Elon Musk, the CEO of Tesla, which makes electric vehicles among other things, and who was recently named Time’s Person of the Year, is the richest human being in the world at a reported net worth of $251 billion.
That’s a lot of money!
So, what should we do with that money?
Read that sentence above again. Then read it again aloud.
I find it sort of gross. Actually, I find it a lot gross. The “we” there and the fact that we think we’re entitled to do something with someone else’s money.
I bring this up because there was a recent exchange between Musk and Senator Elizabeth Warren on Twitter. She Tweeted, “Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else.”
Elon Musk is set to pay a reported $12 billion in taxes for the year 2021. That’s likely more than any American in history.
I’m not a finance guy, but when you see that Musk’s net worth is $251 billion, it’s not as if Musk literally has a salary every year that helped him accrue that kind of money. As explained here, that’s a mix of stock options, capital gains, interests, dividends and business income. So, there could be years, as there were in 2018 for Musk, where he technically has no federal income in which to be taxed; ergo, it would register that he paid no federal income tax in 2018, but that’s divorced from the context of why that was the case.
I’m not sure where this notion that the rich don’t pay taxes comes from, or at least, don’t pay their fair share (whatever fair share means), but the numbers are widely available:
The top 25 percent of income earners paid 87 percent of the income taxes paid in the United States, and specifically, the top 1 percent paid 40.1 percent. In other words, much of the federal government is currently funded by the wealthy and the ultra-wealthy.
Overall in 2018, 144.3 million taxpayers reported earning $11.6 trillion adjusted gross income and the United States government captured $1.5 trillion of that in individual income taxes.
Overall that year, the government took in $3.30 trillion.
In 2018, the government spent $4.109 trillion, with a resulting $779 billion deficit.
The three overwhelming parts of the budget are: 1.) The Department of Health and Human Services at 25 percent of the budget; 2.) Social Security Administration at 23 percent; and 3.) The Department of Defense at 15 percent.
Those first two areas primarily consist of Medicare, Medicaid and Social Security benefits and resulting expenses.
So, would the United States government, and individuals like Sen. Warren, be better at spending Musk’s money than Musk is?
I think the problem is for people like Warren and those who agree with what she is saying, is that they think they can take X amount of Musk’s money via taxation (and again, what’s that desired amount?) and then spend it on Y priority (which varies). Buuuut, that’s not how the government works.
It’s more likely that a portion of Musk’s $12 billion tax bill (or however much it ends up being) would go toward outfitting a drone or bombing a foreigner or caging someone or keeping someone(s) from coming across the Mexican-United States border than it would go toward helping the poor or the disabled or solving climate change or any number of other priority issues.
And it doesn’t seem to me we have a problem of not having enough revenue to do the things we want to do. Or that we’re not getting enough revenue from the ultra-wealthy. Rather, we have a spending problem and a misallocation of money problem.
The government does too many things it ought not be doing. Imagine if we eliminated, or at least minimized, those things it ought not be doing and still had a good chunk of revenue coming in. Then you could do the things that better help the poor, the disabled and whomever else truly needs help. It can be more targeted rather than that $12 billion from Musk being used to subsidize farmers yet again or whatever other fiscal blackhole it would go into, or worse, to bomb some foreigners.
I have no problem with people who think Musk should pay more money in taxes, more than the $12 billion. I would still disagree with them, but I just want them to deal with the reality of his net worth, the reality of how his tax payments work, and most importantly, how the United States government operates and what it actually does with taxpayer money, not what we wish it would do.
Finally, one last note, I’m all about being a decent person. I believe in civility and decency, especially in our politics. But it’s harder for me to sympathize with people who think Musk was too mean to Warren. Those with power, and who are wielding it (or in the case of Warren, want to wield more of it from Musk specifically) are not the people I’m on the side of, quite frankly. Thus, they engender less sympathy for me when someone is indecent to them.
Your post hit a cord in my heart. Those who are rich have normally worked hard, taken enormous risk to become rick. I think if we really understood how riches can be a burden or even a curse. They have to have tough skin to not let the ones who have no understanding not get to them. Good post.