Billionaires often pay lower tax rates than middle-class workers because the U.S. tax code taxes income, not wealth, and their wealth grows through asset appreciation that isn't taxed until sold. They use the "buy, borrow, die" strategy, coined by Professor Edward McCaffery in the 1990s: they buy appreciating assets, borrow against them—banks lend 70% to 90% of portfolio value—since borrowed money isn't taxable income, and pass assets to heirs with a "step-up in basis," erasing prior capital gains. When they do sell, they pay capital gains tax at 0%, 15%, or 20%, versus federal income tax rates of 10% to 37% on wages; Warren Buffett noted he pays a lower rate than his secretary. Real estate depreciation can eliminate taxable income on paper, showing losses that offset other income, and many billionaires reduce taxable income to zero legally through business losses, operating costs, and depreciation. Charitable foundations also serve as tax shelters, though the article notes they aren't just about philanthropy.