Eccentric billionaire and CEO of Tesla and Space X, Elon Musk, has once again drawn attention on social media for his latest criticism of President Joe Biden’s tax plan, pointedly the unrealized capital gains tax, i.e. on asset price appreciation.
For years the United States has had a 20% tax on capital gains. In other words, if a person buys an asset —which can be anything from a stake in a company to a condo in New York— the government and the states levy a tax on the appreciation of the asset on the day it is sold.
The novelty of the new tax proposed by Senate Finance Committee Chairman Ron Wyden (D, OR) is that it could tax the top 1% of Americans on the appreciation of their assets without them having sold anything. This would be, as confirmed by Rep. Nancy Pelosi, a wealth tax.
According to an article in The Washington Post, with the wealth tax Elon Musk and Jeff Bezos could pay up to $50 billion and $44 billion respectively over 10 years.
Despite the hefty sums that would have to be paid by America’s wealthiest 1%, Musk noted that, according to the tax proponents’ own estimates, the tax would only cover 10% of the cost of the human capital plan pushed by the Democratic Party.
“Where will the other 90% come from? The answer is you,” Musk adds in his tweet.
High levels of debt
“Even taxing all ‘billionaires’ at 100% would only make a small dent in that number, so obviously the rest must come from the general public. This is basic math,” Musk mentions in the continuation of his thread. According to the U.S. Debt Clock this could reach $29 trillion and the debt per American taxpayer stands at $229,705.
Musk also mentions the astronomical growth of the federal debt, which in 2000 was equivalent to 56% of GDP and today exceeds 126% “and climbing fast,” Musk notes.
On Sunday, in response to a tweet from Mr. Whale showing a video of Treasury Secretary Janet Yellen talking about the need to impose a tax “on liquid assets – such as company stock – held by extremely wealthy individuals,” Musk commented “sclerotic democracy.”
In another tweet, Elon Musk explained his reasoning against further taxation at 1%: “Who is best at capital allocation – government or entrepreneurs – is indeed what it comes down to. The tricksters will conflate capital allocation with consumption.”
A Biden critic
In the past Musk has mocked the Biden administration by claiming that the president is “still sleeping,” in a clear reference to the jibe calling him “Sleepy Joe.” Musk’s feud with the Democratic administration is not only over tax issues, but also over how the money for the infrastructure plan, which includes substantial subsidies for electric car demand, will be spent.
Although in theory, Tesla should welcome more money being channeled to the electric car industry, this money will end up in the hands of its American competitors such as GM, Ford, Chrysler, or Stellanis, since the subsidies for the purchase of electric cars contemplate that they only go to cars manufactured with unionized labor, and Tesla does not allow unions within its plants.
At present, the government refunds up to $7,500 in taxes to taxpayers for the purchase of an electric car, in the future, these refunds could be up to $12,000, but only for cars from companies that allow unions, which would put Tesla at a disadvantage with its competitors.