How could the proposed tax on asset-backed loans affect California's financial environment?
New federal tax on asset-backed loans could reshape California's financial landscape U.S. Rep. Laura Friedman introduced House Resolution 10846, which proposes a federal tax of 23.8% on asset-backed loans exceeding $1 million. This bill aims to close the 'buy, borrow, die' loophole, where wealthy individuals borrow against investment assets without counting the loans as taxable income. If passed, this legislation would change the financial regulatory and tax environment for wealthy residents and businesses in California, as the tax would apply to any loan, line of credit, or restructured loan, while excluding mortgages, student loans, auto loans, and business loans. The tax rate of 23.8% matches the top long-term capital gains tax rate and the net investment income tax.
- Effect
- Mixed
- How direct
- 2 steps, 1 inferred by Brind
- When
- Over the long term
- The story
- Gone quiet
How it reaches California
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U.S. Representative Laura Friedman introduced House Resolution 10846, which proposes a new tax on asset-backed loans. The bill would impose a 23.8% tax on any loan, line of credit, or restructured loan amount exceeding $1 million. The legislation excludes mortgages, student loans, auto loans, and business loans from the tax.
The full event1independent outlet -
House Resolution 10846, introduced by U.S. Rep. Laura Friedman, proposes a 23.8% tax on asset-backed loans above $1 million. This bill is aimed at closing the 'buy, borrow, die' loophole used by the ultra-wealthy to avoid paying taxes on fortunes.
1 report connects these two. Brind only summarizes; follow a link to read the reporting itself.
- hometownregister.com Oct 22
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US record label; imprint of Congress Record Corp.
Everything about Congress -
As federal legislation, the bill would impose a tax on asset-backed loans for any individual or entity within California that utilizes this financial strategy. The tax applies to loans, lines of credit, or restructured loans above the $1 million threshold, thereby altering the financial obligations of wealthy Californians.
No report states this step directly. Brind drew it from the reporting on each side of it, so treat it as an informed guess.
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Everything about California
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The facts so far
As reported. Each one links to where it comes from.
- House Resolution 10846 proposes a tax of 23.8% on asset-backed loans.hometownregister.com
- The tax applies only to the amount above $1 million.hometownregister.com
- Mortgages, student loans, auto loans, and business loans are excluded from the bill.hometownregister.com
- The 23.8% tax rate matches the top long-term capital gains tax rate and the net investment income tax.hometownregister.com
Why it matters
The proposed tax targets a specific financial strategy used by the top 1% of income earners, who utilize the 'buy, borrow, die' method to avoid paying income and capital gains taxes. For California, a state with a significant concentration of wealth and high-value investment assets, a change in the federal tax code could alter the financial planning and investment behavior of its wealthiest residents and businesses.
Economists have offered mixed views on the bill. While supporters see it as a way to ensure wealthy Americans pay their fair share, critics warn that the legislation could overcomplicate an already complex tax system and potentially open the door to new loopholes in the future.
What we don't know yet
- Will House Resolution 10846 pass through Congress?
- How will financial institutions adjust their lending practices to comply with the new tax structure?
Is this still moving?
- Reports
- 2
- Developments
- 1
- Repetition
- 50%
What would change this answer
Reporting
- hometownregister.comOct 22
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Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.