Senator Ruben Gallego has introduced the Redistribution Of Billions by Instituting New High-income Obligations on Overlooked Debt (ROBINHOOD) Act to close the ‘borrow’ aspect of the ‘buy, borrow, die’ tax loophole that is used by the ultra-wealthy to finance extravagant spending without paying income or capital gains taxes. I’d like the Senator to co-sponsor it.
The ‘buy, borrow, die’ tax loophole has three stages:
—Buy: A wealthy individual buys, or is given as part of their compensation package, assets, such as stocks. This allows them to store and grow their wealth without paying taxes since the gains from these assets are considered unrealized.
—Borrow: The individual then borrows tax-free cash loans, often backed by those assets, to finance their extravagant lifestyles. All the while, their assets continue to gain value.
—Die: Finally, when they die, their assets are gifted to their heirs on a stepped-up basis, meaning their heirs can sell the assets without paying taxes on the capital gains accumulated during the individual’s life.
The ROBINHOOD Act closes this loophole by treating taking out a loan as a realization event, meaning the individual would have to pay taxes on capital gains equal to the loan amount. The provisions of the bill apply to taxpayers who have an income over $100 million and/or assets worth more than $1 billion.
This bill is common sense and must be passed. Please co-sponsor it now. Thanks!
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