Hello, I’m the Angel of Death…and Tax Avoidance. (evil laugh)

I’m here to talk with you about a diabolical tax loophole that the super-rich use so their children can dodge taxes.

Ordinarily, if you buy a thousand dollars worth of stock and later sell it for ten thousand dollars — Congratulations! You’ve made money. Of course, you would need to pay capital gains taxes on your nine thousand dollar profit. 

Or, alternatively, you could die.

Muah-ha-ha. 

With the “Stepped-up Cost Basis” loophole, it doesn’t matter how much you bought that stock for. When you die, its value is “stepped up” to its current value at the time of your death. When your children inherit the asset, they can turn around and immediately sell it without paying taxes on the gains.

Or instead of selling it, they can borrow against it to fund their luxurious lifestyles, and still pass it on to their heirs, also tax-free. The loophole eliminates capital gains taxes on property, too. 

So while the ultra-wealthy can’t cheat death, they can USE death to cheat taxes. This tax-dodging scheme is affectionately known as the “Buy, Borrow, Die” strategy.

And this is one way dynastic wealth grows over the generations — for example, it’s how Robber Baron Andrew Mellon’s fortune was eventually passed down to his grandson Tim, to help enable Tim to become a major political donor.

By the way, the richest 1 percent of Americans own more than half of all individually held stock owned by Americans. 

Closing this loophole for heirs of the ultra-wealthy would raise more than $100 billion dollars over the next decade. Money that could be used for child care, elder care, to fight the climate crisis, or help pay down the national debt. 

And don’t feel too bad for the children of billionaires. They’ll still have lots of money to ensure they’ll never have to work for a living. They’ll be in the lap of luxury until, well…

Muah-ha-ha.