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.

By purchasing art, getting it appraised for a significantly higher value, and then donating it, collectors can claim a tax deduction for the full inflated amount. This deduction can exceed their original purchase price, effectively creating a net financial gain from a charitable act.

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.

The proposed tax on billionaires' assets isn't about the billionaires themselves, who hold a fraction of national wealth. The real goal is to establish the legal precedent for a private property tax. Once normalized, this mechanism can be extended to the middle class, where the vast majority of assets reside.

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.

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.

Instead of focusing on changing the tax code, the most significant tax benefit for the ultra-wealthy has come from systematically cutting the IRS budget. This prevents the agency from auditing complex returns, effectively making the wealthy 'protected by the law, but not bound by it,' and creating a massive enforcement gap.

Billionaire wealth taxes are easily dodged by relocating. A more robust policy would tax capital gains based on the jurisdiction where the value was created, preventing billionaires from moving to a zero-tax state just before selling stock to avoid taxes.