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Drudge Retort: The Other Side of the News
Wednesday, October 08, 2025

It got me thinking, what if billionaires paid the same tax rate as the lower-middle class? I asked ChatGPT and the answers revealed just how different our world could look if the richest Americans contributed at the same level as the lower-middle class.

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The top tax-avoidance techniques used by billionaires like Elon Musk, Jeff Bezos, Peter Thiel, and more (Published 2022)

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-- ProPublica (@propublica.org) Oct 7, 2025 at 8:15 PM

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"My first thought reading this? It's not that billionaires would suddenly stop being billionaires.

They'd still be unimaginably wealthy, but lower-middle class families would finally feel like the system was a little ChatGPT explained that billionaires grow their wealth at lightning speed while paying relatively little tax.

;;

"If they were taxed like a household making $50,000 to $70,000, the gap between them and the middle class would start shrinking.

And honestly, this makes sense. Billionaires would still have private jets and mega-mansions, but the climb for the rest of us wouldn't feel quite so impossible."

"ChatGPT suggested it would force billionaires to rethink how they store and grow their wealth instead of just relying on loopholes and tax shelters."

;;

"This one surprised me. ChatGPT pointed out that if billionaires had less untouchable wealth, their ability to dominate politics, media and lobbying might weaken.

It's not that billionaires would suddenly lose all influence.

But they wouldn't have quite the same grip on shaping policies that often benefit them more than the average voter."

more at the link

#1 | Posted by Corky at 2025-10-07 11:57 PM | Reply

EDIT

"They'd still be unimaginably wealthy, but lower-middle class families would finally feel like the system was a little fairer.

ChatGPT explained that billionaires grow their wealth at lightning speed while paying relatively little tax."

#2 | Posted by Corky at 2025-10-08 12:00 AM | Reply

My first question ...

Why should billionaires pay "average" tax rates?

#3 | Posted by LampLighter at 2025-10-08 12:05 AM | Reply

Why shouldn't everyone pay the same rate on income no matter the source?

#4 | Posted by Corky at 2025-10-08 12:16 AM | Reply

I mean, the only reason they don't now is that they bribed politicians to give them different rates than FDR did.

#5 | Posted by Corky at 2025-10-08 12:18 AM | Reply

"And honestly, this makes sense. Billionaires would still have private jets and mega-mansions, but the climb for the rest of us wouldn't feel quite so impossible."

Why? Why would it feel more possible?

What taxes would we reduce on the guy making $75K?

What other benefits would that same guy realize?

#6 | Posted by eberly at 2025-10-08 12:23 AM | Reply

A worker earning the median income gets their income taxed at 22%

A rich person takes some money, puts it in the market, literally does nothing for a year, take it out, the rich person's profits get taxed as long term capital gains at 15%.

So you get taxed almost double by spending your time working, vs getting taxed on doing nothing and being rich.

And if the rich sell at a loss, they get to deduct the loss from their total income tax liability.

And you need to have enough money lying around to be able to invest it for a year, which again favors the rich.

#7 | Posted by snoofy at 2025-10-08 12:29 AM | Reply

"Why? Why would it feel more possible?"

You're asking why more money makes more things possible?

#8 | Posted by snoofy at 2025-10-08 12:31 AM | Reply

#6

More prevarication... it must be catching.

Could we get a 5 year old to explain this to Eb?

The playing field would be a bit more level.

#9 | Posted by Corky at 2025-10-08 12:32 AM | Reply

@#4 ... Why shouldn't everyone pay the same rate on income no matter the source? ...

My first guess on this topic is that working folk pay a significant part of their income for essentials, a.k.a. food and shelter.

#10 | Posted by LampLighter at 2025-10-08 12:37 AM | Reply

-More prevarication..

Questions you're incapable of answering is your prevarication at work, not mine.

#11 | Posted by eberly at 2025-10-08 12:37 AM | Reply

I answered it, as did Snoofy.

Even though it should have been obvious.

#12 | Posted by Corky at 2025-10-08 12:40 AM | Reply

You're so funny.

It's fine to want everyone to pay the same rate. I agree with that.

But I'm asking about how it actually helps joe 6 pack.

You really don't know. This is just about whining to you.

#13 | Posted by eberly at 2025-10-08 12:43 AM | Reply

-I answered it, as did Snoofy.

Speaking of prevarication ... ..

#14 | Posted by eberly at 2025-10-08 12:44 AM | Reply

-the climb for the rest of us wouldn't feel quite so impossible."

How would it feel not quite so impossible?

#15 | Posted by eberly at 2025-10-08 12:45 AM | Reply

It gives Joe a more level playing field on which to compete, as was mentioned... and less biased media in his ear.

#16 | Posted by Corky at 2025-10-08 12:46 AM | Reply

-It gives Joe a more level playing field on which to compete, as was mentioned... and less biased media in his ear.

You really don't have a clue? You're just making up platitudes.

You're a horrible liberal. You're the ---- Charlie Kirk would pull up to the microphone to embarrass

You can't tie a single meaningful benefit to Joe from the increased tax rate on the billionaire.

#17 | Posted by eberly at 2025-10-08 12:49 AM | Reply

"less biased media in his ear."

Huh?

#18 | Posted by eberly at 2025-10-08 12:51 AM | Reply

"But I'm asking about how it actually helps joe 6 pack."

There's all kinds of ways.

For example, his kids wouldn't be the first generation of Americans to not do better economically than their parents.

#19 | Posted by snoofy at 2025-10-08 12:52 AM | Reply

"How would it feel not quite so impossible?"

Go talk to a person who has existed in the bottom 80% of the economy for the past forty years and you will get your answers.

#20 | Posted by snoofy at 2025-10-08 12:54 AM | Reply

"You can't tie a single meaningful benefit to Joe from the increased tax rate on the billionaire."

For starters, it would be revenue neutral to lower his tax rate, and put more money in his pocket.

#21 | Posted by snoofy at 2025-10-08 12:54 AM | Reply

Or, the added revenue could be spent on better roads, schools, etc. Things that improve the quality of life for all of us.

You must be on Ambien or something. Have a good night.

#22 | Posted by snoofy at 2025-10-08 12:56 AM | Reply

Clearly nobody can cite a real benefit for Joe.

Avoiding the reality that the answer is beyond them.

It's an important thing to understand

Maybe the 5 year old can help. You've admitted they understand it better than you.

I'm not going to answer for you.

I want everyone to pay the same rate as well.

Why? I have reasons. But you're embarrassing yourself with these moronic platitudes

I'll check back tomorrow.

#23 | Posted by eberly at 2025-10-08 12:57 AM | Reply

#17

Descriptions aren't arguments... do let us know when you find that 5 year old to make one for you.

Let's give you another hint though, since you are avoiding Snoofers post like the plague.

"If they were taxed like a household making $50,000 to $70,000, the gap between them and the middle class would start shrinking."

That you are blind to equal justice under the law being a significant factor in a competitive marketplace is truly... unsurprising.

#24 | Posted by Corky at 2025-10-08 01:02 AM | Reply

"I want everyone to pay the same rate as well."

You want long term capital gains to be taxed the same as labor income? That's going to take some convincing. It would cost rich people a lot of money. What about the whole argument that taxing long term capital gains is an inducement that encourages investment?

#25 | Posted by snoofy at 2025-10-08 01:03 AM | Reply

24

Do you realize how ------ you are when you're needing Snoofy to help you?

Anyway ... ..

"If they were taxed like a household making $50,000 to $70,000, the gap between them and the middle class would start shrinking."

And you can't say how. Because you don't know. You might as well say if we tax the rich more, ice cream tastes better.

#26 | Posted by eberly at 2025-10-08 01:08 AM | Reply

-That you are blind to equal justice

I'm literally the only one with their eyes open.

This is fun.

But I need sleep

#27 | Posted by eberly at 2025-10-08 01:09 AM | Reply

If rich people paid more in taxes, let's say on wealth earned, that money could be invested in national healthcare and education (things conservatives hate). It would increase and prolong social security. Be invested in rebuilding aging infrastructure and modernize the nation.

Hospitals and schools can be properly funded and equipped.

And that's just off the top of my head, let alone what ChatGPT came up with.

Unfortunately the transfer only goes one way.

The wealthy steal the profits of our labor and then steal our taxes to fund themselves.

For some reason, conservatives support this.

Because they can't seem to understand they're being taken advantage of.

#28 | Posted by ClownShack at 2025-10-08 01:21 AM | Reply

What taxes would we reduce on the guy making $75K?

If you provided the guy with health care and education for his kids, that would reduce this guy's expenses allowing that money to be spent elsewhere.

#29 | Posted by ClownShack at 2025-10-08 01:24 AM | Reply

The desperation of the MAGAT class would be funny if it wasn't so sad.

#30 | Posted by LegallyYourDead at 2025-10-08 03:20 AM | Reply

You might as well say if we tax the rich more, ice cream tastes better.
#26 | Posted by eberly

Here's what we learned in this thread

If we even suggest taxing the rich more, Eberly cries.

When we ask him what he's crying about, he says "Nothing. Nothing will change is we tax the rich more."

So why is he crying?

#31 | Posted by snoofy at 2025-10-08 09:13 AM | Reply

We learned that Eb didn't read and or comprehend the article.

All his obtusites are addressed there.

#32 | Posted by Corky at 2025-10-08 09:36 AM | Reply

"If rich people paid more in taxes, let's say on wealth earned, that money could be invested in national healthcare and education (things conservatives hate). It would increase and prolong social security. Be invested in rebuilding aging infrastructure and modernize the nation.
Hospitals and schools can be properly funded and equipped."

See, these are the words corky couldn't find. Clown makes an attempt to draw a line from additional tax revenue to where it might benefit Joe 6 pack.

Corky is either too lazy or dumb to at least try and muster up a response to my question.

Those are pretty big longshots to happen no matter how much tax revenue we collect from the wealthiest.

Social security will be saved within itself. IOW, the beneficiaries of SS will be footing the bill to make it stronger. Education funding at the federal level is way too taboo. If States want to fund it, then they can pass taxes on their wealthiest and get to it. or even the county level. Good luck.

Those things are all worthy of being done and being funded by our wealthiest......obviously there are political obstacles.

but my only real reason to piss off corky with my responses was this statement he made....." but the climb for the rest of us wouldn't feel quite so impossible."

It was a "feeling" statement that I wanted him to explain better.

But he couldn't. I knew he wouldn't do it. He's just so used to spewing platitudes with no real thought being put into it. That's why he can't actually discuss it. Rather, he just tries to insult and attack his way around discussing it.

#33 | Posted by eberly at 2025-10-08 09:37 AM | Reply

-We learned that Eb didn't read and or comprehend the article.

a 12 year old could understand the article. In fact, it was written for someone at that level.....no wonder why you loved it so much, why it spoke to you.

I guess you must struggle to find articles that you can comprehend....and you found one.

Good for you.

but you couldn't answer a simple question the reason is obvious. You really have no clue how the world works.

Chatgpt isn't going to save you from being an imbecile. In fact, it only draws more attention to it.

#34 | Posted by eberly at 2025-10-08 09:42 AM | Reply

"See, these are the words corky couldn't find."

Those are things that everyone in this conversation knows to be true and can be taken as "read."

Except by Drunk Eberly who thinks he's scoring points.

#35 | Posted by snoofy at 2025-10-08 09:47 AM | Reply

- but my only real reason to piss off corky with my responses was this statement he made.....

"but the climb for the rest of us wouldn't feel quite so impossible."

That's a quote from the article you didn't read.

Being a piss baby is your only real function here, as your GOP has gone all indefensibly fascist.

And you not grokking how a more level economic playing field would be helpful to a lot of people... is why you are are a Republican to begin with.

#36 | Posted by Corky at 2025-10-08 09:59 AM | Reply

LOL

Poor thing.

#37 | Posted by eberly at 2025-10-08 11:09 AM | Reply

#37

Non-responsive surrender post... now I feel bad for slapping you around.

#38 | Posted by Corky at 2025-10-08 11:12 AM | Reply

OK, I lied... I feel great!

#39 | Posted by Corky at 2025-10-08 11:13 AM | Reply

-Non-responsive surrender post...

That describes everything you posted on this entire thread.

especially the last few.

You completely surrendered and everyone saw you do it.

And you're lying. You don't feel great. It's obvious.

#40 | Posted by eberly at 2025-10-08 11:49 AM | Reply | Newsworthy 1

#40

More argument-free claims... you are completely defenceless and #36 remains unretorted.

#41 | Posted by Corky at 2025-10-08 12:01 PM | Reply

-And you not grokking how a more level economic playing field would be helpful to a lot of people... is why you are are a Republican to begin with.

this is the equivalent of calling me a pedo....because I've kicked your sorry ass around this thread and you've got literally nothing to argue.

You proved that you don't understand how any changes would help anybody. Oh, they certainly could.....but you were unable to communicate any of them. You proved you don't understand this issue enough to comment on it. You just post your cute little chatgpt article and shout "yeah!!!" hoping that's as far into the deep end you'd have to go.

Then I asked you to swim in deeper waters and you jumped out of the pool and cried like a -----.

And you already know why I'm a republican and how it's got nothing to do with taking a position on this issue.

Which, BTW, I don't disagree with you on. You're hoping nobody noticed that I agree with you. I just asked for some clarification on your part and you flat out couldn't ------ do it.

You might be the dumbest liberal on this site.

The dumbest liberal on this site. worth repeating.....

#42 | Posted by eberly at 2025-10-08 12:08 PM | Reply

"You might be the dumbest liberal on this site."

And the farthest left of all the far left liberals!

#43 | Posted by snoofy at 2025-10-08 12:09 PM | Reply

I'm practically a cat eating Panamanian!

Isn't there a name for the logical fallacy where people think that mindless repetitive verbosity is some kind of actual argument?

(asking for a Republican)

#44 | Posted by Corky at 2025-10-08 12:33 PM | Reply

Simple fairness for one.

If sweat of the brow labor gets taxed at say 30% why on Earth should passive income be taxed at half that or less?

Billionaires and the Uber Wealthy get more from government on every level. They pay a tiny fraction of their income in taxes,regular people pay 1/3 or more of their income for no consideration of their needs at the policy level.

More money in the Treasury means more ability to fund health care and other public benefits.

Private Economic power concentration is antidemocratic,it leads to frank Oligarchy and the purchase of policy by the rich.

Reducing Excessive Wealth is itself a public Good.

Finally, it's just Good Optics for the Rich to have More Skin in the Game. They own Everything anyway.

#45 | Posted by Effeteposer at 2025-10-08 12:35 PM | Reply

LOL

You do know you can "beat" ChatGPT into submission to say whatever your narrative is right?

The whole point of it's compliance is "confirmation bias" so you use it again.

#46 | Posted by oneironaut at 2025-10-08 12:41 PM | Reply


"If rich people paid more in taxes, let's say on wealth earned, that money could be invested in national healthcare and education (things conservatives hate). It would increase and prolong social security. Be invested in rebuilding aging infrastructure and modernize the nation.
Hospitals and schools can be properly funded and equipped."

1. Investment in healthcare just causes healthcare costs to rise, it doesn't increase its reach or help those without.
2 Mississippi is proving without a doubt that money and education aren't correlated.
3. Investment in infrastructure, while it sounds great, would again be wasted on the process.

Does anyone read books any more?

Educate yourself on what is actually happening and why it happened, and possible remedies. ...

Abundance - Erza Klein
and
Why nothing works - Marc Dunkleman.

#47 | Posted by oneironaut at 2025-10-08 12:46 PM | Reply

Billionaires won't have to pay any extra taxes while deplorable Trumping MAGAts are around to defend them.

#48 | Posted by ClownShack at 2025-10-08 12:47 PM | Reply

#46

Yet another clown with no argument to the points made.

Merely yet another Fallacy, this one of attacking sources/tools instead.

Speaking of tools...

#49 | Posted by Corky at 2025-10-08 12:51 PM | Reply | Funny: 1

Investment in healthcare just causes healthcare costs to rise, it doesn't increase its reach or help those without.

Countries with national healthcare prove this statement to be a lie.

Mississippi is proving without a doubt that money and education aren't correlated.

That's not what they proved. Again. All you have to do is look at nations that provide national education to see the benefits of the system.

Your propaganda smells of rotten eggs.

Investment in infrastructure, while it sounds great, would again be wasted on the process.

Right. We should allow our roads and bridges to continue to deteriorate so billionaires don't have to pay taxes.

American infrastructure boasts the best the 1970s could provide!

Why ask for more?

Go air yourself out.

#50 | Posted by ClownShack at 2025-10-08 12:59 PM | Reply

"Investment in healthcare just causes healthcare costs to rise, it doesn't increase its reach or help those without."

^
This might be the worst take on health care I've ever seen.

#51 | Posted by snoofy at 2025-10-08 01:05 PM | Reply | Newsworthy 1

Why is the result of an AI query thread worthy?

Are we so lacking in intellectual bandwidth as a species that this is what passes for interesting these days?

#52 | Posted by jpw at 2025-10-08 01:17 PM | Reply

| Posted by eberly

Disingenuous POS.

Don't waste the effort.

#53 | Posted by Angrydad at 2025-10-08 02:43 PM | Reply

The author's point is the rational conclusion no matter where the data originates.... as it's easy to check the validity of the data.

He then supports the conclusion with argument.... which he definitely didn't consult Eberly or 1Nut for.

jajaja! (best Panamanian laugh)

#54 | Posted by Corky at 2025-10-08 02:48 PM | Reply | Newsworthy 1

#52 | Posted by jpw

Clearly, did not bother reading the article.

#55 | Posted by Angrydad at 2025-10-08 02:51 PM | Reply

-Why is the result of an AI query thread worthy?

It gave me an opportunity to have fun with Corky....so it's hard for me to criticize it.

#56 | Posted by eberly at 2025-10-08 03:04 PM | Reply

- to have fun with Corky

Typical Bev Back Pedal.... he's gotten to be really quite the pro at that around here; almost BillJohnson level.

I expect him to be saying, "I'm done with you!", then come back on the thread any day now.

#57 | Posted by Corky at 2025-10-08 03:08 PM | Reply | Newsworthy 1

57

yet another lie. You're not expecting me to do that. You damn well know I don't do that and never have.

just keep lying......it's not like the truth is helping you.

#58 | Posted by eberly at 2025-10-08 03:11 PM | Reply | Funny: 1 | Newsworthy 1

- I don't do that

Don't spend whole long thread making obtuse obfuscating posts... then end up peddling in reverse saying you really didn't mean it or that you'd been drinking?

There's too many witnesses here for that not to be laughed offa the thread.

#59 | Posted by Corky at 2025-10-08 03:18 PM | Reply | Newsworthy 1

"More money in the Treasury means more ability to fund health care and other public benefits."

really? I'm all for fiscal sanity and responsible growth.

But let's examine that theory...

let's analyze the growth of Tax receipts over the past 15-20 years.

in 2009 the receipts to the US treasury was $2.1 trillion
in 2022 the receipts to the US treasury was $4.9 trillion

over 14 years that's 6.2% annual growth.

pretty damn robust growth in tax receipts.

www.statista.com

Now.....with such robust tax growth....where is the funded health care and other public benefits?

#60 | Posted by eberly at 2025-10-08 03:20 PM | Reply

On topic... see #1.

#61 | Posted by Corky at 2025-10-08 03:21 PM | Reply

"you'd been drinking?"

Again, this is your argument.......proving you have nothing.

I know you obviously threw in the towel on being taken seriously years ago but you don't have to cry about it.

take your L and live with it. It's not my fault you're not taken seriously here.

#62 | Posted by eberly at 2025-10-08 03:22 PM | Reply

#60

Check for them in Trump's Big Bad Bill which is the largest transfer of wealth upwards in our already checkered history.

scholars.org

#63 | Posted by Corky at 2025-10-08 03:25 PM | Reply

simple doesn't mean fair

and the lawyers and accountants who influence our government aren't in favor of simplifying anything.

Neither are the politicians. There is almost no support for it.

#64 | Posted by eberly at 2025-10-08 03:26 PM | Reply

- not taken seriously here.

I'm not the Republican who obfuscates for Orange Adolph on every thread, and refuses to support Republicans like those in the Lincoln Project who do just the opposite.... because they have a spine.

#65 | Posted by Corky at 2025-10-08 03:28 PM | Reply

Can any Trump supporter, or non-Trump supporter with conservative leanings, explain why conservatives support cutting taxes on billionaires.

Especially considering the impossibility of spending a billion dollars in a single lifetime.

#66 | Posted by ClownShack at 2025-10-08 03:31 PM | Reply

#66

Here's Kimmel's Revenge @ 3:20 in:

www.youtube.com

ahahaha!!

#67 | Posted by Corky at 2025-10-08 03:38 PM | Reply

Clearly, did not bother reading the article.

#55 | Posted by Angrydad

No, I didn't.

I saw the title and figured it wasn't far off from when "journalists" screen shot random tweets or social media posts and act like that's reporting.

#68 | Posted by jpw at 2025-10-08 03:44 PM | Reply

in 2009 the receipts to the US treasury was $2.1 trillion
in 2022 the receipts to the US treasury was $4.9 trillion
over 14 years that's 6.2% annual growth.
--Eberly

Cool story bro.
FY 2008 $2.52 trillion
FY 2023 $4.44 trillion
over 16 years that's 3.6% annual growth.

#69 | Posted by snoofy at 2025-10-08 03:47 PM | Reply

"Now.....with such robust tax growth....where is the funded health care and other public benefits?"

Nowhere to be found in Republican policy is where.

#70 | Posted by snoofy at 2025-10-08 04:02 PM | Reply | Newsworthy 1

"ChatGPT suggested it would force billionaires to rethink how they store and grow their wealth instead of just relying on loopholes and tax shelters."

Well the point is that billionaires want the easy buck. Loopholes and tax shelters are easier than actually working.

"Now.....with such robust tax growth....where is the funded health care and other public benefits?"

The GOP serves only the 1%. They are not going to allow the government to work for the middle class and poor and provide them anything that might make their lives even a tiny bit easier. Look at the Big -------- Bill...it took healthcare funds away from the middle class and poor, SNAP away from hungry families all to allow the penis rocket crowd an even more egregious set of tax cuts.

Just look at the baloney they used to sell the Big -------- Bill... "tax free" tips, overtime and social security? Hardly. Even if those were what they say they are, they are only for four years, while the tax cuts for the 1% are permanent. It is clear who they work for.

Buried deep in their plan is to end Medicare and Social Security. That is their long term goals. They are on track to get it done within the next ten years by cutting taxes for the top, creating massive debt and triggering sequestration.

#71 | Posted by Nixon at 2025-10-09 07:41 AM | Reply

ChatGPT, how do you tax an unrealized gain?

ChatGPT said:

Although not currently in law, several proposals have surfaced. Here's how they might work:

One proposal (often linked to Vice President Harris / Biden plans) would impose a minimum tax of, say, 25% on unrealized gains for individuals whose net worth exceeds a high threshold (e.g. $100 million).

Taxpayers would calculate their effective tax rate including unrealized gains; if that rate is below the minimum threshold, they'd owe additional tax to bring it up.

Those additional taxes might be treated as prepayments of future capital gains tax when the asset is eventually sold.

For illiquid or non-public assets, payment might be spread over multiple years (e.g. 5 or 9 years) to ease liquidity burdens

#72 | Posted by sitzkrieg at 2025-10-09 08:05 AM | Reply

To boil down "the plan" as far as the DNC is concerned, it's to pretend to tax unrealized gains but really it's just prepayment on future capital gains.

#73 | Posted by sitzkrieg at 2025-10-09 08:06 AM | Reply

ChatGPT, how long has the tax code been based on realization?

Summary Timeline
Year Event Impact
1913 16th Amendment + Revenue Act Income tax established
1918-1919 Treasury and early courts develop realization concept First administrative use
1920 Eisner v. Macomber Constitutionalizes realization
1939, 1954, 1986 Codification in IRC 1001 Realization formally embedded
Today Still in force Unrealized gains untaxed

#74 | Posted by sitzkrieg at 2025-10-09 08:08 AM | Reply

As long as there has been an income tax, it has been based on realization. So that brings up the question...

ChatGPT, what % of net worth of the US wealth is unrealized gains?

Excellent question " this goes to the core of U.S. tax philosophy.

" Estimates from Major Analyses
Source Finding Year
Federal Reserve / Survey of Consumer Finances (SCF) For the top 0.01% of households, over 75% of wealth growth in the past decade came from unrealized capital gains. 2010"2020
ProPublica "Secret IRS Files" (2021) U.S. billionaires' collective wealth grew by $1.8 trillion between 2014"2018, while they reported only $50 billion in income to the IRS " meaning 97% of their wealth growth was unrealized. 2014"2018
Americans for Tax Fairness (2024) Billionaire wealth increased by $2.9 trillion since 2020, with almost all of that increase coming from stock price appreciation (unrealized gains). 2020"2024
White House Council of Economic Advisers (2022) Estimated that over 60% of U.S. billionaires' wealth consists of unrealized gains. 2022

#75 | Posted by sitzkrieg at 2025-10-09 08:10 AM | Reply

Lets go ahead and answer the point somebody will post thinking it's clever.

ChatGPT, when they use this stock as loan collateral, why is not a realized gain?

Fantastic " you've zeroed in on one of the most debated points in modern tax theory.

Here's a detailed, plain-English breakdown of why borrowing against stock does not count as a realized gain under U.S. tax law, even though it feels economically similar to spending your profits:

' 1. What actually happens

When a billionaire pledges stock as collateral and borrows money:
They do not sell their shares.
They still own the stock (and any future appreciation or dividends).
They receive loan proceeds, not sale proceeds.
They have a legal obligation to repay that loan.
So legally and accounting-wise, the cash they receive is a liability, not income.

2. The tax system's reasoning

U.S. tax law follows the "realization principle" " income is taxed when a gain is realized (sold, exchanged, or otherwise disposed of).
Borrowing against an asset doesn't meet that test because:

You still own the property " no sale or exchange has occurred.
You owe the money back " there's an equal liability offsetting the cash.
Your net worth hasn't definitively increased " it's just changed form (illiquid stock ' liquid cash + debt).
The tax code sees that as a balance-sheet rearrangement, not a gain.

skipping 3, it's just an example using Tesla stock (lol)

4. Legal foundation

This logic traces back to early tax cases and regulations:

Eisner v. Macomber (1920) established that unrealized appreciation is not taxable income until "severed" from the underlying capital.
Commissioner v. Tufts (1983) and other cases confirm that only when debt is forgiven, or an asset is sold or exchanged, does a taxable event arise.
Borrowing income; debt forgiveness = income.

#76 | Posted by sitzkrieg at 2025-10-09 08:14 AM | Reply

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