- cross-posted to:
- aboringdystopia@lemmy.world
- cross-posted to:
- aboringdystopia@lemmy.world
Elon Musk is on pace to become the world’s first trillionaire by 2027, according to a new report from a group that tracks wealth.
Informa Connect Academy’s finding about the boss of electric carmaker Tesla, private rocket company SpaceX and social media platform X (formerly Twitter) stems from the fact that Musk’s wealth has been growing at an average annual rate of 110%. He was also the world’s richest person, with $251bn, according to the Bloomberg Billionaires Index, as the academy’s 2024 Trillion Dollar Club report began circulating Friday.
The academy’s analysis suggested business conglomerate founder Gautam Adani of India would become the second to achieve trillionaire status. That would reportedly happen in 2028 if his annual growth rate remains at 123%.
Right now, if he were able to convert all of his $241.8B to cash, then distribute it evenly among all of the employees at all of his companies, he could give each of his 146,000 employees $1.6M.
No one person should be that wealthy. I don’t necessarily think that billionaires should be abolished, but I do think they should be paying a shit load more in taxes than they are.
Also, before anyone says it, yes, I know it’s not as simple as converting his holdings to cash. I’m just saying “if it were possible”.
Fun fact that this doesn’t work for every billionaire. Tech companies don’t employ very many people compared to their revenue.
If you go by by profits returned to owners as opposed to sale value it’s even more stark. Amazon still hasn’t paid out anything; it’s all been plowed straight back into expansion.
To piss off the remaining side of the political spectrum: Why not?
That’s the assumption everyone makes but it’s a false premise. If he tried to sell all his shares it would cause the stock price to collapse, his wealth would plummet, and his companies would be in jeopardy. Far from being able to give all of them $1.6M, they would all likely lose their jobs.
That’s also the issue with taxing them. If someone owns a billion dollar company (based on the price of their shares of stock) we call them a billionaire but they might not have very much money in cash (say a few million). Suppose we want to tax them 10% of their wealth: that’s $100 million! They don’t have enough cash to pay for that, so they have to sell shares, which causes the share price to go down, which negatively affects the company and the workers.
I think the issue is with how we view ownership of a business vs other things, like a yacht. The yacht can be sold to pay taxes and it won’t affect other people. The company cannot. In a lot of ways, the company isn’t just a possession of the owner, it’s a responsibility. These days I feel like we don’t talk enough about responsibility.
Fuck ‘em
And yet…
The moment shares are used as a source of value to leverage, they should be taxed on that assessed value. Because this is also how so many of the wealthy can get away with “$0 income” - they are “paid” in shares, then turn around and use those shares to get loans from the bank to pay their living expenses. They essentially leverage shares for tax-free income.
If any and all leverage on shares are taxed on that assessed leverage, the Parasite Class would no longer have any way to shield their obscene wealth from taxation.
Its not difficult and its done all the time
The shares a company gives me as a reward are taxed the instant I receive them and deducted directly from the shares.
E.g. company gives me 20 shares but the tax is worth 1 share. Company sells that 1 share on my behalf to cover the taxes. I receive 19 shares in my account.
The big concern is the rich dodging taxes on value increase. In theory you have the “shares as income” when acquired as a restricted stock, and then capital gains/loss to cover value change between acquisition and sale. However there’s room for loopholes when using the unrealized value of the stock as basis for a loan, to defer tax and potentially all the way to death and then doing other tracks around estate taxes.
Shares aren’t always given to you as a reward. If you are the sole founder of a company then you create the shares yourself and decide who to give (or sell) them to. If you choose not to take your company public on the stock market, then what your stake in the company is worth is unclear. Sure, the company may have assets (equipment, properties, resources) but that’s only the book value. The true market value of the company might be much higher.
Look at a software company. The software they create might never be sold, only used to provide services. The market value of the company could far exceed the book value of all the desks, chairs, computers, and other stuff the company has at the office. But you don’t really know that if the company never goes public. So how do you tax it?
Why? If the fundamentals are there, there should be a hard floor on stock prices. It would take a while for the market to absorb that much Twitter and SpaceX, but I see no reason it’s impossible. Actually, I bet Twitter’s (off-book) cap would go up if Musk was leaving.
If you’re trying to defend capitalism (whatever that means to you), keep in mind that you’re basically suggesting stocks have no actual, intrinsic value here.
Billionaires don’t actually do this, though, because liquid cash doesn’t earn.
The S&P 500 is “worth” 45 trillion dollars.
The M2 money supply is less than half of that. There does not exist as money dollars to spend as the nominal value of all the stock.
The stock value is extrapolated from the shares that do move, but those extrapolations fall apart in the “cash it all out” scenario.
That being said, it just means we have to be careful about how we proceed. For example, better tax capture of loans and estates, which is a big dodge for people with high stock wealth.
Cashing out the entire S&P 500 is very different from cashing out one billionaire. Most of the people who buy stocks already own stuff on the S&P 500, so it’s unclear who that trade would be with, exactly. Same exact thing for real estate: if you sold the entire continental US (again, whatever that means) it would probably exceed 45 trillion, but I’m still pretty comfortable saying if you own 100 billion worth of Manhattan real estate, you actually have 100 billion dollars, and could reasonably pay a 90 billion dollar bill given enough time.
Careful is good when it comes to policy, I definitely agree with that.
Putting a huge percentage of a company up for sale on the open market is going to tank the price no matter what the fundamentals are. It’s simple supply and demand: you’re putting a huge glut of supply on the market and not putting similar demand. All those sell orders will begin expiring as the offers drop in price.
The largest owner of shares putting everything on the market at once is strong signal that the stock is overpriced and so buyers will react accordingly.
By the way, TSLA has a P/E ratio in the 60’s so it’s not exactly a great deal anyway.
I’m neither defending nor attacking capitalism. I’m just pointing out that putting heavy taxes on illiquid assets leads to huge disruptions.
The increase in value of shares above book is called unrealized gains. They can be here today and gone tomorrow. Taxing makes no sense unless you’re going to reimburse the taxes if the shares drop in price.
It’s not like you can buy too much of an earning stock. I’m pretty sure elasticity approaches zero quickly if someone is dumping a well-known, profitable company. It might induce some paranoia, but big investors don’t get to where they are by panicking often.
Depends. Amazon doesn’t even have one; tech stocks are often driven by future potential. I wouldn’t buy a car from them though.
Generally accurate, but need to address ways they get money whole avoiding realization of taxable capital gains (e.g. borrowing).
But yes, even if he is a paper trillionaire, you won’t find people willing to actually give him a trillion dollars for his stocks. It’s still some absurdly high number, but our math does not really model exactly what the “real” wealth would be.
There are infinite possible ways to implement wealth tax. If you want to avoid your scenario, tax corporations on their profits, reducing the dividend payout to shareholders. For example.
These people have ALL THE MONEY and it needs to be stopped, like yesterday. Find a way.
Taxing profits just means the company will borrow from investors (by issuing bonds) and then instead of profits paying out as dividends the company shows losses from interest payments.
I would rather try land value taxes.