The article only addresses a subset of economic activity. The larger portion of the adult population are wage earners or retirees, not business owners. For them, large investments in Traditional IRAs or 401k plans are most definitely not able to escape upon death the income taxes that were deferred.
In other words: Gamble that (1) your investments appreciate, or (2) that you will find credit rates drop when convenient.
In 1 word: Gamble.
So, either you are rich and have spare money to gamble, which sure, might be beneficial against taxes. But you could also gamble against any other sector (stocks, housing, startups...)
Or, if you are not rich, just put it in the 401k (or eq).
> Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.
The article talks about taxes in the USA, and I think the treatment of taxes at death is unfair by giving a significant tax advantage to people who hold assets till death, especially with the step-up basis. The way Canada handles it seems more reasonable to me:
> Capital property generally includes real estate, such as homes and cottages, investments like stocks, mutual funds or crypto-assets, and personal belongings like artwork, collections or jewelry. When a person dies, they are considered to have sold all their property just prior to death, even though there is no actual disposition or sale. This is called a deemed disposition and may result in a capital gain or capital loss
-- https://www.canada.ca/en/revenue-agency/services/tax/individ...
In exchange, Canada does not have an inheritance tax. All taxation is resolved in the estate of the deceased person before the money or assets are passed on without further taxation.
Depreciation is recaptured if you sell an asset for more than its depreciated basis. People sometimes get into trouble with this if they rapidly depreciate real estate and then sell it. Even if you sell for less than your purchase price it is possible to owe taxes.
You also aren't going to be able to pay no taxes since you do need to realize some income to pay for mortgage/rent, food, transportation, etc. I guess if you had assets you could borrow against it would be possible to pay for these using the loan proceeds (which are not taxable).
Since I'm not a financial adviser, someone asked me take on which 4k projector to buy last Xmas.
I explained that the tech has improved so much lately, they've become somewhat affordable, I recommended a model and pointed ou that he would certainly get a better device next Xmas, for half the price. I thought he would follow suit given his budget was a bit below the retail price. That would just wait.
His response was he would rather go ahead and up the budget a few hundred dollars to get it right away. That projectors will surely get much better by next year, but that he, certainly, will not.
I can't figure out the thought process of someone who finds this sensible. Maybe there isn't one.
Be really careful when doing this. Make sure you have a great accountant - if you go more than a few years without turning a measurable profit, your risk of being audited apparently goes up. My accountant personally cautioned me about this since my business has been in an R&D phase for 5 years so we've been showing a small loss every year. The last thing you want is for the IRS to decide you've been cheating on your taxes.
Please consult a real tax lawyer before even following such advice...
Why? They have skin in the game such losing their license if they do something wrong and illegal...
I live in Minneapolis, MN. The Federal government has cut public health grants, Medicaid, laid off a large portion of he Department of Health, cut Department of Human services, cut school funding, cut University of Minnesota funding, cut heating assistance, cut flood mitigation, cut USDA programs, and cut SNAP. This is just the things I can remember! Our city hosts Hennepin County Medical Center, which provides emergency care to the entire state, and it is risking closing due to federal cuts.
Minnesota has historically paid more in federal taxes than other states, and contributes more than it gets back. I think it's time for a change.
So like influencers get to hear other influencers explaining this "you can reinvest your profits and then you won't have profits" type of advice... but then they will put it right next to unsound advice about "by the way, a great way is to invest in a "business" trip to Greece to sail the Mediterranean, it is "team-building" between you and your spouse and kids who are all employees of your little influencer company, oh by the way you should buy fancy watches so that you can show them off in your videos, and get a very expensive hairstylist to do your hair -- as long as you make a video about it!"
And it's like, no, the tax courts actually have procedures they follow to determine if those things are personal expenses or business expenses and 90% of the advice that you hear here are some form of tax fraud.
But from the point of view of a company, as the tax year comes to an end you hopefully have extra money left in the bank, now you can either use it to buy things that the company needs and thus grow the company, or you can hold onto it where if you're a C-corp the government will take 21% of the year-on-year delta, or you can pay it back to the shareholders as a dividend and they pay 15% capital gains tax on it. (And of course you don't have to dump the whole account into just one bucket, you can choose how much goes into each of the three.) And when it gives the advice "pssst, you should probably reinvest most of it," that's a standard practice explicitly sanctioned by the government.
But in the U.S. you can't rapidly depreciate real estate, it is generally straight-line over 27.5 or 39 years (residential vs. non-residential). The gain on real estate due to depreciation is technically referred to as Section 1250 gain, and if there is no gain (which is calculated against your adjusted basis, not purchase price), then it follows that there is no Sec. 1250 gain (often mistakenly called "depreciation recapture").
There are also some loopholes where capital gains taxes deferred until after death just don't get paid at all. This is the "step-up basis" where your inheritors get to reset the basis of capital assets and neither you nor they has to pay taxes on the capital gain.
You can make tax-exempt donations, or start your own non-profit organization.
Some people hoard money without building businesses, without participating in government, without contributing to welfare. People who take more than they give are assholes.
In my state (NY), I pay income tax to the feds and NY state. I pay property tax to my county and town. This pays for things like roads, cleanup and maintenance, the school district, the library, the parks and sports recreations. The community trails and wildlife preserves.
The sum owed I had calculated at the end of 2025 was less than 2% off from the sum our IRS equivalent came up with.
Their sum was the most favorable to me, though - they had adjusted a deduction I qualified for last year which I had missed.
This level of accuracy is down to our IRS knowing just about all there is to know about our income, assets, debts &c of course - oh, and on there being fewer loopholes in our tax code...
Not entirely, no. Any of those reinvestments that count as capital expenditures aren't immediately deductible, but only on a throttled schedule, which is why the concept of depreciation exists in tax law:
If you want to play concerned citizen get out and protest, vote with your dollars by not throwing them at big tech companies who kowtow to politicians and fund their campaigns. But if you think you’re sending kind of message by withholding your taxes, it’s really just that you’re a selfish asshole.
Your heirs inherit your stocks, with their cost basis reset to the current price. This means that they have zero appreciation of your purchase of $RIVN at $67, despite it being at $420. They can then sell the shares, to pay the loans, and not owe capital gains, because there are no gains. Additionally, at this step cash can be extracted for no gains as well if desired.
So you avoid taxes while alive by taking loans (not income), avoiding capital gains (never selling), and then gains evaporate through a stepped up basis. There are some exceptions here - estate taxes, etc with ways around them like trusts, but this is the general mechanism.
Its worth noting though, that its not ironclad. In a significant downturn you can be forced to liquidate and it will hurt (see the news on Musk right after X purchase). Additionally, while people talk about this as being super popular, realize that in practice people who take advantage of these strategies also still have millions in cash flow, so its not a true borrow only $0 tax lifestyle, they will use already taxed money to manage them as well.
https://www.theatlantic.com/economy/archive/2025/03/tax-loop... (viewable by disabling JS)
You do have to be sure you follow the rules and avoid various gotchas that other people in this section have pointed out, but otherwise it is entirely legal and routine.
Abstaining is not voting. If you want to vote with your dollar, spend it actively undermining big tech companies. Get out there and blind some cameras or something.
If your assets are growing faster than the interest it would also be possible to payoff the loan with a new (larger) loan, so you are still kicking the can down the road but eventually you would die and never need to pay the taxes while you were alive. I doubt this is done that often in practice, but who knows.
I.e. what kinds of loans can be tax deductible? To be clear theres decent effort into this, you can't just do a cash-out refi on a home, but loopholes exist for those who find it worth the effort.
Do you have an example? I've seen dozens of IRS letters for dozens of different taxpayers and none of them had any "angry" language in them.
The myth that the IRS is trying to scare or traumatize you is just a dark pattern by certain 3rd party "tax resolution" services. The IRS is quite tolerant of the person who breaks the law by not filing and paying on time and provides many opportunities to come into compliance, starting with an automatic first-time abatement of the most common penalties.
https://www.irs.gov/individuals/understanding-your-irs-notic...
The fact is that the country whereever you carry any legal activity will require you to prove you're taxed elsewhere not to tax you in place.
To carry out economic activity you'll need a presence, if it's a company it's corporate tax, if you're freelance you'll need a registered address.
Most banks will freeze you without a TIN and and address.
Plus the whole can of worms of the centre of vital interests or source-based taxation systems.
In the moment you input an address in the financial system, the tax administration will know, and they will knock your door for any significant income, plus arrears, pulling one of the cards from your house, and it's not going to be pretty.
This all seems to benefit from low interest rates. Was it a thing in the 90's? Or even the 80s when rates were much higher?
They weren't angry with me. They were, however, obstinate. They disputed an education related credit. Each time I called them, they told me what documents they would need. I'd send it, and they'd continue the dispute. The cycle would repeat.
Here's what happened:
University sends me tax form. I file with my taxes.
"Just because they sent you the form doesn't mean you actually attended the school and paid your fees. Send us proof you paid them."
Sent proof of payments to the university.
"Just because you gave them money doesn't mean it was for tuition. For all we know they could be parking tickets. Send us the billing statement"
Called the university[1] to get a copy of the billing statement. Sent to the IRS to show the payments matched the tuition billed.
"Sorry, that's not enough. Send us a statement from the university with a line item showing the tuition was paid."
Sent it. They finally accepted it.
The university told me they'd never heard from any student that the IRS didn't simply accept the original tax form they send out.
[1] Keep in mind that this conversation happened 2-3 years after graduating.
Picking a random country: Italy. Please explain under what legislation or mechanism an Italian citizen who spends 3 months in Japan, 3 months in South Korea, 3 months in the U.S., 3 months in Norway and then repeats the loop for the rest of their life would owe any taxes to any tax authority?
Almost every country except the United States only taxes their residents, not citizens. Almost every country follows the typical 180 day rule for tax residency.
(Also, if you live in the house for 2 years and then sell it, you can exclude $250K-$500K in gains, but that has nothing to do with inheritance).
If you add the legislative decree 209/2023 article 1 that modifies the tax code and sets the basis for the centre of vital interests, it complicates things even further for the "permanent traveler" for simply having a family or ever having been long term resident in a country.
If you regularly return to Germany and generally to the same place there (i.e. family, friends), and you're not tax resident elsewhere, the tax administration will consider it your habitual abode. And, you guessed it, under the German Fiscal Code (Abgabenordnung), you are a tax resident if you have a domicile or habitual abode in Germany.
Plus, under Extended Limited Tax Liability (Erweiterte beschränkte Steuerpflicht), any significant economic presence in Germany (assets, German clients, participation in a company, bank accounts) will pull you into the tax jurisdiciton for 10 years, not only as permanent traveler but also if you move to a low-tax country.
So while different, it's similarly difficult. It's technically possible but you have to leave Germany and basically cut all ties, difficult if you're German.
If you're not German, you can completely escape the claws of the German fisc with relative ease. But if you're say Spanish, Hacienda will consider you tax resident in Spain even if you never ever lived in Spain (i.e. born abroad). There's all sort of sticky tax rules in numerous countries: you're tax resident until you prove you're tax resident elsewhere, the aforementioned nationality fallback, essential ties rules, the "domicile" concept (i.e. where you intend to live until you die).
Plus, and I reiterate, the difficulty in obtaining a simple bank account without a TIN and proof of address in most countries.
I'm sure there are corner cases with exotic nationalities and carefully selected tax jurisdictions with lax "tax residency" tests to rotate along, and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time", plus tax laws constantly change, and not to leave you more loopholes.
Starting Cash Annual Return Volatility Loan Rate Leverage Depreciation Front-Load Tax Rate
Period: Years Decades
| Period | Invested | Asset Value | Debt | Depreciation | Taxes | Cash Out | Equity |
|---|
tl;dr:
- Defer US taxes by reinvesting your taxable income into the economy as business expenses, depreciating assets, etc.
- For your leveraged investments, pay yourself in refinanced cash when your investments appreciate and/or credit rates drop.
You can dodge defer US taxes if you reinvest your dollars into the economy. This is no loophole; the system is working as intended. Your government wants you to create taxable wealth.
Equity is taxable wealth that already exists. You cannot create wealth by purchasing $10k of AAPL equity. You can create wealth by investing $10k in an apple orchard.
But you must reinvest your dollars in a particular way that Uncle Sam understands. When you report business expenses on your tax return, you inform the IRS what you spent on enterprise. The US tax code rewards entrepreneurial pursuits which grow the economy. Uncle Sam happily forgoes $1 now for $11 next decade -- it's the same slice from a larger pie.
To perpetually defer taxes on your taxable wealth, keep reinvesting your surplus. The IRS forgoes $10 now for $110 next decade, $100 for $1,100, and so on.
If you aren't actually reinvesting capital, pay your damn taxes. Don't be an asshole.
Depreciation spreads business expenses over time. If you invest $100 in a lawnmower that earns $11 per year, this depreciation schedule will minimize your total taxable income each year:
| Year | Revenue | Depreciation | Taxable Income |
|---|---|---|---|
| 1 | $11 | $10 | $1 |
| 2 | $11 | $10 | $1 |
| … | … | … | … |
| 10 | $11 | $10 | $1 |
| Total | $110 | $100 | $10 |
But you can also ask the IRS to treat it as $10/year for 10 years rather than $11/year for 9 years. You might consider this schedule if your other investments lost $11 this year:
| Year | Revenue | Depreciation | Taxable Income |
|---|---|---|---|
| 1 | $11 | $0 | $11 |
| 2 | $11 | $11 | $0 |
| … | … | … | … |
| 10 | $11 | $11 | $0 |
| Total | $110 | $100 | $11 |
Let's say your other investments gain $89 this year, so you front-load the lawnmower depreciation schedule. You pay zero taxes this year, but you've increased your tax obligations in future years:
| Year | Revenue | Depreciation | Taxable Income |
|---|---|---|---|
| 1 | $11 | $100 | -$89 |
| 2 | $11 | $0 | $11 |
| … | … | … | … |
| 10 | $11 | $0 | $11 |
| Total | $110 | $100 | $99 |
To defer taxes, deduct yesterday's expenses from today's revenue. Good accountants will massage depreciation schedules to match unexpected profits/losses.
Example: Instead of depreciating a building over 27.5 or 39 years, a cost segregation study could reclassify components (carpeting, fixtures, landscaping, certain electrical) into 5, 7, or 15-year assets. In this way, a $2M property could accrue $200K–$300K in depreciation deductions its first year.
Again, this is intentional. If you contribute more to the US economy than you siphon out, your government will happily pretend you're penniless.
A politician attracts investments into their constituency via tax incentives. Unfortunately, some tax incentives are loopholes which invite crooks to claim exemptions without truly contributing. It is difficult to distinguish whether a loophole is corrupt or negligent, and impossible to prosecute politicians either way.
Most investment money is borrowed (e.g. SBA loans, commercial real estate loans). Your government wants you to create wealth, so it loans money to banks at a magic interest rate. Banks may lend that money to you at a higher rate.
If you contribute loaned wealth to the US economy, you must siphon your dollars out in a way that Uncle Sam understands. One popular method is refinancing, i.e. paying off your old loan with a new loan and pocketing the cash difference. Loaned money isn't taxable income, so you can save/spend it without affecting your tax rate.
Disclaimer: Loans ain't free. Refinancing ain't easy.
Death is a popular escape from deferred taxes. When you die, your obligations to the government vanish. Your heirs inherit assets/property at market value. Their assets depreciate from new cost bases.
According to Modern Monetary Theory, taxes are a method of pulling dollars out of circulation. The government never actually needed your money anyway.
Your life on Earth continues long after you die. Every dollar you've spent, saved, borrowed, lent, donated, willed -- it all mattered. People will commute on the roads you paid for, or taste apples from your trees, or pollute the Pacific Ocean, or survive tuberculosis, or eat pasta, or overdose on fentanyl, or play chess, or gossip, or whatever people do.
You're doing what so many people who make this argument do. You're taking an extreme example that laws have been crafted to tackle and using it to represent the norm. A normal German citizen with a normal amount of money leaving Germany to become a nomad and travel the world, never establishing tax residency in any other country, will not need to open a bank account anywhere else, nor will they be subject to Extended Limited Tax Liability which is designed to capture tax from people who try to terminate their tax residency before realizing substantial gains on local assets. Completely irrelevant to almost every person on earth.
My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere, they will be living an entirely legal tax free[1] life. Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.
> [...] and numerous nomads fly under the radar for various reasons (illegally of course), but I assure you it's way more complicated than "lol just don't be American/Eritrean and travel all the time"
"illegally of course" again, false. There is no universal tax law that we are all subject to. The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.
Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?
> plus tax laws constantly change, and not to leave you more loopholes.
Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.
Despite my argument, I am pro taxation. Taxation is needed to support society. We pay taxes to contribute to the society we are a part of. Taxation isn't punitive. But if someone opts out of being a part of a society, if they choose to wander the world, without the benefits of having a home and community, why would they be expected to pay taxes? And to who? Tax residency is a good system, a fair system.
[1] tax free is a bad term anyway because tourists pay consumption taxes but we're talking about income taxes
That will make you tax resident in Germany as all of your financial interests are in Germany. It's not an extreme example at all, it's the basic case to catch.
>My original assertion is that unless you are American (or, apparently, Italian) the normal person can up sticks one day and wander the world, and so long as they never establish tax residency anywhere,
Or Spanish. Or Belgian. Or French. Or Germany. Or basically any OECD country, and most non-OECD ones.
>they will be living an entirely legal tax free[1] life.
Legal as long as they don't generate any income, and even then, wealth taxes could kick in.
>Of course doing so requires giving up the things humans need, like stability, so it is a terrible life for most, but the point is, it is legal and easy.
It's really not easy at all to do legally, but at least we agree it's difficult to do emotionally.
>"illegally of course" again, false. There is no universal tax law that we are all subject to.
That's the fun part: virtually all OECD tax laws are universal.
>The Common Reporting Standard is intended to combat tax evasion. A person who does not have tax residency is not engaging in tax evasion, they are just a person without tax residency.
That's sovereign citizen tier of delusional. Plus I proved again and again that tax residence isn't bound to only where you are/live, at all, for over a decade, for any developed country and most developing ones.
>Rather than speak in theory and hypotheticals, can you point to any real world examples of someone being charged / tried / accused of tax evasion because they didn't have tax residency?
https://www.bbc.co.uk/news/entertainment-arts-67472496
She played the "I didn't stay anywhere for too long lol" card because she was touring most of the time, and she was slammed by the Spanish fisc on the basis of her centre of vital interests.
Literally most rock/pop stars would be living tax free if what you said was true, unfortunately for them it's not the case.
You won't find many high profile cases because the people who make money use expensive tax advisors who tell them not to do what you suggest, but since you're familiar with Germany, here's another: https://www.theguardian.com/world/2002/oct/25/germany.tennis
> Why are you framing it as a loophole? Not having tax residency isn't a loophole, just as not having a car isn't a loophole for a drivers license.
Not having a tax residency prevents you from legally doing business pretty much anywhere where it's worth doing business. I have to ask for a work visa in some countries I visit because of work even if there's a tourist visa-free regime for me, I literally am not allowed to do any work there. Would they notice? Probably not. But what happens if they do? That I and most importantly my company are in deep shit.