Elon Musk, the current wealthiest person in the world, made his feelings known about a proposal to tax unrealized capital gains. He wants no part of it.
Wealthiest Person in the World
Musk recaptured the title of the wealthiest person in the world Monday as Tesla shares posted a record high and boosted his net worth by about $36 billion. He now proudly stands alone as the world’s wealthiest person valued at $289 billion.
Hours after becoming the world’s richest man yet again, Musk went on the warpath against President Joe Biden. Specifically, he criticized Biden’s crusade of taxing unrealized gains held by the ultra-wealthy.
Responding to a tweet urging social media users to write to political representatives and oppose the proposal, Musk joined the chorus. He posted a reply. “Exactly. Eventually, they run out of other people’s money and then they come for you,” he said.
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Disincentive To Investment
However, the proposal to tax capital gains even before transferring ownership will only apply to America’s wealthiest persons. In fact, this will affect less than 1,000 of the country’s richest elite.
Currently, the government only taxes capital gains when owners decide to sell the asset. Republicans, in particular, oppose the measure. They argued that the plan will create a huge bureaucracy. In addition, it will also act as a disincentive to investments.
Meanwhile, Musk’s case is what the proposal targets. His wealth is almost entirely based on stock options from his companies. In particular, these firms include Tesla, space travel company SpaceX, and tunnel digging The Boring Company.
In particular, tax documents released by ProPublica show that Musk and fellow billionaires managed to keep their wealth tax-free by tying them up in stocks.
Musk’s Wealth Tied Up In Options
However, Musk denied the allegations and called it misleading. He said he does not earn a salary from any of his corporate jobs. “My cash compensation is basically zero,” Musk said in September.
Much of his value is based on his existing stock options. This gives him the right to buy or sell shares at a set price.
For 2021, Musk has a few options that he’ll need to exercise. “I have a bunch of options that are expiring next year, so a huge block of options will sell in [the fourth quarter of 2021] — they’ll have to, or they’ll expire,” he said.
When he sells those options, he will pay a marginal tax rate of 53%. This rate will hike to 57% next year. Instead, he won’t be avoiding any taxes. “The majority of what [stock options] I sell will be taxed,” he said.
Tesla’s Gains Shot Up Musk’s Value
Yesterday’s stock market rally on Tesla boosted Musk’s wealth by $36 billion. Rental car company Hertz announced that it will purchase 100,000 cars from Tesla sent stocks flying.
Even better, Tesla is just coming off an earnings call that said it beat both top and bottom lines during the previous quarter.
As a result, Musk’s net worth vaulted to $289 billion. Meanwhile, his closest rival Jeff Bezos is now only worth $192.6 billion. This means that the world’s wealthiest person is around $100 billion richer than the next wealthiest person.
Watch the New York Post’s video reporting that Elon Musk attacks Biden’s unrealized gains tax:
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