The super-rich avoid capital gains taxes by borrowing against their appreciating assets instead of selling them. This allows them to fund their lifestyle tax-free. Since assets are only taxed upon sale, this deferral becomes permanent if they hold the assets until death, when the cost basis resets for heirs.

The ultra-wealthy avoid income and capital gains taxes by taking no salary and instead borrowing against their massive, unrealized stock holdings. This provides them with liquid cash for spending and investment while never triggering a taxable event, effectively hacking the tax code.

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 US tax system heavily favors owners over earners. Earners are taxed annually on income, limiting compounding. Owners, holding appreciating assets like stock, can defer taxes indefinitely by borrowing against their assets instead of selling them, leading to exponential wealth growth.

A major wealth preservation strategy for the ultra-rich is borrowing against their appreciated public stock. This provides them with massive, tax-free cash liquidity for living expenses or new ventures, without ever triggering a taxable event like selling the stock.

The wealthy don't sell appreciating assets like stock to fund their lifestyles; they borrow against them at low interest rates. This "Buy, Borrow, Die" method avoids triggering capital gains taxes, allowing wealth to compound tax-deferred and widening the gap between asset owners and wage earners.

The ultra-wealthy minimize taxes by buying equities, letting them compound tax-deferred, and then borrowing against their portfolio for liquidity. Upon death, the assets receive a step-up in basis, allowing heirs to inherit them without paying capital gains tax on the appreciation.

Instead of taxing unrealized gains, which forces asset sales and creates economic distortions, a more sensible approach is to tax the cash that wealthy individuals borrow against their assets. This targets actual liquidity and avoids punishing the long-term investment that builds the economy.

A major flaw in the unrealized gains tax is that it punishes all investors for the actions of a few. A more targeted and less destructive approach would be to tax the loans that wealthy individuals take out against their stock portfolios, targeting the actual cash they use without harming the underlying assets.