You’re Wrong Elon: Social Security’s Not The ‘Ponzi Scheme’, The ‘Unrealized Gains’ Tax Loophole Is – OpEd
"At current interest and tax rates, it is far cheaper to borrow against the value of one's shares than to sell them and pay taxes on the gains."
"Numbers don't lie." That is-until they do. Numbers can lie-when they're used to justify the illegitimate tax loophole known as 'unrealized gains.' https://www.nbcnews.com/business/taxes/harris-plans-tax-unrealized-stock-gains-only-people-100-million-rcna168819 Elon and fellow billionaires are defending the ultimate tax 'cheat' (that happens to be technically 'legal'), which allows them to 'borrow' ungodly amounts of money, live like kings off of that borrowed money-while paying next to nothing in taxes on these obscene levels of wealth. But the scam doesn't stop there. These billionaires get to declare these loans as a loss and a tax break. They most often 'borrow' against the estimated value of their assets-usually stocks, using them as collateral for the banks. This strategy is known in the banking industry as 'pledging.' Forbes has compiled a list of the 400 most frequent billionaire pledgers-and Elon tops the list.
Elon and his fellow perps do this, all the while planning to steal
Who are these questionable billionaires doing all this quasi-fraudulent pledging? According to Forbes, our 'first buddy', ersatz 'co-president'
So how does this all too real 'Ponzi' scheme work and why was it legalized? How can the world's wealthiest people 'borrow' against their publicly traded stock while evading the capital gains tax-legally? https://www.designgurus.io/answers/detail/who-owns-tesla (And for the record, it's not just Elon taking advantage of this real Ponzi scheme. There are some 560 corporate board directors and executive officers that use this 'pledging' system as well). Forbes cited the average pledge amount to be some
It should also be noted that Elon's share of pledged stock assets via his
So, if these billionaires use the estimated value of their privately owned stock as collateral for these loans; what happens when the stock loses value? What risk do these pledged loans pose for the economy in general? If these loans are so safe, then why do larger corporations refuse to allow them? Proxy advisory firm, Institutional Investors Service (ISS) provided data on corporate practice regarding these billionaire loans made possible by pledged private stock shares. The report revealed that: "Over two-thirds (68.4%) of S&P 500 companies ban all company employees and shareholders from pledging shares for debt, 22% prohibit pledging but with exemptions for certain individuals, and only 3.4% fully permit it." https://www.forbes.com/sites/johnhyatt/2021/11/11/how-americas-richest-people-larry-ellison-elon-musk-can-access-billions-without-selling-their-stock/?sh=97dbb3823d4e
So what are the concerns and how do they affect the overall value of a company? Forbes published:
"Those concerns include margin calls: forced sales of pledged shares that can sink a company's stock price, which risks cascading into a broader, panic-induced selloff. An example: Green Mountain Coffee Roaster's founder
Now Elon and his fellow billionaire bandits can make whatever asinine claims they want about this practice, but the numbers clearly show that when the stock price falls, all investors lose value. This loss of stock value doesn't merely affect these vile billionaires. It hurts those whose retirement is funded by
ProPublica report exposed the 'legal' tax cheats...
In 2021, ProPublica published an expose on America's 'legal' tax cheats, aptly titled:
https://www.propublica.org/article/why-we-are-publishing-the-tax-secrets-of-the-001 Propublica answered this accusation writing that while... "A federal law ostensibly makes it a criminal offense to disclose tax return information. But we do not believe that law would be constitutional if applied to bar or sanction publication of a story in the public interest when the news organization did not itself remove the information from the control of the
ProPublica rightfully argued that using information provided by a whistleblower that exposes criminality or public detriment supersedes alleged privacy rights. ProPublica also explained further that..."The consequences of allowing the most prosperous to game the tax system have been profound. Federal budgets, apart from military spending, have been constrained for decades. Roads and bridges have crumbled, social services have withered and the solvency of
Exactly how many planes have to crash before we demand a full staff of well rested, air traffic controllers? How many bridges have to crumble during rush hour due to either a collision with a barge or basic lack of maintenance? CNN reported that "1 in every 13 bridges in America is in 'poor' condition. https://www.cnn.com/2024/03/30/business/americas-bridges-climate-infrastructure/index.html This systemic 'legal' tax evasion by the billionaire class is a major contributing force to the crumbling devastation of our national infrastructure.
This tax evasion is not merely about infrastructure deterioration; it is an issue of justice. The 'unrealized gains' tax loophole that allows the rich to both claim actual wealth gains to serve as collateral for even obscenely larger loans-also permits the rich to claim a tax deduction. Exactly how can stock valuations serve as both a declaration of wealth collateral tangible enough to justify bank loans, while also evading the capital gains tax? The corporate law shysters hide behind the technical 'legality' of this unjust rule, while the public suffers.
To quote McCaffrey:
"It's perfectly legal, and it's a little hard to say it's immoral. Like, it's immoral to own a growth stock? It's immoral to borrow money? So the question is, why would anybody not do it?" https://www.forbes.com/sites/johnhyatt/2021/11/11/how-americas-richest-people-larry-ellison-elon-musk-can-access-billions-without-selling-their-stock/?sh=97dbb3823d4e
Suffice to say, that McCaffrey is responsible for coining the term... "Buy, Borrow, Die", which does truthfully state how the very rich evade taxes-legally. While technically 'legal', these strategies are unethical, and yes
First let's speak to the legal and secular arguments regarding equity in taxation.
They explain in their paper how the 'unrealized gains' rule works. To quote:
"The rule is based partly on the notion, correct or incorrect, that gains aren't real until they become cash. But that argument does not apply when billionaires borrow against their gains and use the money." https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4716197
The authors use the example set by billionaire
Look at that last phrase: ..."he's used that income just as if he'd sold the stock." That's key to this argument. If the use of these obscenely monstrous loans, secured by stock as collateral, serves in the same capacity as cash obtained from a sale of that stock, then it's a gain that should be taxed. After all, isn't the tax writeoff based on the idea that the 'gain' hasn't been 'realized'? If the loans are used as wealth and then generate more wealth, then this same wealth has been 'realized.' You can't have it both ways, yet it gets worse. To quote from the paper:
..."Indeed, under current law, Ellison - despite using the stock appreciation to purchase his island - will never pay income tax on those gains if he holds the stock until his death. This is a tax avoidance strategy known as "buy, borrow, die," and it can allow the wealthiest Americans to live lavishly while paying little income tax." https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4716197
Sorry,
True tax rates of billionaires are obscenely low ...
Once again, ProPublica conducted an analysis of the 'true' tax rates paid by the billionaire class using
ProPublica reported:
"The results are stark. According to Forbes, those 25 people saw their worth rise a collective
ProPublica also 'outed' liberal billionaire
The utter injustice of this skewed tax system is obvious. In an age where the paltry benefits paid to lower income
Another tax evader, (technically legal-but it shouldn't be), is
The poor are audited more frequently than the wealthy...
Add to this unethical system, the foul fact that lower income people are more apt to be audited by the
"If you claim the earned income tax credit, whose average recipient makes less than
The piece explained how ..."a benefit for the working poor was turned against them." https://www.propublica.org/article/earned-income-tax-credit-irs-audit-working-poor
This wholesale tax evasion by the .001% is an issue of ethics. While the billionaire class grows richer, the working poor and middle class are struggling just to keep a roof over their heads and their kids fed. Tax policy should reflect equitable sacrifice across all economic levels. The 'unrealized gains' loophole ensures that equitable sacrifice remains a cruel joke-aka the ultimate 'Ponzi scheme.' Essentially, these billionaires obtain ungodly loans by using their stock holdings as collateral. They then live off of these loans, have the use of this profit, while claiming a loss. If you have the use of this money, (whether it originated from a loan or not), and use that loan money as currency, then you have a capital gain or in Elon's case, ..."he's used that income just as if he'd sold the stock." And that strikes at the core essence of premeditated fraud. The issue isn't merely technical 'legality', but rather a tax code that encourages such 'legalized' fraud.
Billionaire 'mafia' is built on lies and tax deceit...
Conclusion:
So, while arrogant Elon has repeatedly called out
Elon's "Nerd Reich" of adolescent tech terrorists is celebrating the idea of a
Or to put it more simply, as Dr.
a-url="https://www.eurasiareview.com/15032025-youre-wrong-elon-social-securitys-not-the-ponzi-scheme-the-unrealized-gains-tax-loophole-is-oped/" data-a2a-title="You're Wrong Elon:
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