MUSK AGAIN PROVES NEED FOR A BILLIONAIRE TAX
Elon Musk, the world’s wealthiest man, would like us to think he takes personal finance and investment advice from Twitter. He recently polled his 63 million followers on the social media platform about whether he should sell part of his stake in Tesla. “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” he wrote. More than 3.5 million votes later, the sells decisively won.
The poll, which Musk pledged to honor, was almost certainly a publicity stunt — a way of garnering goodwill at a time of increasing annoyance toward the nation’s billionaire class. A few details omitted from the tweet cast the situation in a rather different light: Musk’s contract gives him the option to buy almost 23 million shares of Tesla stock at $6.24 each, but he needs to do it by next August or lose the opportunity. Since those same shares were trading for more than $1,000 when Musk posted, he would be a fool to pass on the option.
Musk would owe taxes on his mammoth gain, perhaps as much as $15 billion, and many analysts have suggested that selling off part of his stake in Tesla is the only way he could generate enough cash.
It’s a dilemma that calls for taking the world’s tiniest violin and shrinking it some more.
A recent Democratic proposal to raise taxes on the wealthiest Americans put the issue of what billionaires pay, and don’t pay, back in the spotlight. Don’t forget: America’s richest men and women have been the big winners of the pandemic. While almost 20% of Americans spent their entire savings just to get by as millions of people lost their jobs, the stock market went on a bender. Billionaire wealth increased to record levels.
Musk was a standout beneficiary. Before COVID hit, Musk’s net worth was an estimated $27 billion. Bloomberg estimated it at $323 billion earlier this week. Credit the soaring Tesla stock, which traded at two figures in early 2020.
If you think Musk is grateful, try again. He was among the billionaires who pushed back hard against the tax proposed by Sen. Ron Wyden, D-Ore., that sought to keep the Democrats’ Build Back Better plan deficit-neutral and reduce wealth inequality. Last month, Musk proclaimed that we all need to be worried. “Eventually they run out of other people’s money and then they come for you,” he tweeted.
Musk might be a particular loudmouth on taxes, but he’s far from the only wealthy tax skeptic. Investor Leon Cooperman — who sobbed on television in 2019 when talking about higher taxes on billionaires and claimed that the nation’s wealthiest were being portrayed as “deadbeats” — recently argued, “They’re attacking billionaires for no reason.”
Actually, no. Billionaires are on a collision course with the rest of us. Survey after survey shows a solid majority of Americans believe that the rich in general and billionaires in particular are not paying their fair share. We’re not wrong. More than a quarter of the $600 billion “tax gap” — that is, the amount of money legally owed under current law but not paid each year — is shirked by the richest 1%. That’s unlikely to change soon: Republicans kiboshed efforts to buttress IRS funding so the agency could go after wealthy tax cheats. Meanwhile, wealthy investors such as Berkshire Hathaway’s Charlie Munger (perhaps now better known for a nearly windowless dorm he designed for the University of California at Santa Barbara) insisted when asked about wealth taxes in 2019 that “a lot of civilizations work very well with low taxes on the rich.”
We don’t need to look at the data on inequality in this country, child poverty, housing or health issues to know that things have gone too far. Billionaires are portraying themselves as misunderstood victims, running roughshod over popular opinion and turning the question of paying taxes into a public should-he-or-shouldn’t-he dilemma. And too many of our elected officials continue to do nothing about it.