Edward Fox (Michigan) and Zachary Liscow (Yale), “The Rich’s Real Tax Trick Isn’t ‘Buy, Borrow, Die’” (Tax Policy Center, June 15, 2026):
A fashionable theory of how the rich avoid taxes captures something real—but it misses what’s mostly going on. Consider two of the wealthiest billionaires in the US: Jeff Bezos and Elon Musk. The theory says they never sell their stock and never draw a real salary. Instead, they borrow against their appreciated shares to finance yachts, jets, and everything in between. When they die they’ll pass their unsold stock to heirs on a “stepped-up” tax basis, resetting the stock’s value to its price at their death and wiping out any capital gains during their ownership.
Buy, borrow, die? A catchy, scandalous story.
This story is everywhere, from Ezra Klein’s interview with Professor Ray Madoff about her acclaimed book “The Second Estate,” to newspaper stories and cable segments across the country.
The catch? It isn’t the full story. Buy-borrow-die is a real loophole, and in absolute terms the rich borrow a lot—but the data say the very wealthy are mostly saving, not borrowing.
Using two decades of household data, we measured the annual borrowing of the top 1 percent of American wealth-holders. That borrowing comes out to roughly 1 to 2 percent of their economic income (which includes unrealized capital gains). Meanwhile, their unrealized gains over the same period were 20 to 40 times larger.
If buy-borrow-die were the dominant playbook, the rich would be leveraging aggressively against their ballooning portfolios. They aren’t. Borrowing against unrealized gains is, if anything, more of a middle-class habit than a billionaire one.
