> Bezos does not have his cash in hand, for the most part. To the extent that he does have cash in hand, he has already paid taxes on that cash.

What a lot of high wealthy individuals are doing is using their portfolios as collateral against lines of credit. The LOCs give them cash to fund their lifestyle, and they don't have to liquidate their portfolios and take the capital gains charges (at least in the short-term).

Someone can have both holdings and cash in this situation.

This has been possible lately because rates are so low, so the interest doesn't cost borrowers that much.

Pretty sure many in the middle class do the exact same thing. That's the whole idea behind mortgages, auto loans, etc -- to fund consumption on credit and pay the interest with income.

For the middle-class, the closest would be a home equity line of credit (HELOC). Reverse mortgages are also a variant of this.

Generally though, most 'middle-class loans' have an end date.

I think a lot of middle class people roll over their debt, too, no? Say buying a new car when the warranty expires on the old car. Or buying a new house every 10 years (US average).

But I don't feel like digging around SCF data, so this is just a hunch. Having said that, my hunch is that middle class households are much more indebted than wealthy households.

I think an easy argument can be made that the standard home and car loans are the same. In spirit, payday loans are exactly the same.

Difference is just the volume of money and when the term is due.

> What a lot of high wealthy individuals are doing is using their portfolios as collateral against lines of credit. The LOCs give them cash to fund their lifestyle, and they don't have to liquidate their portfolios and take the capital gains charges (at least in the short-term).

> Someone can have both holdings and cash in this situation.

Ya, I understand this. This is exactly my point, though. If he's taken out loans against his shares, he is even more incentivized by the value of those shares than if he had not done so.

To the extent that he has pure (unencumbered) cash positions, he's paid taxes. To the extent that he has unrealized gains or loans against unrealized gains, he is incentivized by share price appreciation.

This was in response to the a comment suggesting that because Bezos had already cashed out, he didn't care about the value of his shares anymore.

For a billionaire it's not about the absolute dollar value of their wealth.

It's about the fraction of global wealth that they control.

That's how they benefit from crisis and catastrophe.

Maybe the dollar value of their pile declines, but the percentage of global wealth they control increases, as the poor and less wealthy get hurt proportionately more.

Don't they have to payback the loans at some point? And at that point do they not liquidate some assets to do so and pay taxes on that? (Serious question.)

You don't use all your assets as a collateral – you loan out, say, 1%, for the needs you have. If the creditor demands a repayment for some reason – and if you're still solvent, it's not like your IOU can't be treated as money in itself – then you can get a loan on some other 1% of your now-appreciated assets, use that to repay the first loan. All without liquidating any assets and accruing any “income”. Then pass the bucket to whoever inherits your assets.

You can presumably go a layer deeper and use the loaned cash to build an investment portfolio with a rate of return sufficient to fund your lifestyle, pay the interest on the original loan, and pay for the management of the whole thing.

> Don't they have to payback the loans at some point?

LOCs are often open-ended, so as long as they're at minimum paying the interest, the lender doesn't care. Presumably it will be cleared up eventually on death with the estate.

Not just holdings and cash in hand, but $0 tax liability as a result.

In large portions of the united states people who own homes have their property taxes go up most every year based on the value of their home. Seems a bit strange to me to treat, in this respect, peoples homes differently.

That’s because you pay those taxes in exchange for services from your municipality. And let’s admit it, it’s stupid that your payment is proportional to the value of your house. How is the city budget correlated with house values?

And they pay taxes in exchange for services as well. And it isn't stupid as if the cost was, for example, divided up equally between all residents a very large portion of them would be unable to live in cities due to the increase in cost.

  > Bezos does not have his cash in hand, for the most part. 

yes, but it works as collateral for whatever cash he may need/want, which means effectively the same thing in the end, no?

I’m willing to bet he has more cash on hand than we will make in our entire lifetimes… what’s the point of arguing how much it is? the point is that he has so much money that nothing really matters.

The point is exactly what I said in the rest of the comment. He has already paid taxes on the cash he has in hand. The only assets he has not paid taxes on are the shares in AMZN that he has not realized the gains on.

I haven't realized any gains on my house, but I pay taxes on it.

Yes, but your property tax rate is a much lower recurring rate than the capital gains tax rate. In fact, a tax like that on unrealized gains would probably be a much better way to structure things. You pay 1% a year on unrealized gains until they are realized, at which point you can deduct what you've already paid. I guess this would be annoying to calculate, though.

Good news the unrealized gains are in a form very similar to what you outlined.

sure but he’s got so much he has no incentive to touch it, and it gains all the same… if he makes a 5% return this year, take 2%…

You're right about that. My point isn't about his overall wealth, or whether it's socially good that he has it. A few comments up the tree, someone asserted that Bezos wasn't strongly incentivized by the value of his Amzn shares because he had already "cashed out", though. That's what I responding to.

>The point is that Amazon wouldn't have achieved what it has

Sounds good to me.

Fortunately, you don’t get to decide that. Contrary to popular sentiment on HN, Amazon is one of the most favorably perceived brand by Americans, ranked top 4 in 2020. When you go against Amazon, you go against something that Americans like more than Netflix.

> When you go against Amazon, you go against something that Americans like more than Netflix.

That just gives more reason to go against, there's quite a few Western comforts that could use a bit more opposition, Amazon being one of them.

You're making the case that it is virtuous to be aligned with popular sentiments on issues, which is a position that dissolves any ethical or political principles in the name of conformity.

This is interesting:

https://tenetpartners.com/top100/most-powerful-brands-list.h...

Apple, Google, Amazon, Microsoft all in the top 10.

Exxon way more popular than Netflix.