ContinuousZ t1_j6m7fu4 wrote


You just said avoid. There is no avoiding just delaying. You still have this impression this practice is done purely to "avoid" taxes. You don't pay interest on a huge loan to delay paying taxes.

>If the collateral raises faster than the interest rate, this can be extended to add on more debt load in total. Using this is risky

the banks that are giving out the loans don't like risky

>The loans will also let them do better timing with sells.

You're just reiterating what I just said.

>If they manage to delay the repayment until death

Banks are in it to make money. They aren't going to let Jeff Bezos take out a huge loan and not pay it back for 40 years.


ContinuousZ t1_j6kyj7m wrote

>the rich can take loans using the stock as collateral allowing them to defer paying taxes, often permanently as no tax is owed until the stock is actually sold

you imply they do this to avoid taxes which isn't the case and you say "permanently" which makes no sense. You realize they have to pay back these loans, right? So what ever income they've made will be taxed and will go towards the loan(which btw has a small interest rate). The reason the rich get loans because they believe their stock will go up so they want to hold on to as long as possible. So if A rich person wants 100mil instead selling the 1mil shares, they get a loan and when they have to pay off the loan they might have to only sell 300,000 shares.


ContinuousZ t1_j4dr421 wrote

>Musk nor Trump have the business acumen of their father.

you think the richest man alive has worst business acumen than his father who went broke in the 90s?

>But when you’re born that rich, you tend to fall upwards I guess.

Elon was born in a wealthy family but not even close to ultra rich that he can fall upwards like trump.

"In 1995, Musk, his brother Kimbal, and Greg Kouri founded Zip2.[49][50] Errol Musk provided them with $28,000 in funding. Compaq acquired Zip2 for $307 million in cash in February 1999,[56][57] and Musk received $22 million for his 7-percent share."

28,000 is not that much, can easily find an investor to fill that. I know parents who buy their highschool kids $50,000 cars and that's not even an investment it's depreciating asset. If Elon musk's dad was ultra rich, Elon would have way more than 7 percent share. You only give up shares for investors or to compensate employees when you lack funding/cash which his dad couldn't provide because he wasn't ultra rich.