What is this 'buy, borrow, die' strategy that everyone keeps talking about — and that billionaires like Jeff Bezos deny?
You might have heard about a sneaky trick the wealthy use to avoid taxes. The aptly named ‘buy, borrow, die’ strategy was developed by Professor Edward J. McCaffery in the 1990s to describe how rich …
You might have heard about a sneaky trick the wealthy use to avoid taxes. The aptly named ‘buy, borrow, die’ strategy was developed by Professor Edwar
Read Full Story at Yahoo Finance →Why This Matters
The "buy, borrow, die" strategy isn't just a loophole—it's a structural feature of the U.S. tax system that allows extreme wealth to concentrate while public services erode. Its growing visibility exposes the mismatch between political rhetoric on inequality and the actual mechanisms that enable it, forcing a reckoning over whether tax policy should prioritize fairness or economic dynamism.
Background Context
Conceived in the Clinton-era tax debates, this strategy leverages three pillars: undervalued assets that appreciate tax-free, tax-free loans against those assets, and stepped-up basis at death that erases capital gains liabilities. While McCaffery framed it as a legal innovation, its roots trace back to the 1921 Revenue Act, which exempted inherited assets from capital gains taxes—a provision championed by lobbyists for railroads and industrialists of the Gilded Age.
What Happens Next
State-level wealth taxes and federal proposals to reform stepped-up basis could disrupt this playbook, but billionaires like Bezos are already diversifying holdings into trusts and other structures to preempt change. Watch for IRS audits targeting opaque valuation methods and whether Congress finally closes the "loan loophole" via reconciliation or regulatory action.
Bigger Picture
This is part of a decades-long shift where wealth management has outpaced policy, creating a parallel economy where the ultra-rich navigate tax codes while average earners fund public goods. It mirrors broader trends in financialization, where legal arbitrage—not innovation—drives outsized returns, challenging the narrative that markets alone determine merit.
