Elon Musk’s latest Twitter stunt offers 'best argument imaginable' for billionaire tax: progressives
Mega-billionaire Elon Musk's latest stunt—a Twitter poll asking whether he should sell 10% of his Tesla stock—was accompanied by a candid admission of what progressives have long seen as a fundamental flaw of the U.S. tax system: For the super-rich, paying income taxes is effectively optional.
After promising to abide by the results of his poll—which attracted more than 3.5 million votes and closed with 57.9% endorsing the sell-off—Musk noted that he does "not take a cash salary or bonuses from anywhere."
"I only have stock," he added, "thus the only way for me to pay taxes personally is to sell stock."
While Musk likely would have been forced to sell a chunk of his Tesla shares regardless of the poll's outcome due to the structure of a stock option grant he was awarded in 2012, the Twitter survey called attention to the fact that unrealized capital gains are not taxed in the U.S., allowing billionaires to accumulate vast wealth for years without paying a penny in federal income taxes.
Capital gains are only "realized"—and thus taxable—when an asset such as a stock is sold.
"He is the poster child for why we need a billionaires income tax," the progressive advocacy group Americans for Tax Fairness (ATF) wrote of Musk in a tweet on Sunday. "Billionaires shouldn't only have to pay taxes when they volunteer to do so."
The Institute on Taxation and Economic Policy also weighed in:
The fact that Elon Musk conducted an unscientific Twitter poll on whether he should pay taxes symbolizes what is wrong with our tax system. \n\nIt\u2019s no laughing matter that superrich people can manipulate their finances to pay minuscule tax relative to their income.https://twitter.com/4TaxFairness/status/1457432007722643459\u00a0\u2026— ITEP (@ITEP) 1636320881
ProPublica reported in June that Musk—who is now worth nearly $320 billion after seeing his wealth balloon during the coronavirus pandemic—"paid $0 in federal income taxes" in 2018. When billionaires like Musk need money, ProPublica noted, "they borrow... pledging the value of shares as collateral."
"It has been called 'Buy, Borrow, Die,' and it's a wonderful system for the superrich," the outlet continued. "This system allows them to enjoy luxury cars, yachts, homes on multiple continents, and occasional trips to outer space while reporting, in some cases, a salary of a dollar a year or less to the IRS."
In an attempt to change the nation's deeply unequal tax system, Sen. Ron Wyden (D-Ore.) last month introduced an updated version of his Billionaires Income Tax, legislation that would impose an annual levy on billionaires' unrealized capital gains. Wyden is pushing to include the measure in Democrats' Build Back Better reconciliation package.
"There are two tax codes in America," Wyden, chair of the powerful Senate Finance Committee, said in a statement after unveiling his bill. "The first is mandatory for workers who pay taxes out of every paycheck. The second is voluntary for billionaires who defer paying taxes for years, if not indefinitely."
Replying to Musk's Twitter poll, Wyden on Saturday reiterated the case for his legislation, writing: "Whether or not the world's wealthiest man pays any taxes at all shouldn't depend on the results of a Twitter poll."
"It's time for the Billionaires Income Tax," the Oregon Democrat added.
Whether or not the world\u2019s wealthiest man pays any taxes at all shouldn\u2019t depend on the results of a Twitter poll. It\u2019s time for the Billionaires Income Tax.https://twitter.com/elonmusk/status/1457064697782489088\u00a0\u2026— Ron Wyden (@Ron Wyden) 1636237112
In a statement on Sunday, ATF said that Musk's Twitter escapade offers the "best argument imaginable for the Billionaires Income Tax now before Congress."
"While it's good news that it looks like Elon Musk will finally be paying some taxes on his enormous growth in wealth, billionaires shouldn't only have to pay taxes when they volunteer to do so," said Frank Clemente, the group's executive director. "Under our current, rigged tax code, it's mandatory for working families to pay each and every year while billionaires only pay when they feel like selling off their assets."
"Under the Billionaires Income Tax," Clemente noted, "Musk would also pay every year on the income derived from his wealth growth."
Urging congressional Democrats to include the Billionaires Income Tax (BIT) in their reconciliation bill, ATF pointed to a recent survey data showing that "funding the package with this tax makes the bill 20 to 40 points more popular with voters in key battleground districts and states—including among Republicans."
"Impacting fewer than a thousand fabulously rich Americans, the BIT could raise more than $550 billion to help fund the Democrats' $1.75 trillion Build Back Better (BBB) plan of social and environmental investments," the group observed. "President Biden has endorsed the tax, which also has the blessing of Sen. Kyrsten Sinema [of Arizona], the Democratic senator otherwise most averse to higher taxes on the wealthy."
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