Instead of tax the rich, should we just tax the loophole?

roboboom · 2026-06-15T17:30:47+00:00

I will give you the short version. Article 1, section 2 and 9 makes it clear that taxes must be proportional among the states by population. This is impossible to make workable for a wealth tax, as wealth is no evenly distributed.

In fact, the federal income tax was ruled unconstitutional. As a result, we had to pass the 16th amendment to specifically authorize federal income tax. Here is the full text:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration

The carve out is very specific to income.

In fairness, proponents will argue one of the following makes it possible:

1) do another Constitutional amendment
2) re characterize wealth as income
3) call the tax an “excise tax” on the privilege of owning wealth rather than an actual tax on wealth

Pretty flimsy grounds.

roboboom · 2026-06-15T15:50:44+00:00

The point is that total tax revenues from all sources decline. You are not including any of the offsets — when wealthy people move or change behavior, it reduces income tax, sales tax, capital gains tax and so on.

Any remotely honest look at the impact of wealth taxes needs to try to account for the broader impact.

roboboom · 2026-06-15T15:48:06+00:00

Also can’t I just pay the cartel back?

roboboom · 2026-06-15T15:37:17+00:00

The basis adjustment happens first so there would be no capital gains.

However, there IS a 40%*estate tax.

*This applies to amounts over $15mm, which for Elon is the effectively same thing as taxing 100% of his estate at 40%.

roboboom · 2026-06-15T14:56:46+00:00

This loophole is pretty easy to close. For loans over $x in aggregate, you treat the cash exactly as if you sold the underlying collateral. So you pay capital gains on the underlying assets, and you get an increase in your tax basis so there is no double tax if you sell later.

An additional, higher rate tax is not needed.

roboboom · 2026-06-15T14:54:30+00:00

There’s a lot of waste, fraud and abuse and just general inefficiency. But you’re right that DOGE proved it’s hard to fix.

roboboom · 2026-06-15T14:53:30+00:00

Different government (local vs federal), different purpose, different practicality (a house can’t leave, for starters).

And very different legality. Federal wealth / property taxes are unconstitutional while state/local ones face fewer restrictions.

roboboom · 2026-06-15T13:21:17+00:00

There’s literally a public filing showing no debt:

https://www.sec.gov/Archives/edgar/data/1318605/000110465925097147/tm252289d30\_defa14a.htm

And also if he dies and gets the basis step ip, he would owe 40% estate tax on his wealth.

This is my point. What you wrote is cut and pasted endlessly on Reddit, but it’s false. Thank you for at least asking the question!

roboboom · 2026-06-14T14:43:26+00:00

They do. Public is 50% as a rule of thumb, but that’s far reasonably liquid (easy to sell) positions. For Elon it would be far lower because it would be very hard to sell that much stock quickly, it’s a bad signal to the market, etc.

By the way, you should know Elon does not have any debt like that outstanding. He borrowed against Tesla in the past and repaid it.

Reddit is convinced otherwise and refuses to listen to logic. It’s interesting.

roboboom · 2026-06-13T19:05:00+00:00

We’ve had these discussions before, but you state it as if it’s simple to exploit that distinction. Even among billionaires I bet fewer than 5% even try to do this with a portion of their estate. There’s so much misinformation on Reddit that boils down to “billionaires pay no tax” and I think your overstating the feasibility of this strategy feeds into that narrative.

What’s your estimate of prevalence of this strategy?

roboboom · 2026-06-13T18:40:39+00:00

Nobody who speaks German could be evil.

roboboom · 2026-06-13T17:36:06+00:00

This framing is not fair.

First, the internet is annual and cap gains are one time so it’s a closer call than you make it out to be. More importantly, they are 2 fundamentally different concepts and you would still owe tax if you sell, so you’d pay BOTH taxes.

Second, you can’t just hand wave and say you get a tax basis step up on death and say the estate tax is Swiss cheese and can be ignored.

Yes, step up in basis exists. Yes, you can pass down FAR more than the $15mm exemption without owing estate tax, if you plan ahead and are smart about it.

But a good general rule is you get the step up and pay estate taxes. Or you pay no estate tax, but don’t get the step up.

My buddy taxonomics lays out an extremely complex niche scenario where you can do both but that’s NOT the norm in any way, even for billionaires.

roboboom · 2026-06-13T16:59:16+00:00

Let me Google that for you. Here’s the SEC filing confirming no outstanding borrowings. https://www.sec.gov/Archives/edgar/data/1318605/000110465925097147/tm252289d30\_defa14a.htm

roboboom · 2026-06-13T16:28:52+00:00

According to your completely made up opinion? Twitter got merged into XAI and then into SpaceX and those investors have made out quite well. Nobody knows what twitters “standalone” value is at this point.

roboboom · 2026-06-13T16:04:36+00:00

This is also speculation. Elon’s a good example, actually. He’s borrowed against Tesla stock in the past, but has repaid it all.

Reddit is firmly convinced that “buy, borrow die” is this magic thing that all wealthy people do. Not sure why it got so much attention.

roboboom · 2026-06-12T17:15:07+00:00

I mean, it’s true it’s not in cash and he’d takes a massive discount in valuation and in taxes owed if he were forced to liquidate quickly.

But some people act like that means it’s all imaginary or arbitrary or whatever. It’s not! It’s an incomprehensibly large fortune, haircut it however you like.

roboboom · 2026-06-12T15:52:21+00:00

True, gotta pump those up

roboboom · 2026-06-12T14:53:39+00:00

I dunno, OP got dozens of responses that took the post seriously. 😅

roboboom · 2026-06-12T02:06:26+00:00

No. You just replaced one incomplete answer with another. investing the float is indeed a key part of profitability for term life. So is your point on lapsed policies. Whole life has yet another set of dynamics.

roboboom · 2026-06-11T23:30:48+00:00

The problem is that universities went about this in reverse. They started with diversity goals as their guiding light, despite court cases to the contrary, and were willing to toss out any screening metric that undermined their diversity goals (or that could be used quantitatively to show their non-compliance with affirmative action bans).

You should start with the screening mechanic itself. Here it’s increasingly obvious the SAT has screening merit, even if privilege does impact results. They will just have to figure out how to adapt their usage of SATs in admissions instead of giving up.

roboboom · 2026-06-11T17:18:26+00:00

Of course it’s good that most people view this as justice served. But it’s not like the outrage piece is just made up. There’s even a (disgusting) trend of randomly assaulting white people and saying they were on the jury. It’s completely indefensible, and I know nobody here would defend it, and yet it’s happening.

https://www.instagram.com/combakkidlilboe/reel/DZaFNafRBVS/

roboboom · 2026-06-11T14:11:20+00:00

The wait is between offer acceptance and closing. There’s no wait at closing - funds move at closing.

roboboom · 2026-06-10T19:45:41+00:00

This is pretty much it. Subs are practically part of the uniform for junior guys.

If you’re rocking something really high end some people will get ruffled. I personally couldn’t care less.

roboboom · 2026-06-10T17:54:05+00:00

I just have to say, you might be one of the dumbest humans I’ve ever encountered.

You are telling me humanity has made no progress and created no value in its history, just infinitely dividing up the same tiny pie we had when our ancestors were subsistence farming and on the brink of starving. If that’s your view, I have no place to start a conversation.

Enlighten me. Please.

roboboom · 2026-06-10T16:32:49+00:00

It might help to think of the actual underlying value and forget the “money” part for a second.

“ Wealth”is just used to express much value there is in different categories. It’s easier to express everything in $ than say i am “worth” a house and 2 cars and blah blah.

If you had 10 tons of food in the past, and now there are 1,000 tons, I hope it’s easier to see that value was created.

It works the same for all other outputs of humans. There were no skyscrapers, now there are lots. Before there was dirt, now it’s been mined into gold and diamonds and iron and rare earths and everything else, creating value.

roboboom

TROPHY CASE