Rich

The old adage of the rich get richer is grounded in financial common sense. A forty-year-old man has assets totaling one billion dollars. He follows the strategy of borrow till you die and allows his estate to grow at ten percent per year and in forty years he will have $45 billion. He needs one million per year to cover his life style so he borrows that getting a low 5% rate using his assets as collateral. Over the next 40 years he will pay out $41 million in interest but his estate passes to his heirs without paying any capital gains tax or if the money is in an estate trust no estate tax. In addition, there are ways for him to deduct a good part of the interest. The rich do this generation after generation and the wealth gap grows larger. Some suggest raising the income tax rates but these very rich do not pay income tax. The way to stop this is to say that any estate over $10 million will pay tax. This allows small estates to pass without destroying the business and still keeps the super-rich from escaping taxes. Thirty years ago, the billionaires owned $240 billion in assets and today they own $7,800 billion in assets. Much of this money is passed to heirs untaxed. This will also offer incentives for the rich to risk investing in new business ventures.