Basically, you have to be grateful to Elon Musk for his latest PR stunt, because he could hardly have displayed his worldview more impressively: It is not governments and elected representatives who should decide whether the richest man in the world pays taxes or not, but rather, if anything, his millions of fans on Twitter. Contempt for democracy paired with social media simplicity, that is truly pure cynicism.
To put it straight away: Nobody questions Musk’s lifetime achievement or envy his success. With Space-X and Tesla, the former physics and economics student created two companies that really shook up their industries. This is especially true for the electric car manufacturer Tesla: If Musk hadn’t kicked the bosses of the established car manufacturers consistently over the years, the traffic turnaround 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 demand from the tax office to be left alone for all time. Musk’s courage has so far earned him a fortune of nearly $ 340 billion, so no further reward in the form of government protection is needed. In other words: If the richest man in the world doesn’t pay a single cent in taxes, while ordinary Americans transfer thousands of dollars to the state every year, then you don’t have to be a communist to think that there might be a mistake here in the system there.
Rich people who need money borrow money from the bank
Theoretically, the amount of the tax burden in the USA, as in Germany, is based on the economic performance of the individual. The basis for this is income – and this is exactly where the problem lies: People like Musk often don’t have a traditional wage at all. If you need money, go to the bank and borrow it. This is great business for the bank because, given the large amount of client assets, it doesn’t have to worry about repayments. The borrower in turn pays interest, but avoids any tax payment at the same time.
The trickery is possible because the tax office only gains access to Musk’s steadily growing stock assets at the moment when the Tesla boss sells papers – in other words: generates income. It’s the same in Germany. In the USA, however, there is a second, almost perverse circumstance: the ultra-rich can even inherit their shares tax-free, because the increase in value of the portfolio is reset to zero with each next generation. An expert from the Center for American Progress (CAP) recently said that anyone who is just rich enough can decide for themselves in the USA whether or not to pay taxes. Experience shows that many ultra-wealthy 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 future price gains should be taxed at the end of each year even if the paper is not sold at all but remains in the custody account. Had that been the case, Musk, for example, would have had to pay a double-digit billion amount since 2019 alone. The approach is sensible, but not yet broad enough: It would be more correct to measure performance in the future based on the wealth of the individual instead of income, because of course a person with 30,000 euros in earnings and 100 million euros in assets is economically more potent than someone with the same income , but no reserves.
Many will now object that the cost of levying any wealth tax is comparatively high. That may be, but in view of the grotesque injustice of the current law, it cannot seriously be the decisive argument. And yes, in extreme cases, such a reform could also mean that a person affected would have to sell shares, a house or the four-car in order to be able to pay the tax. After all, it was then decided by laws and elected representatives. And not the Twitter followers of a latent megalomaniac entrepreneur.