The wealthy build wealth by buying assets, borrowing against them tax-free for living expenses, and then passing the assets to heirs with a "stepped-up basis" upon death. This maneuver effectively eliminates capital gains taxes for the next generation.

The biggest tax cut isn't a legislative change but rather neutering the IRS's budget. The agency lacks the resources to audit the complex finances of the wealthy, incentivizing aggressive tax strategies and leaving hundreds of billions in legally owed taxes uncollected each year.

A tax deduction lowers your taxable income, saving you an amount proportional to your tax bracket. In contrast, a tax credit directly subtracts from your final tax bill, offering a full dollar-for-dollar reduction. Prioritizing actions that yield credits provides a much larger financial benefit.

Unlike regulated stock exchanges, the art world lacks a central pricing authority. A small group of wealthy insiders can coordinate purchases of an artist's work at inflated prices, which legally and artificially creates a new, higher "market value" for their own holdings.

The wealthiest individuals don't have traditional paychecks. Instead, they hold appreciating assets like stock and take out loans against that wealth to fund their lifestyles. This avoids triggering capital gains or income taxes, a key reason proponents are pushing for a direct wealth tax in California to address this loophole.

OpenAI argues that because Elon Musk donated through a donor-advised fund and YC as a fiscal sponsor, his direct claims about a specific charitable purpose may not hold up legally. The direct relationship was with the intermediary, not OpenAI.

Instead of selling assets and triggering capital gains, the wealthy buy and hold assets like stocks. They then borrow against that portfolio tax-free for living expenses. When they die, a life insurance policy pays off the loan, allowing the original assets to pass to heirs tax-free.

The ultra-wealthy store art in "free ports"—private, tax-free warehouses. Because the art is legally considered "in transit," it remains untouched by domestic tax authorities, allowing for sales and storage without incurring customs duties or capital gains taxes.

Collectors buy art, have it appraised at a much higher value, and then borrow against that new value. Since loans are not considered income, this provides them with millions in tax-free cash for other investments, all without selling the underlying asset.