Newsom Urges Congress to End 'Buy, Borrow, Die' for 905 U.S. Billionaires
Updated
Updated · CBS New York · Jul 2
Newsom Urges Congress to End 'Buy, Borrow, Die' for 905 U.S. Billionaires
3 articles · Updated · CBS New York · Jul 2
Summary
June 26 marked Gavin Newsom's call for Congress to close the "buy, borrow, die" tactic, which lets wealthy investors borrow against appreciating assets and pass them to heirs with a stepped-up basis.
1% to 2% of economic income for the top 1% came from the strategy over two decades, according to the Tax Policy Center, undercutting claims that it is the main tax playbook of the ultra-rich.
905 U.S. billionaires held a combined $7.8 trillion as of September, and Newsom argued that widening wealth concentration requires a federal response rather than a California-only tax that could spur relocation.
5% is the rate in a California billionaire-tax measure headed to the November ballot, while Elizabeth Warren has proposed a 2% annual tax above $50 million plus a 1% surtax on billionaires and a 40% exit tax.
Legal and political hurdles remain: Newsom cannot change federal tax law, wealth-tax proposals could face constitutional challenges, and some tax scholars say raising ordinary and capital-gains rates may be a simpler fix.
With wealth taxes failing across Europe, why is this controversial strategy being revived in the United States?
What are the overlooked economic consequences of forcing billionaires to liquidate assets to pay annual wealth taxes?
Is taxing wealth at death, not annually, a simpler and more effective way to fix the system?
Ending “Buy, Borrow, Die”: Newsom’s Federal Billionaire Tax Proposal and the Battle Over Wealth Inequality
Overview
Governor Gavin Newsom has called on Congress to address tax avoidance by the ultra-wealthy, focusing on the 'buy, borrow, die' strategy. This method lets the rich buy assets that grow in value, borrow against them to fund their lifestyles without paying taxes, and then pass them to heirs tax-free. Newsom wants a minimum tax on billionaires to ensure they pay at least the same rate as their workers. His push highlights concerns about tax fairness and aims to close loopholes that let the wealthiest avoid contributing their fair share.