“Good to Be Rich:” Multimillionaire Matt Dolan Uses “Cheap Loan” To Fund Senate Campaign, Avoid Paying Taxes
August 22, 2023
Dolan’s sweetheart deal “speaks to some of the financial gateways available to wealthy politicians but closed to most the constituents they represent”
Columbus, OH – A new report from Cleveland.com today shows multimillionaire Matt Dolan is using a “cheap loan” – valued between $5 – $25 million with a “staggeringly low” interest rate of less than 1% – to fund his Senate campaign. Dolan’s 0.832% interest rate is far lower than the average 30-year fixed mortgage rate and credit card interest rate, speaking “to some of the financial gateways available to wealthy politicians but closed to most the constituents they represent.”
Financial experts say Dolan is following a “‘buy, borrow, die’ tax avoidance strategy.’” Of the top 10 wealthiest Senators, only one has used a loan to fund their campaign – and paid an interest rate between 4.25% and 5%.
Dolan reported a net worth between $14.5 million and $41 million last week – including multiple dressage horses – and has already loaned himself $4 million this cycle to fund his Senate campaign.
Read more:
Cleveland.com: How a multimillionaire U.S. Senate candidate financed his race with a cheap loan
Jake Zuckerman
August 22, 2023
- When Matt Dolan needed cash for his first U.S. Senate run in 2021, he found it in an unusual place: the Morgan Stanley office in Pepper Pike.
- He pays .832% interest on the loan, a staggeringly low rate from the company through which Dolan owns millions in stocks, mutual funds, bonds, and other investment vehicles. For comparison, the average 30-year fixed mortgage rate for the U.S. in 2021 was between 2.7% and 3.2%, according to the Federal Reserve. That year, credit card interest rates were 14.6%, according to the Fed, and 24-month personal loans were 9.4%.
- The Morgan Stanley financing speaks to some of the financial gateways available to wealthy politicians but closed to most the constituents they represent. However, even in terms of a U.S. Senate crammed with millionaires, Dolan’s financial arrangement sticks out.
- The loan Dolan took out seems to follow the “buy, borrow, die” tax avoidance strategy, according to Edward McCaffery, a tax law professor at the University of Southern California who’s said to have coined the phrase. The idea is that wealthy Americans can limit their tax liabilities by accumulating assets like stocks that appreciate in value without producing taxable income; borrowing money against those assets; and passing the assets on in death to their heirs.
- Had Dolan sold off his stock holdings to pay for the race, he’d need to pay a capital gains tax on the sale. Instead, he can borrow money at an interest rate lower than the rate that the stock appreciates in value. McCaffery said it’s a common tactic among billionaires…
- “It’s good to be rich,” McCaffery said.
- “If you’re not super wealthy, a bank is not going to give you a personal loan to fund a political campaign,” [Bob Salera] said.
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