Your touching on a much more complicated subject about reporting.
If someone one owns a billion dollars of stock foobar, and foobar grows 10x, then that person is now worth 10B and "made" 9B. However they have not sold anything so while they can be reported as making 9B, they are none of it was directly cash and not taxed; at least not yet.
However, while Bezos "only" has a salary/bonus of 1.5 million a year, it is very common for executives to have total comp packages in the 10s to hundreds of millions a year. These can easily be converted into hourly rate equivalents because there is only so many hours you can work a year.
The billionaire stock owner in your example's economic power has increased by 10x regardless though. They can borrow against that money and those funds aren't taxed - so they can effectively spend it without taxation.
They can cycle debt to avoid ever having to sell a single share for their entire life, at rates more favorable than any middle class person has access to.
We can fix our tax code with legislation to address this loophole, our politicians just don't have the will to do this currently (largely because many of them amass fortunes through stocks and insider tips, IMO).
I think there's kind of a tacit understanding with business owners and legislators that if you collect taxes, you're good. Bezos and Musk might not pay taxes personally, but they oversee operations that result in payments of sales taxes, payroll taxes, employee income taxes, property taxes, etc, in vast amounts.
The historical critiques of class warfare have some good points, because there's obviously a privileged class here that's doing really well on the backs of labor, and this privileged class can afford to buy (and let's face it, it's really bribe) itself ever more privileges for a very tiny share of their wealth.
Wealth != income. What you're advocating isn't changing a loophole, it's developing an entirely new tax (wealth tax) to supplant the old (income tax). It helps to be explicit.
The loophole is that you can get $1M deposited into your bank account, but because it's technically a loan it isn't considered income. This doesn't require a wealth tax, (and getting ex. a home loan shouldn't be taxed as income), but being able to utilize wealth to get a pile of cash that is not taxed is effectively untaxed income IMO.
A wealth tax could address this, but perhaps there are other legislative options, like (partial?) realization of capital gains when used as loan collateral in the income tax code, or something like that. I'd prefer that latter, as it seems more direct.
But I don't know the specific best way to address this, I'm no a tax expert. But, I think its pretty clear that this scheme is an abuse of the system and should be remedied in some way.
This type of loan is really just a form of margin -- the same thing you can get at most stock brokerages (e.g. Schwab, TD Ameritrade, Interactive Brokers, etc). It seems almost impossible to distinguish the purpose of the loans -- e.g. I know people who use these loans to fund primary residence purchases because they lack income for FHA mortgages.
In fact, unless you have a cash-only account, you likely use margin every time you buy & sell a stock. Technically, stock transactions don't settle for 2-3 days. When your brokerage fronts you the shares to immediately buy, sell, or transfer funds, it's all margin under the hood. It gets even more complex once you get into options, swaps, and other esoteric financial instruments.
TLDR: It's simple in principle, but very complex in practice. Further complicating IRS rules is unlikely to win the whack-a-mole competition -- especially when IRS auditors under-target the ultra wealthy to begin with.
I assume they borrow against the after-tax value of the stock, because it will be taxed before being paid back(?) I don't know if that is significant, but I figure it's worth noting.
No that’s not how it works. Infact, you can get a margin loan at 0.75% interest from ibkr if you hold more than 50k usd of stock for half of its value.
Of course, if that value drops you’ll get margin called for more collateral
The thing is, when most of your money is in illiquid assets (stock, in this case, or houses, etc.) you can reliably get an extremely low interest rate loan against those assets. What does that mean? Let's say you have 10B equity in a company, and you want to buy a used 747 Jumbo Jet--a steal, at $500,000. You only have about $100k liquid cash on you at the moment. No problem! Go to a banker, take an extremely inexpensive loan out against your 10B (think less than 1% interest), and buy your jet. Because it's not income, it's not taxed. But yes, these people do actually have access to that much purchasing power, it's not just abstract numbers.
If someone one owns a billion dollars of stock foobar, and foobar grows 10x, then that person is now worth 10B and "made" 9B. However they have not sold anything so while they can be reported as making 9B, they are none of it was directly cash and not taxed; at least not yet.
However, while Bezos "only" has a salary/bonus of 1.5 million a year, it is very common for executives to have total comp packages in the 10s to hundreds of millions a year. These can easily be converted into hourly rate equivalents because there is only so many hours you can work a year.