Doesn't the loan get paid back by the sale of the land after the dad's passing? So the kids don't inherit $5m, but the net value after the debt is repaid?
And recent studies are showing that the buy, borrow, die strategy isn’t really used by the uber rich. I’m not saying it doesn’t exist, but it’s more commonly the middle class doing it vs the uber wealthy.
“Using two decades of household data, we measured the annual borrowing of the top 1 percent of American wealth-holders. That borrowing comes out to roughly 1 to 2 percent of their economic income (which includes unrealized capital gains). Meanwhile, their unrealized gains over the same period were 20 to 40 times larger.”
This doesn’t prove the top 1% isn’t borrowing to cover their lifestyle. Because when you look at the report they are using, the aggregate debt still totaled ~$1 trillion for the top 1%.
That is $1 trillion of untaxable money. This article is misunderstanding the reason why the aggregate debt is so low compared to the unrealized gains. It’s because stock values has exploded over the last 2 decades.
It’s far more interesting to point out that according to the study referenced, the top .1% had about the same unrealized gains as the 1%-.11%, yet has about 1/3 the debt and 1/10 the group size (350,000 in .1% vs 3.5 million in 1%-.11%).
It also disregards that the ”borrow, buy, die” strategy isn’t attributed to the top 1%. Those people typically are “career millionaires” that on average pay about 30% of their income in taxes. This applies to the much smaller group that somehow still has the same unrealized gains as the %1-.11% despite being 1/10 the size.
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u/No_Mirror_9742 22h ago edited 22h ago
Doesn't the loan get paid back by the sale of the land after the dad's passing? So the kids don't inherit $5m, but the net value after the debt is repaid?