True, but these ultra-wealthy individuals aren’t taking loans out on anywhere near the majority of their portfolios.
If a billionaire has $1B, they can put $900m in the illiquid startup, and $100m in their own brokerage account.
They can get loans using $100m of collateral, only paying tax on $100m, instead of paying tax on the other $900m that they aren’t even actively using for loan collateralization.
Some who has $900m in a truly illiquid investment and $100m in liquid assets is basically a paper billionaire. As long as $900m is illiquid they have the means of someone with only $100m, and I’m OK if the IRS treats them that way.
True, but these ultra-wealthy individuals aren’t taking loans out on anywhere near the majority of their portfolios.
If a billionaire has $1B, they can put $900m in the illiquid startup, and $100m in their own brokerage account.
They can get loans using $100m of collateral, only paying tax on $100m, instead of paying tax on the other $900m that they aren’t even actively using for loan collateralization.
Some who has $900m in a truly illiquid investment and $100m in liquid assets is basically a paper billionaire. As long as $900m is illiquid they have the means of someone with only $100m, and I’m OK if the IRS treats them that way.