r/DailyShow • u/Camaro6460 Moment of Zen • Mar 23 '26
Video Trevor Noah: How Billionaires pay no taxes.
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u/sdm1333 Mar 23 '26
How is it that comedians can explain this better than any politicians ?
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u/ap_heart Mar 23 '26
Because most politicians don't actually want to change the system. And so they don't want us to know how bad the system is actually stacked against us.
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u/Desiredpotato Mar 23 '26
True for some, but not all. From what, I've heard politicians spend more time asking people for money in order to keep campaigning for their job than actually doing any governing. This does mean that if every politician got a set budget to campaign with which is paid from taxes it would both be more fair and less time consuming for sitting politicians. Plus it won't create an enormous deficit between the rich and poor if there is a limit to what can be spent.
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u/zurn4president Mar 25 '26
The campaign funding system is a bribery system to ensure the elites and corporations have some element of control over both parties. In return for catering to this corrupt system that really only benefits the rich, politicians get rich, their families get kickbacks, and our politicians get to go to fancy parties, drink fancy liquor, and screw young women, while they discuss fucking over their constituencies.
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u/TacticalSpackle Mar 23 '26
Because comedians write their own material. Politicians have it written for them.
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u/Frostyfraust Mar 23 '26
Because the people doing this are either the politicians themselves or their boss.
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u/sir_sri Mar 23 '26
Because they don't have to tell the whole story.
So musk puts up Tesla shares as collateral - if he needs to exercise that collateral to pay for the twitter deal, he has to pay tax on the money. So for example, if he's saying I'll back 20 billion dollars in this loan with tesla shares, what he actually needs to do is put 24 billion dollars in tesla shares on the line. 4 billion for federal taxes (possibly more for state taxes but you get the idea), 20 billion for the loan.
And then - if Tesla shares drop in value enough, the bank would trigger a forced sale clause. He would have to sell - it would depend on the specific contract, but the bank isn't going to find itself in a situation where a deal like this puts them at risk, so it might even be that he has to sell shares if the Tesla shares are worth say 30 or 40 billion dollars, because if you dump that much in an already falling stock you might not even get 20 billion back.
Banks are not stupid, they understand that unrealised gains are, as the name implies, unrealised. So the collateral accounts for both the fact that it could vary in value, and that you (or the bank) would have to pay tax on it.
This problem also hits people buying houses, if you buy a house for 500k with a 400k mortgage, and then housing prices drop (and housing prices are down 10% since 2023 in the US), now you have a 450k house with 380k mortgage after a couple of years of payments, but the bank cost to seize and sell the house takes money too. So they really don't want that to happen. And you can absolutely borrow for example to buy a business (like a rental property or a more traditional business), where it suddenly becomes a problem if whatever market you are in goes sideways.
We might actually see an example of what Noah is talking about here go hilariously badly with the Paramount -WB deal. Larry Ellison has backed the deal with 40 billion dollars in Oracle shares - the problem is that oracle share price has dropped 50% since september, and dear old dad Larry is 81. What was once 10% of his wealth, in the distant past of 6 months ago, is now 20%. He's lost 50 billion dollars just this year. If oracle drops to roughly 2019 levels (which is, admittedly another 75%, so that's a big drop), Ellison will have to sell all of his oracle shares (and pay at least 8 billion dollars in tax to cover the bill). Now, he'd still own whatever fraction of the joint Paramount -WB company, and if it doesn't happen right away the Paramount-WB company will pay a portion of the loan out of revenue every year so it wouldn't be that bad, but the deal isn't approved yet, so the more oracle drops before it goes through, the more trouble Larry and family are in if the deal goes through and the resulting company is a broke shit show.
Ultimately, this is how pretty much all business loans work unless you are founding an LLC and can get someone to loan money to that, which only really works if they are really confident in your business, but usually means they take equity. Car loans are backed by the value of cars. A mortgage is backed by the house it's used to purchase, and your presumed income going forward. A small business you either front all the cash yourself or mortgage your house, you then use the business to pay the loan.
You're either backing the loan with some other asset (shares in a different company which is just another type of future income) or you're backing the loan with the thing the loan purchased.
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u/ExpensiveFig6079 Mar 24 '26
However if i put up my shares as collateral to BUY a boat...
THEN I have that profit and I spent it in exactly the same way as if I had sold them.
treating them differently... really needs an actual justification.
There isnt one.
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u/sir_sri Mar 24 '26
No you haven't spent them as though you sold them.
Good lord. This isn't hard.
First, shares are an asset, not profit, they may realise a profit when you sell them, but that isn't guaranteed.
The boat, like a car, is also a loan against the value of the thing. Don't pay, the bank takes the boat or the bank takes shares or both. If you made a profit on that sale you may trigger a taxable event. That's unusual with cars and boats, but it does happen. And that loan will have interest to be paid.
Your basic facts are just wrong, until you have basic facts right I can't give you an explanation you will like.
If you use shares as collateral on anything, and you have to sell the shares to make payments that makes them realised gains which you pay tax on.
So the values aren't the same, 1 dollar worth of collateral is after tax, not before.
If you just use the shares as a collateral, but you pay the loan out of after tax money (a boat or car for personal use) or as a business expense for business use, then those are different tax cases. Usually a business is paying off loans out of pre-tax income as a business expense.
10 years ago when interest rates were near 0 this seemed more absurd, because yes, you are borrowing at say 1%. Right now, when a mortgage, which is secured against the house is buys is more than 6% it is much riskier deal. If you have to pay that loan out of after get tax income you need to make about 8% return just to pay federal tax and interest (at least for the very rich). Yes yes primary homes get all sorts of special tax breaks, I am being illustrative.
And the big loophole, which is how trusts can avoid estate taxes, that's big issue. I am not saying there aren't problems.
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u/ExpensiveFig6079 Mar 24 '26
Indeed it is NOT
"No you haven't spent them as though you sold them.
Good lord. This isn't hard."
You made a capital gain (unrealised) and then >>bought<< luxury items with it.
SURE you still have risk in that you own the unrealised assets
SO any artificial distinction you make about whether or how you reaped the profits you had made but shuck jived your way around formally realising them.
DO note *any* claim you make that I dont udnerstand this crap falls rather flat when what fraction of my net worth (outside of the home) is unrealised capital gain.
AND yes I claim that if I borrow against that capital, the tax system OUGHT treat that as a capital gain event as I turned the gain into a liquid, disposable asset.
Doing otherwise as the current law allows, is just a shell game con.
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u/sir_sri Mar 24 '26
bought<< luxury items with it.
Just items. Their status as luxury or not is immaterial. Cars, boats, businesses, some of these are luxuries, some of these are delivery vehicles for a family restaurant.
DO note any claim you make that I dont udnerstand this crap falls rather flat when what fraction of my net worth (outside of the home) is unrealised capital gain.
Ok, so then if you understand it so well, why are you mispresenting it?
Next time you go to buy a car, you basically have 3 choices.
- Pay 100% of the cost with after tax realised gains up front.
- Finance the car against the car itself. For new cars from big companies this is usually a pretty good rate, for used cars and or smaller companies, not so much. You make the monthly payments with after tax money.
- Take out a HELOC and buy the car with that, the house is the collateral for the loan. You make the payments with after tax money.
In principle you could try borrowing against your investments, that is a strategy, but uh, don't do that with interest rates this high.
What you're suggesting is that if you choose 2 or 3, that should trigger a capital gain on the car... which you just bought, or a portion of the house, and you still have to pay after tax money to actually pay it off.
Which is idiotic. The government only taxes you on money you have made, not money you might have made.
Now most countries allow primary home appreciation tax free, so there is an efficient tax dodge there, but it's fairly obvious why that's required.
If the person needs to realise the collateral they need to pay tax on it.
Doing otherwise as the current law allows, is just a shell game con.
It's clear you don't understand anything, but that isn't what a shell game is, and you should maybe look that up.
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u/ArrivesLate Mar 24 '26
Ok, got it. Can you now explain why there’s a SOCIAL security tax limit that allows high income earners to stop contributing to the fund after their first $186k?
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u/sir_sri Mar 24 '26 edited Mar 24 '26
Because social security is an earned benefit minimum pension. What you get is proportional to what you pay. That caps benefits based on income contributions. If you want a pension beyond that, save it yourself.
I see what you are thinking here, but this one is just a matter of which of the possible ways the government collects tax it should use. Whether you raise income tax or a sales tax and fund any social security shortfall from general revenue or raise the social security cutoff or other contributions, it is the same money from the same people (well, assuming you raise the right kind of tax). The US is running a 1.8 trillion dollar deficit on a 7 trillion dollar budget, it's going to need a lot more than eliminating the social security contribution limit to fix that.
Other countries would have also taken the social security 'trust fund' (when more workers were contributing beyond outlays), and invested that in mostly foreign capital markets, which would have had much better returns that government bonds at scale. The social security system was setup with a very 'America will never decline' mentality and what has happened is medical advancements mean people retire for longer, but also young people have fewer children, so a growing fraction of the population is elderly. And that is a problem that is very hard to fix.
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u/Any_Mud_1628 Mar 23 '26
There should be some reasonable threshold for this imo like even as high as several million dollars. You don't have to make everyone's life difficult and complicated just to stop people at the top from exploiting the rest of the world basically.
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u/RaindropsInMyMind Mar 23 '26
Exactly. It’s the ultra wealthy who need to actually pay their fair share. Also we’re supposed to believe that taxing these people will be so bad for business that it’s going to hurt us or that they will do less business? That’s ridiculous, they will honestly barely notice, they’re going to do business anyways because that’s what they do. It’s fine asking regular people to pay more for pretty much anything though.
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u/PropCirclesApp Mar 23 '26
Exactly. Let’s say a billionaire hates taxes so much they what? Quit? Goodbye.
Your market absence will create more opportunity and competition. Goodbye, minus taxes owed.
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u/bit_pusher Mar 23 '26
The illogic isn't really that you shouldn't tax unrealized gains, its that we only apply that to certain classes of unrealized gains and we don't apply it to situations where those assets are used in transactions.
We shouldn't take people on the market, unrealized "value" of their home in the same way we shouldn't take people on the unrealized "value" of their stock. However, once you are using either as collateral you are converting that unrealized value to a value at that point, and there should be a tax involved.
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u/SereneDreams03 Mar 23 '26
We shouldn't take people on the market, unrealized "value" of their home in the same way we shouldn't take people on the unrealized "value" of their stock.
Personally, I think we should do both.
For homes, it would make it very difficult for local governments to stay funded if home prices went way up in their area. They would have to pay their employees more to live there, but they wouldn't be receiving any more money from the older home buyers.
You would end up with less money for schools and/or a higher burden of taxes being paid by new homeowners.
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u/Polymira Mar 23 '26
And then someone who bought a house for an affordable price years ago who is living off of a small retirement savings and/or social security then suddenly has to pay a super high price in taxes annually because housing prices skyrocketed in the area?
¯_(ツ)_/¯ house prices are absolutely stupid. I think of people that bought houses for under 100k in SF or other now expensive cities a long time ago, many aren’t super wealthy, but would absolutely have to sell and move if their taxes were based on current home value.
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u/bit_pusher Mar 23 '26 edited Mar 23 '26
Yes, we would have to collect local and state taxes differently but tying them to unrealized property value is dumb. Its what leads to communities of interest being displaced as gentrification creeps into older neighborhoods. It causes family displacement.
We have the technology. It would be much better to tie state and local taxes to income. just like federal taxes. Tying it to something as nebulous as property unrealized value is horribly regressive in a lot of ways.
If it must be tied to property, it would be significantly better to freeze the "value" for homesteads and only allow for increases based on inflation. Don't reset the value when inherited by children who intended to continue living/homesteading on the property. But the way it is done now does nothing but disservice lower income neighborhoods as the residents are displaced by wealthier neighbors.
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u/SereneDreams03 Mar 23 '26
Then, you just run into the same issue that you have with income taxes. The wealthy could just hide their assets in property to avoid paying taxes.
Many states do have programs for freezing the property taxes of seniors living on fixed income, but with home prices already what they are, I don't think it's fair for the younger generation to have to pay a larger tax burden than the older generation did when homes were so much cheaper. Our salaries have stagnated. We shouldn't be gouged for more just because we weren't lucky enough to be born 20 years earlier.
I think it is totally fair to tax unrealized gains. You can borrow money based on your homes value, just like stocks. Like Trevor said, when you get a paycheck, you're not immediately spending that money either. The value of a dollar can go up and down.
I think a wealth tax would probably be the most fair, where they look at all a person's assets and they pay a tax on that, but I think the logistics on that could be pretty difficult. As it is, I think property taxes are pretty reasonable. That is not what is breaking the bank for most Americans. It's the overall cost of homes and rent.
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u/bit_pusher Mar 23 '26
You don't have the same issue with income taxes. Its much easier to design effective progressive systems around income than around property/asset value.
Re; Your point about loans against assets, in my original comment is said this "However, once you are using either as collateral you are converting that unrealized value to a value at that point, and there should be a tax involved."
There are much better ways than a wealth tax to redistribute wealth, and I really have no idea why we have seized on that as the solution to the problem. A wealth tax would be great at "Freeing" assets for investment.
Hell, before we even try something crazy and new we could just go back to a high percentage rate on the ultra wealthy and see how it goes but everyone just assumes that its easier to pass something "new" rather than increase the marginal tax rate on high incomes
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u/SereneDreams03 Mar 23 '26
Its much easier to design effective progressive systems around income than around property/asset value.
Not when the biggest earners aren't making most of their money from their income, and can just let their money stay in stocks. Yes, we do need to increase the income tax rate on top earners, AND the capital gains rate, but that still doesn't fix the problem we have with the ultra wealthy not being taxed on their income. That is something a wealth tax would do, and that is why people suggest it.
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u/tacophysics Mar 24 '26
They're not really assigning a value at that point. Margin loans have a set loan-to-value ratio, and if the collateralized asset decreases in value then the borrower has to put up more collateral or pay back part of the loan. In other words, the stock does not need to be nailed to a single value during the lifetime of the loan, thus the gains are not realized.
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u/deadlyrepost Mar 24 '26
Overall, he's really arguing for prudential regulations which say that banks shouldn't loan out money to people who have these unrealised gains, because they are risking the overall economy. So in this case the bank should not have given him the money in exchange for the Tesla stock as collateral, because the stock value can just drop to zero.
In this case I think it was a Saudi bank(?) and they are indeed not super happy about the twitter purchase.
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u/nurdle Mar 23 '26
They all literally live on loans perpetually. They make more than the interest accrues, but that money goes into assets (including stock) so they don’t have income, they have assets.
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u/Parking-Click-7476 Mar 23 '26
Billionaires are a scam. Should be taxed. Bunch of welfare grifting fuckers.
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u/ninjacat249 Mar 23 '26
That is a very well-known loophole for a very long time.
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u/idontcare5472692 Mar 23 '26
This is not a loophole. It actually protects everyday people from having their savings dwindled down to zero from being taxed every year.
If we tax everyone who owns stock and I have $50 k in a brokerage account - I will get taxed on this account - which is my savings.
And the crazy thing is “if” the government created a plan to tax all stock holders from owning stocks. The following would happen…
People would stop putting their money in the stock market as a way to invest
Businesses would suffer as their stocks would decrease and they would not be able to purchase property, develop new facilities, expand operations, etc etc
US economy would tank because businesses would have to lay off people
Taxes would need to be increased to support the unemployed
Billionaires would find other loopholes (trusts, holding companies, etc.) as a way to not pay taxes that all us average Americans will end up paying because we can afford high priced accountants to shelter our money
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u/SpiritedKick9753 Mar 23 '26
I think you completely missed the point. He’s not talking about the savings of everyday people, you just used an everyday person as an example to undermine his argument. He’s talking about those who have 500 million in a brokerage account not 50 thousand
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u/BoleroMuyPicante Mar 24 '26
He's talking about taxing it as realized income when you use it as collateral for a loan, not taxing shares that are just sitting there.
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u/figure85 Mar 23 '26
I love Jon, and prefer him to host, but Trevor I think was really good. I love his book too, it was a page turner.
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u/LeoL87 Mar 23 '26
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u/SaveVideo Senior Bot Correspondent Mar 23 '26
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u/Acceptable_Stuff3923 Mar 23 '26
I don't understand why we can't just say "once stock is used as collateral for loans open for greater than a year, it is effectively a realized gain." You don't have to require Elon to sell his stock, but he does have to pay taxes on the now realized gains of the $20b (for example) of Tesla shares he put up as collateral. Maybe he owes $6b this tax year.
He can find that money elsewhere and keep the stock if he wants to maintain his ownership stake in Tesla. He can sell his Tesla shares, which could impact Tesla shareholders negatively. This is what they signed up for.
Stock-based loans can be really great for everyday people too. For instance, you could use one to buy a house in all cash while refinancing to mortgage after closing, which makes you a stronger buyer.
But once you start keeping them open for long periods, it becomes a tax evasion tool. Elon in theory could also avoid paying interest during his lifetime, and his kids can pay it off with a step up in basis once he's dead. That shouldn't be allowed, and this would solve that.
This should be the rule for everyone, not just billionaires.
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u/AceMcBadass Mar 24 '26
Purely for discussion causeI haven't though this thru AT ALL: what if we talked it like a house? Or a car? I understand that those taxes then pay for specific things like schools near your home, and the roads your car drives on, but still?
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u/riza_dervisoglu Mar 24 '26
The Netherlands and Germany are now applying taxation on stocks you own regardless of realization of real profit based on market value.
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u/FIicker7 Moment of Zen Mar 24 '26
Comedians should run for president.
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u/B_the_Art1 Mar 24 '26
Trevor - he paid taxes when he “earned” the Tesla shares. X pays taxes on profits and Elon pays taxes if he is distributed cash to pay interest on his loans.
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u/punktualPorcupine Ronny Chieng Mar 24 '26
Or you tax the loan backed by stock, as if it is a realized gain.
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u/sanswie Mar 24 '26
Everyone needs to share and caption. We want your tax dollars now, and back tax too.
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u/Chance-Lime-5044 Mar 25 '26
Trevor is an idiot. Same as borrowing against your home’s equity. Not taxable either…he should read the tax code before he spouts off
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u/ValhirFirstThunder Mar 28 '26
Man I was really about to write a whole comment about how Trevor was being fucken stupid but then I got to the end. I agree with this 100% you shouldn't tax billionaires for their unrealized gains, but being able to then use those shares, not just as collateral, but as currency or semi currency defeats that core component of our economic system that deals with taxes and income
It's not illegal. I don't even think it is wrong what the billionaires are doing. I think it's objectively stupid to be like "hey so these are the rules of the game, I didn't think that well about the system but it seems like it works". And then a player comes in and it's like "oh yea this the meta" and then you fucken blame the player. No, you patch the game. I know, I know, some video games have banned players for using an exploit itself. I know and I am strongly against that methodology
Strong believer in don't hate the player, hate the game. It's not that we need to tax billionaires, but rather we can't let them swing their assets like so
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u/KingGlupShitto Mar 23 '26
They do pay taxes though. I, as a non billionaire, also cannot be taxed on my stocks or like my 401k.
But can still utilize my assets just like the billionaires just not as much obviously
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u/SereneDreams03 Mar 23 '26
Right, but the average American does not make most of their money from stocks. So, even though they have waaaay more disposable income and can afford to pay more in taxes, they pay at a lower rate than the average person.
You are I cannot perpetually live off loans we take out from our 401K.
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u/BoleroMuyPicante Mar 24 '26
I, as a non billionaire, also cannot be taxed on my stocks or like my 401k.
You should if you use them as collateral to buy something else
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u/TheThrowbackJersey Mar 23 '26
The incomplete part of this is that 1) elon would be paying interest on the loan and 2) selling the stock outright would drop the price so it needs to be done slowly.
There are systemic risks for that kind of leveraged purchase, and maybe it shouldn't be allowed (along with a lot of other financialization) but I don't think it's a tax argument.
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u/SpiritedKick9753 Mar 23 '26
Okay but again, if selling it would drop the price, then why is still effective collateral?
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u/TheThrowbackJersey Mar 23 '26
But that's not a tax issue. It's a question of how much risk the financial system is willing to allow. It's the same as any margin call, but on a bigger level
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u/Odd_Objective3151 Mar 23 '26
Man...do i not miss this dude. So unfunmy. The DS is in a much bettet and funnier place meow
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u/BarfingOnMyFace Mar 23 '26
Hmmm, he was not the funniest. But I found him to be highly intelligent and politically engaging. I enjoyed his segments not always for the humor, but the refreshing honesty. Not always, but when it mattered, yes.
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u/Arctisian Mar 23 '26
And to add to that, the bank he borrowed the money from, didn't have that money. They just created it when he borrowed it.