Comment Re:You know what I like? (Score 1) 1065
Indeed. What Ellison is doing is taking a bet that his stock's return will exceed the interest rate on his loan. Kind of a dicey gamble, especially on a volatile investment like stock. Considering the volatility of stock, I wonder what interest rate he is even getting. I would be really surprised if its anything near the prime rate. I am actually currently doing a similar thing- my mortgage interest rate is 3.25%, and effectively its lower due to the tax breaks. It makes me uncomfortable as I hate debt, but I am not paying my mortgage off earlier because I can easily exceed a 3% return with only moderate risk even in this market (I made a portfolio of high yielding boring dividend stocks w/ companies like ConEdison, PSEG, AT&T, Verizon, Altria, etc). If the economy ever gets out of the mud, I should be able to find even better returns for the same risk, or my more likely course, the same returns for less risk. You could look at this as a tax deferment strategy as well I guess, as I maximize my mortgage deduction.
I don't really see where the tax dodge comes from at all. There may be some short term vs long term capital gains rates involved, but that doesn't seem likely as I am sure Ellison has a hoard of stock he has had for a very long time around. I guess one could also view it as delaying paying income taxes, similar to a Roth 401k, and letting the stock grow in value tax-deferred. Again it assumes that there will be an increase in value, and those types of schemes always seem like more trouble than they are worth.