Billionaires inhabit a completely different world and moral universe to the rest of us, and how they escape paying taxes through debt is the perfect illustration of why we need a wealth tax.
While everyday people operate in a system where work is taxed, billionaires operate in a system where wealth and capital is liberated.
This is the “magic debt system” that allows the ultra-wealthy to decouple their lifestyle and spending power from the tax obligations that bind the rest of the population. It creates a structurally separated moral universe, and also creates dangerous systemic risks to democracy and undermines social and economic stability.
How does the billionaire magic debt system work? The primary structural separation lies in how money is defined and treated by the law. Both work differently for billionaires.
For the average person, income comes from working. This is the most heavily taxed type of money. Even a very high-income professional pays a significant proportion of their earnings in taxes. This tax is mandatory and removed before the money even reaches the bank account.
Billionaires operate in a financial economy that is almost unimaginable to everyday people. Their income is actually the growth in the value of their assets (like Tesla, Amazon or Oracle shares). Under the tax laws in basically every country on earth, when those shares go up in value, even if it is worth billions of dollars in a single month or year, it is not considered income unless it is sold. This allows billionaires like Zuckerberg or Musk to take $1 or $0 salaries while accumulating massive fortunes.
The real magic then occurs through debt. Billionaires do not need to sell their shares to buy superyachts or finance far-right political projects. Instead, they get disposable income through borrowing.
Billionaires put up their shares as collateral to banks to take out massive loans. This is called “pledging”. Elon Musk has pledged tens of millions of Tesla shares to secure personal loans, as has Oracle billionaire Larry Ellison.
These loans are not legally defined as income, so they are tax free — what banks and wealth managers call “tax efficiency”. The scale of the debt — millions or even billions, means that the billionaire can finance their lifestyle, their business dealings and their political projects solely through borrowing.
In the economic-moral universe of everday people, debt must be paid off, typically through working or selling assets. This is a moral choice that billionaires never face. For the billionaire, debt is an arbitrage strategy that can be sustained indefinitely. When a billionaire borrows against shares, they are essentially accessing the surplus value created by the workers of that company.
Billionaires avoid having to sell their shares to pay back loans because the value of the shares (the share price) usually grows faster than the interest rate on the debt.
To give a concrete example, Meta (Facebook) shares increased in value by more than 7 percent in 2025 and Mark Zuckerberg, who owns around 13 percent of Meta’s shares, saw his nominal wealth increased by $15.3 billion. Zuckerberg can borrow unimaginable sums using the security of just the value increase in his shares from a single year, and without paying any tax.
When the loan comes due, billionaires can just take out a new loan to pay off the old one, again, using the increased value of their assets to pay the interest. As long as the stock price keeps rising, this cycle can continue forever. (Of course, this also creates vast, structural hidden financial risks, through the creation of “fictitious capital” like bitcoin, and comes with risks of contagion if the share price drops. This mostly harms everyday people like workers, pensioners and ordinary shareholders.)
And this is dynastic, patrimonial wealth. Billionaires ensure that they pass on their vast, ill-gotten fortunes largely tax free while also wiping the debt-slate clean. When a billionaire dies, the “cost basis” of their assets is stepped up to the current market value. This means all the growth that occurred during their lifetime, which funded their lifestyle via loans, is permanently exempted from capital gains tax. The heirs can sell a portion of the stock to pay off the debt tax-free and keep the rest.
The result of this system is that the 25 richest Americans paid a tax rate of just 3.4 percent.
This moral separation is not accidental; it is the result of the long-term ideological project of neoliberalism to unleash capital against democracy.
The explicit goal of this project is to create a system where capital could move freely and avoid democratic interference or redistribution of wealth and power. If a population votes for policies the wealthy disliked, such as full employment, social welfare or wealth taxes, the billionaires enforce economy-destroying capital flight, currency crashes, to discipline national governments. If that fails, the billionaires can fund far-right movements to protect themselves.
The laws created by states are not neutral. Tax codes are tools that the billionaires use to maintain their exorbitant privileges, power and wealth. These laws have created the artificial distinction between income from work and income from debt and capital gains. The debt of billionaires is not the same as debt for everyday people; it is a financial instrument transforming asset inflation into liquidity.
This financial separation allows extreme wealth concentration, which translates into disproportionate political power for a small group of people who operate outside the rules that govern the rest of the population.
For billionaires, paying tax is essentially voluntary. They only pay if they choose to sell. For everyone else, tax is mandatory. Billionaires aren’t cheating the system — the system itself is the cheat.
The “magic debt” system allows billionaires to live in a separate moral universe. They enjoy the benefits of society’s infrastructure and legal protections while opting out of the financial contributions required to maintain them.