Elon Musk slams Biden over his new billionaires' tax

Elon Musk slams Biden over his new billionaires' tax
Elon Musk slams Biden over his new billionaires' tax

Elon Musk has slammed President Joe Biden’s plan to tax billionaires’ income to pay for his proposed spending bill as the Tesla CEO saw his company’s value top $1trillion and his personal wealth increase by a single-day record of $36billion.

Musk took to Twitter on Monday and responded to a tweet that was critical of the Democrats’ idea for a new billionaires’ tax to help pay for Biden’s social services and climate change plan.

The world’s richest man predicted that the Democrats’ plan to tax the wealthy will eventually expand to include new levies on middle class Americans.

‘Eventually, they run out of other people’s money and then they come for you,’ Musk tweeted.

Earlier this year, it was revealed that Musk and his rival, Jeff Bezos, have in recent years paid nothing in federal income tax.

Musk's wealth grew an estimated $13.9billion between 2014 and 2018. 

He reported $1.52billion in total income and paid $455million in taxes. It equates to a 3.27 percent true tax rate. 

In 2018, Musk paid no federal income tax. The records show he paid $68,000 in 2015 and $65,000 in 2017.   

Democrats on the Senate Finance Committee, led by Senator Ron Wyden of Oregon, are prepared to roll out the tax revenue plan in a matter of days.

Under Wyden's emerging plan, the billionaires' tax would hit the wealthiest of Americans, fewer than 1,000 people.

Elon Musk

President Joe Biden

Elon Musk (left) has slammed President Joe Biden’s (right) plan to tax billionaires’ income to pay for his proposed spending bill

The world’s richest man predicted that the Democrats’ plan to tax the wealthy will eventually expand to include new levies on middle class Americans. ‘Eventually, they run out of other people’s money and then they come for you,’ Musk tweeted

The world’s richest man predicted that the Democrats’ plan to tax the wealthy will eventually expand to include new levies on middle class Americans. ‘Eventually, they run out of other people’s money and then they come for you,’ Musk tweeted

Musk was replying to a post by Rick McCracken, who warned against the capital gains tax proposal

Musk was replying to a post by Rick McCracken, who warned against the capital gains tax proposal

Musk on Monday saw his personal net worth grow by more than $36billion after shares of his company, Tesla, soared by nearly 13 percent

Musk on Monday saw his personal net worth grow by more than $36billion after shares of his company, Tesla, soared by nearly 13 percent

It would require those with assets of more than $1billion, or three-years consecutive income of $100million, to pay taxes on the gains of stocks and other tradeable assets, rather than waiting until holdings are sold.

As it stands, billionaires use much of their money to buy assets like stocks, which are currently only taxed when they are sold. 

The new plan would levy annual taxes on those assets for the ultra-rich while they're still in the hands of their owners. 

Wealthy people often use these currently-untaxed assets as collateral to obtain loans - a maneuver that allows them to pay lower taxes. 

A similar billionaire's tax would be applied to non-tradeable assets, including real estate, but it would be deferred with the tax not assessed until the asset was sold.

Overall, the billionaires' tax rate has not been set, but it is expected to be at least the 20 percent capital gains rate.

Democrats have said it could raise $200billion in revenue that could help fund Biden's package over 10 years.

Rick McCracken posted a tweet in which he warned against Wyden’s capital gains tax proposal.

He posted a template of a letter which concerned citizens can use to send to their representatives in Congress to express opposition to the proposal.

‘I expect you to oppose the Wyden proposal to tax unrealized capital gains,’ the letter read.

American car rental company Hertz announced on Monday that they are set to buy 100,000 electronic vehicles from Tesla

American car rental company Hertz announced on Monday that they are set to buy 100,000 electronic vehicles from Tesla 

The deal is said to be worth $4.2 billion as each vehicle is worth about $40,000 each

The deal is said to be worth $4.2 billion as each vehicle is worth about $40,000 each 

‘Although the proposal targets billionaires and not myself, the government of elected representatives have a track record of scope creep when writing new taxes.’

HOW CAN THE SUPER-RICH PAY LOWER TAXES? 

Many billionaires are able to reduce their federal tax bills using legal tax strategies.  

Among the ways they can reduce tax bills are:

Making sizable donations to charity

The rich can reduce tax bills through the use of charitable donations. 

They can deduct up to 60 percent of adjusted gross income with donations. 

Investing in stocks to avoid wage income

The rich can reduce taxes by avoiding wage income, which can be taxed at up to 37 percent.

They can instead benefit from investment income, which is often taxed at 20 percent.

Paying themselves lower salaries

If the mega-rich pay themselves a lower salary, they can then take a higher portion of the income as dividends.

The lower salary is then taxed a normal rate. Dividends are often taxed the same as the capital gains rate, which is between 15 to 20 percent.

Another option is to opt for part of their compensation in their company stock options. Stock is usually only taxed when the options are exercised.

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McCracken predicted that after Democrats tax the ultra-wealthy, ‘any new unrealized capital gains taxes will slowly make their way down to middle class retirement investments over the next several years.’

‘It will start with billionaires, then eventually millionaires, then the modest investments will get hit possibly within a decade,’ McCracken continued.

‘Although principle residences and holdings in 401K plans apparently will be excluded, the Wyden proposal takes new tax hikes a step closer to imposing unrealized capital gains tax on the average investor.’

Musk agreed with McCracken’s post, tweeting: ‘Exactly. Eventually, they run out of other people’s money and then they come for you.’

Despite concerns about possibly paying more taxes, Musk had reason to celebrate on Monday.

Hertz announced on Monday that it will buy 100,000 electric vehicles from Tesla, one of the largest purchases of battery-powered cars in history and the latest evidence of the nation's increasing commitment to EV technology.

The news of the deal triggered a rally in Tesla's stock, driving the carmaker's market value over the $1trillion mark for the first time.

The purchase by one of the world's leading rental car companies reflects its confidence that electric vehicles are gaining acceptance with environmentally minded

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