US government should tax Musk’s wealth – economy

Basically you have to be grateful to Elon Musk for his latest publicity stunt, because he could hardly have presented his worldview in a more impressive way: it is not governments and elected officials who should decide if the richest man of the world pays taxes or not, but rather, if anything, its millions of Twitter fans. The contempt for democracy coupled with the simplicity of social media is pure cynicism really.

To put it right up front: No one questions Musk’s work or envies his success. With Space-X and Tesla, the former physics and economics student created two companies that really turned their industries upside down. This is especially true for electric car maker Tesla: If Musk hadn’t systematically punched the bosses of established automakers over the years, the turnaround in traffic would still be nothing more than a household name.

But many other people have also done their best for the common good, without deriving the tax office’s request to be left alone forever. Musk’s courage has so far earned him a fortune of nearly $ 340 billion, so no further rewards in the form of government protection are needed. In other words: if the richest man in the world doesn’t pay a single penny in taxes, while ordinary Americans transfer thousands of dollars to the state every year, then you don’t need to ‘being a communist to think there might be some mistake here in the system there.

The rich who need money borrow money from the bank

Theoretically, the amount of the tax burden in the United States, as in Germany, is based on the economic performance of the individual. The basis of this is income – and this is exactly where the problem lies: People like Musk often have no traditional income from work. If you need the money, go to the bank and borrow it. This is a great deal for the bank because, given the importance of customer assets, it doesn’t have to worry about repayments. The borrower in turn pays interest, but at the same time avoids paying taxes.

The deception is possible because the IRS only has access to Musk’s ever-growing stock market assets when the Tesla boss sells papers – in other words: generates income. It is the same in Germany. In the US, however, there is a second, almost perverse circumstance: the ultra-rich can even bequeath their shares tax-free, because portfolio appreciation is reset to zero with each subsequent generation. An expert from the Center for American Progress (CAP) recently said that anyone who is just wealthy enough can decide for themselves in the United States whether or not to pay taxes. Experience shows that many ultra-rich people choose option B.

In extreme cases, a billionaire has to sell a house or a car

In Washington, therefore, it is now being discussed whether in the future price gains should also be taxed at the end of each year if the paper is not sold at all but remains in the securities account. If that had been the case, Musk, for example, would have had to pay a double-digit billion since 2019 alone. The approach makes sense, but is not yet broad enough: it would be fairer to measure performance in the future according to the wealth of the individual rather than income, because of course a person with an income of 30,000 euros and 100 million euros in assets is economically more powerful than someone with the same income, but no reserves.

Many will now object that the cost of levying any wealth tax is comparatively high. It may be, but given the grotesque injustice of the current law, this seriously cannot be the clincher. And yes, in extreme cases such a reform could mean that an affected person would have to sell shares, a house or the four-person car in order to pay the tax. At least then, however, the laws and elected officials decided it. And not the Twitter followers of a latent megalomaniac entrepreneur.

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