Jeff Bezos pushed back against claims that he relies on the "buy, borrow, die" tax strategy to minimize his tax obligations. The Amazon founder denied the approach in recent remarks, despite years of reporting suggesting wealthy individuals use this method to avoid paying taxes on their investment gains.
The "buy, borrow, die" strategy works like this. A wealthy person buys assets, typically stocks or real estate, that appreciate over time. Instead of selling those assets and triggering capital gains taxes, they borrow money using the appreciated assets as collateral. They then use the loan proceeds as income to fund their lifestyle. Because loans are not taxable, the borrower avoids triggering a taxable event. When the borrower eventually dies, heirs receive a "step-up in basis," which resets the asset's cost basis to its current market value. This eliminates the original appreciation from taxation entirely.
Tax experts and journalists have documented this strategy's use among ultra-wealthy individuals. ProPublica's 2021 investigation revealed that billionaires including Bezos paid little to no federal income tax in certain years by using strategies like this one. Bezos's 2010 and 2011 tax returns showed he paid zero federal income tax while taking advantage of various deductions.
Bezos's denial comes as Congress debates closing tax loopholes available to the wealthy. The Biden administration has proposed a minimum income tax on billionaires specifically designed to address strategies that allow high-net-worth individuals to avoid taxation on unrealized investment gains.
For ordinary investors, this debate matters. The "buy, borrow, die" approach remains largely available only to those with substantial assets and access to favorable lending terms. Most people cannot borrow against stock portfolios at the low rates wealthy individuals negotiate with banks. The broader conversation about billionaire tax avoidance informs future tax policy that could affect both wealthy