³ÉÈËXÕ¾

President Biden he wants wealthy Americans to pay more in taxes, which will likely set off a big fight on the grounds that the government has no business going after taxpayers just because they’re wealthy.

Well, no one wants to hurt law-abiding wealthy people.

So I called my favorite tax accountant Don DeSantis, who explained to me that wealthy people get that way using a strategy known as “buy, borrow, and die.”

Basically, you buy assets that appreciate over time, you accumulate five million, 10 million, 100 million, and when it’s time to cash in … you don’t sell your investments, because that would mean you owe taxes on the gain. Instead, you take out a loan.

So you take out a loan to get your cash – and magically, that cash is tax-free. Why?

“Because a loan is never income,” DeSantis told me.

Right – because you have to pay it back. Except … you don’t pay it all back, or at least not right away. The key is to pay the minimum and spend your untaxed loan proceeds on another money-making investment. Sure, you could blow the cash on something frivolous …

“But presumably, those are gonna be business deductions,” DeSantis pointed out.

So your non-taxed loan income can actually get you a business deduction, instead of costing you a single penny in extra taxes.

And this is why the strategy is called buy, borrow, and die: Because if you’re rich enough, you needn’t pay off the loan ever. The idea being that when you die, the underlying assets backing the loan pass to your heirs and, upon your death, the tax liability on the capital gains of those assets magically and legally disappears. So they have plenty of money to pay off the loan — or just keep it going.

Your heirs might have to pay an inheritance tax, but no capital gains tax, which is like starting the tenth inning with a runner on third.

And this is the system that many members of Congress will fight to protect. It’s a system intended to protect small business, but it’s also being used by the super-rich to create an American aristocracy akin to Downton Abbey without the pretentious accent.

Maybe it’s for the best. Our leaders would then be born into their positions; all that grubby campaigning would be unnecessary, and all that election fraud would just disappear.

Listen to Seattle’s Morning News weekday mornings from 5 – 9 a.m. on ³ÉÈËXÕ¾ Radio, 97.3 FM. Subscribe to the podcast here.