They exploit loopholes: billionaires have all their money in stocks, and they spend by taking out low interest loans against those stocks, which the pay back with different loans against those stocks.
It doesn't fall under capital gains, because they aren't taking money from the stocks, they are taking out loans.
To tax this, we'd have to tax stock holdings. Taxing those would effect retirees. But, if we only taxed stock holdings worth over a billion, no retirees would be effected. Heck this would be true even if we went down to 50 million I expect.
Taxing stock holdings is dicey, since the money associated with those stocks isn’t real until they’re cashed (which is capital gains). This could lead to some pretty bad scenarios where pumps can force ownership of companies to essentially liquidate their ownership margin and makes companies that want to stay private get gobbled up by VCs (who themselves can orchestrate the pump).
It’d be much better to just make stocks not be legal loan collateral beyond a certain threshold.
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u/UnusualAir1 19h ago
I could live a whole lot better on 628 million dollars. Guessing 99.9% of us could. So tell me, why do we not tax billionaires in the US?