By Stephen Land and Bob Lord<\/p>\n
The valuation trends up and down, but one thing\u2019s for sure: Elon Musk became the world\u2019s first trillionaire this summer. At the height of the SpaceX IPO, he was briefly worth around $1.45 trillion.<\/p>\n
Then SpaceX stock tanked, rallied, then tanked again. But the most important thing about Musk\u2019s wealth isn\u2019t whether it stays above the 13-figure threshold \u2014 it\u2019s that\u00a094 percent of it\u00a0comes from not having to pay taxes on unrealized gains.<\/p>\n
That\u2019s right: Musk\u2019s fortune effectively comes from not paying taxes.<\/p>\n
It\u2019s no exaggeration to say that trillionaires (Musk likely won\u2019t be the last) are creatures of the tax code. They ought to be called \u201ctaxillionaires.\u201d If it weren\u2019t for laws that permit the wealthy to endlessly defer paying taxes by keeping their gains unrealized, there would be no trillionaires \u2014 and many fewer billionaires.<\/p>\n
According to Musk\u2019s own account, when he sold his stake in Paypal in 2002, he\u00a0netted $180 million, invested it all in SpaceX and Tesla, and borrowed to pay his living expenses. To get from $180 million to a trillion today implies annual returns of over 40 percent (returns that would be considered impossible for ordinary investors).<\/p>\n
Allowing these returns to compound untaxed supercharges growth.<\/p>\n
Musk paid some taxes along the way, when he exercised stock options or sold some Tesla shares, but any taxes he paid are insignificant compared to his wealth. By contrast, for most working Americans earning a good salary, total state and federal taxes are significant \u2014 typically around 40 percent.<\/p>\n
They can put limited amounts in tax-deferred IRAs, 401(k) plans, and the like. But most of their savings comes from net paychecks after withholding for federal, state, local, Social Security, unemployment, and Medicare taxes. Musk is effectively exempt from these taxes.<\/p>\n
But he doesn\u2019t have to be.<\/p>\n
Suppose he were subject to the same taxes on his annual wealth increase that most higher-earning Americans pay on what they make, and had to sell some Tesla and SpaceX shares to pay those taxes. We crunched the numbers based on the latest figures, and found he\u2019d be worth around $47 billion today \u2014 rich enough to afford the most lavish lifestyle imaginable, but not a trillionaire, and not richer than the GDP of most countries.<\/p>\n
It\u2019s the same story for Jeff Bezos, Warren Buffett, and other multibillionaires.<\/p>\n
The vast bulk of their fortunes came from not paying taxes on their wealth as it grew. Without endless tax deferrals, they would have only a tiny fraction of what they own today (although that tiny fraction would still be a huge amount of money). Yet as things stand today, nothing stops them from wielding the power and influence their wealth buys to benefit themselves.<\/p>\n
In the 2024 elections, Musk was\u00a0the largest campaign donor, giving $291 million. That\u2019s chump change for him, but it bought unprecedented power:\u00a0lucrative contracts, the\u00a0suspension of investigations\u00a0of Musk\u2019s businesses, access to government data, and the authority to dismantle government programs \u2014\u00a0 including disruptions to foreign aid which are projected to result in\u00a0\u00a0over 14 million people\u00a0dying from preventable diseases.<\/p>\n
It\u2019s a vicious cycle of wealth begetting power which begets more wealth, diverting it from the needy and vulnerable. We\u2019re in the grip of unprecedented power accumulated by private, superrich individuals.<\/p>\n
We can check their power by fixing the untaxed wealth problem. We should end the practice of funding billionaires\u2019 and trillionaires\u2019 accumulation of power at public expense by letting them amass yet larger fortunes without paying taxes. We should adopt sensible policies requiring them to pay their fair share, such as the\u00a0Billionaires Minimum Income Tax Act\u00a0introduced in Congress in 2023.<\/p>\n
Over the next decade, we will face\u00a0crisis-level national debt and unmet needs\u00a0for healthcare and retirement income. That will force us to decide whether to leave the vast pool of billionaire and trillionaire wealth untouched, or tax them like the rest of us to curb their influence and address public needs. The choice is ours.<\/p>\n
Stephen Land is a retired tax attorney and former Chair of the New York State Bar Association Tax Section. Bob Lord, an associate fellow at the Institute for Policy Studies, currently serves as Senior Vice President for Tax Policy at Patriotic Millionaires. This op-ed was distributed by OtherWords.org.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"By Stephen Land and Bob Lord The valuation trends up and down, but one thing\u2019s for sure: Elon…\n","protected":false},"author":2,"featured_media":174480,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[122],"tags":[8586,10682,202,1960,203,50,55],"class_list":["post-174479","post","type-post","status-publish","format-standard","has-post-thumbnail","category-elon-musk","tag-california-news","tag-columnists","tag-elon-musk","tag-local-news","tag-musk","tag-news","tag-opinion"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@people\/117020594438406877","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/174479","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/comments?post=174479"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/174479\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media\/174480"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media?parent=174479"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/categories?post=174479"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/tags?post=174479"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}