The Investment Thread
Not a tax expert.
I think the error is not describing the types of stock offered. RSUs (stock grants) are taxed as W2 income. ISOs/stock options (employee purchase) are more complicated. ISOs are not taxed as W2 income but part of AMT. CEOs are paying 26-28% on the spread between the excise price and market price for those options. Once they sell, they pay capital gains taxes on the gains.
CEOs paid in RSUs for pennys/share or purchased ISOs very cheap and held with 1000-4000x growth are how they get super rich. Portfolio loans are a thing. Musk has personal loans of 3.5B.
Can you take a portfolio loan, invest it in real estate or another business, and deduct the interest on loan? Yes. Could a wealth person live off a portfolio loan at a 7-9% interest rate to avoid paying 20% LTCG taxes? Sure. Could a wealthy person set up a company in a tax haven, invest in that company, claim a loss on that money to reduce tax burden, and the IRS lack the funding to deep dive on that company/losses? Probably. The Panama Papers were all about fraud and tax evasion. There were lots of international names, Americans not so much. Makes me wonder who was the hacker.