(If you're planning to wink at the bank, pay nothing, and let them keep the stock, that's the kind of thing that won't work if it becomes common. At that point, people will point out that you sold stock to the bank and didn't pay the income tax.)
Interest rates are so low that your income from your job at the startup is probably enough, right? Granted it won't work if rates go back up, and the current environment is a bit special.
Plus you might have some dividends on the whole amount.
You're paying interest on top of the loan amount, which you still also have to pay. You may not get the income to pay the loan by selling stock, but you have to get it somehow, and you'll pay income taxes on it.
The point is by borrowing the money you avoid paying the same amount of tax, because the income tax on whatever you're servicing the loan with is not the same amount as what you'd pay if you sold the shares?
In a general debt-vs-immediate-payment question that could work, I guess, because you can e.g. pay the debt off over such a long period that the total income you need divided by the number of years you take falls into a lower tax bracket than otherwise.
I have trouble seeing how it would work in the example under discussion, where we know that the person is extremely wealthy -- and thus should hit the maximum income tax bracket no matter what -- and that capital gains taxes are likely to be the least heavily taxed income source available, so that it would be difficult to beat selling stock.
Depends a lot on what country we mean. Also, the debt never had to be repaid. You can keep rolling it as an interest-only loan, so long as the collateral is enough to satisfy the lender.
(If you're planning to wink at the bank, pay nothing, and let them keep the stock, that's the kind of thing that won't work if it becomes common. At that point, people will point out that you sold stock to the bank and didn't pay the income tax.)