Definitely the significant difference. It's not just that the ultra wealthy can stash money in these sort of asset havens and avoid taxes, it's that they can somehow use them as liquid as cash.
Your average person may have access to some of the asset storage options, like wealth stored in their 401k or even purchasing stocks directly. What we can't do is use those assets as if they're money in a bank account and avoid tax. I can lower my income by stashing money in my 401k and defer taxes until I retire but when I retire, I will pay taxes and between now and then, those assets can't be touched for much beyond an emergency without incurring fees, taxes, etc.
Wealth is very different than income but if wealth can be utilized just like income (liquidated) yet not taxed, something is off in the tax system and this is what people get cranky about. If the assets weren't as liquid and usable in place of cash and had to be tucked away or otherwise taxed, less people would be cranky.
For all intents and purposes for the ultra wealthy, that wealth is readily accessible, well above the amount of money they could need or most could even want which people equate to their income. They might not quickly liquidate their entire estate but they can liquidate or borrow against large enough portions that they can do about anything they want.
I’m confused how using their assets to borrow against lets them avoid taxes. If they borrow $10M for a yacht, they still have to presumably back that money back at some point to whomever they borrowed from. And to get that money from their assets, they will have to pay capital gains taxes on it. What am I missing?
Your average person may have access to some of the asset storage options, like wealth stored in their 401k or even purchasing stocks directly. What we can't do is use those assets as if they're money in a bank account and avoid tax. I can lower my income by stashing money in my 401k and defer taxes until I retire but when I retire, I will pay taxes and between now and then, those assets can't be touched for much beyond an emergency without incurring fees, taxes, etc.
Wealth is very different than income but if wealth can be utilized just like income (liquidated) yet not taxed, something is off in the tax system and this is what people get cranky about. If the assets weren't as liquid and usable in place of cash and had to be tucked away or otherwise taxed, less people would be cranky.
For all intents and purposes for the ultra wealthy, that wealth is readily accessible, well above the amount of money they could need or most could even want which people equate to their income. They might not quickly liquidate their entire estate but they can liquidate or borrow against large enough portions that they can do about anything they want.