Unintended Consequences Inequality: American Buy, Borrow, and Die vs. Scandinavian Wage Compression
Aug 14, 2025
The discussion reveals how wealthy Americans cleverly sidestep taxes with the 'buy, borrow, and die' strategy, raising eyebrows over income inequality perceptions. Surprisingly, Scandinavian income equality stems from wage compression, not popular progressive policies. The podcast dives into the nuances of education demand, healthcare costs, and family policies, debunking myths about their effectiveness. It also compares U.S. and Scandinavian systems while highlighting challenges to adopting similar wage strategies in America.
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Trump Illustrates ‘Buy, Borrow, Die’
- Peter Van Doren and Paul Matzko describe Donald Trump's low reported income-tax years as an illustration of buy, borrow, and die.
- They explain wealthy heirs inherit stepped-up basis so capital gains often go untaxed across generations.
Why Unrealized Gains Aren’t Clearly Taxable
- Unrealized gains can come from rising cash flows or falling discount rates, and only the former increases true ability to pay taxes.
- Research cited argues most asset-value variation stems from changing discount rates, weakening the case to tax unrealized gains.
Buy, Borrow, Die Is Less Common Than Thought
- Survey data show unrealized gains are a large share of top-1% wealth but a small share of reported economic income on tax forms.
- The paper finds buy, borrow, and die is less common than assumed; rich households tend to buy, save, and die instead.