Don't they have to payback the loans at some point? And at that point do they not liquidate some assets to do so and pay taxes on that? (Serious question.)
I’ve never understood this reasoning. Loans need to be repaid at some point, so one must realize some income to pay them back, at which point they will owe tax.
Why? It's literally free money. Stick it into an low risk investment account or even a money market account, give it back at the end and keep the interest.
People should be held accountable for their own stupidity, and it's not like the company did anything deceptive AFAIU. If an adult doesn't understand what a loan is then that's on them (or their education, but that doesn't absolve their responsibility).
Taking out a bad loan is not smart. Not being able to pay it back is not smart. We can argue whether this is good or not, but certainly these people are not smart or they would have solved the problem or avoided it in the first place.
Loaning $160K to someone who was unlikely to be able to pay that back was also a stupid mistake, no? Given that the debt is non-dischargeable not everyone is allowed to fail.
People should be asking where this money comes from, and if it's not ever paid back, who doesn't get paid back?
It's not a problem for you if you can take a loan and you don't need to pay it back. You should get as much debt as possible. It's a problem for the guy who never gets their money back.
In effect, the money is borrowed from those who have savings in cash, in the form of inflation. Deficit spending with created money i.e. inflation is a 'hidden tax' which mostly hurts poor people, who have most of their savings in cash.
They pay down the loan (which will have some hilariously low interest rate because they're good for it) with income, and then - to rub salt in the wound - they get to write off the interest paid on their income taxes.
These guys do have substantial incomes, but through "charitable donations" (to charities they control) and interest paid, they often pay little or no income tax on it.
Are they allowed to take out loans without paying them back? If they have to pay them back, eventually they have to use that collateral which will be a taxable event. They might be able to delay, but they'll eventually have to pay.
So you are suggesting that lending money to someone where prospective income is unlikely to cover principal and interest is not stupid because the creditors (who may be banks) have been able to structure the system that they won’t ever face the consequences of their decisions?
Who is stupid enough to make these loans? How can they not see they won't get their money back?
I suspect it is a tax thing/way to move money, isn't it?
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