell some of your stock to pay back the loan. And they don’t pay any tax on the stock sale, because they get a “basis step-up.” This strategy is sometimes called “buy, borrow, die.”[4]](https://cdn.bsky.app/img/feed_thumbnail/plain/did:plc:an6o7ltcyxfventos6jwvwxr/bafkreihv4f32fzo5fkciserqhael6kepxehn74ipkq4ii5yqeuoou7pth4)
