Staff Reports
Governor Gavin Newsom just took his class-war act national. After pushing a state billionaire tax and floating a so-called national economic “reset,” he’s now asking Congress to outlaw the tax tactic called “buy, borrow, die.” That sounds tough. It also sounds like the sort of headline-grabbing policy that will punish small businesses and savers while driving more wealth — and jobs — out of the country.
Newsom Wants a Federal Ban on “Buy, Borrow, Die”
Governor Gavin Newsom urged lawmakers to eliminate the “buy, borrow, die” strategy used by very wealthy people. The idea is simple: rich people buy assets, borrow against them instead of selling, and when they die heirs get the assets at a stepped-up tax basis. Loans aren’t taxed, and a stepped-up basis wipes out capital gains owed on gains during life. Newsom says this is a loophole the public never hears about and wants Congress to act.
What “Buy, Borrow, Die” Really Means
Here’s the plain truth. If you sell an asset for a profit, you pay capital gains tax. If you borrow against an asset and live off the loan, you don’t trigger that tax. And when the owner dies, heirs usually inherit the asset at its market value, erasing prior gains for tax purposes. That sequence is legal now. It’s legal because Congress wrote the rules. If you want to change them, you need clear fixes — not just populist sound bites.
Why This Plan Will Backfire
Newsom’s proposal sounds like a crusade against the very rich. But policies that punish capital lead to capital leaving. Wealthy investors, entrepreneurs, and small business owners don’t stick around to be squeezed. They move money, headquarters, and jobs to friendlier places. Meanwhile, middle-class workers feel the hit when investment dries up and housing prices spike or businesses close. If Newsom wants fewer tax games, he should propose smart, targeted reforms — not a nationwide scare campaign that fans envy into policy.
Voters Should Watch the Real Agenda
This isn’t just about one weird tax trick. It’s a preview of a broader tax appetite: wealth taxes, higher capital gains rates, and creative ways to treat loans like income. Governor Newsom is running on grievance and redistribution. Voters need to remember who pays the bills when the wealthy leave and revenues fall. If you like good jobs, investment, and higher pay, you should be skeptical of policies that make the U.S. less competitive in the global market.
