Elon Musk boasts of the taxes he pays and rekindles the ‘Tax the rich’

FigueresAmid controversy over whether America’s super-rich pay enough taxes, Tesla mogul Elon Musk has reignited the movement Tax the rich by ensuring that this year will be the American that will make the highest tax payment in the history of the country: more than 11,000 million dollars. He made it public when, after being chosen Person of the year by the magazine Time, Democratic Senator Elizabeth Warren again called for a change in the tax system so that it “really pays the taxes it would have to pay” and “stops taking advantage of others.” The figure, however, is tricky and rather reinforces the arguments of those in favor of raising taxes on the rich. “The announcement was more opportunistic than opportune”, sums up the UOC professor of financial and tax law, Benja Anglès.

There is no estate tax in the United States, and Musk has been building his fortune over the past few years. But it has not been until now, that he has sold shares in the company, when he has had to pay income tax. “Although in 2021 he has to pay so much, in recent years he has been paying very little compared to what he has really been earning,” recalls the UB professor of economics and director of the tax area of ​​the IEB (Instituto de Economía de Barcelona), Alejandro Esteller. In addition, as Anglès explains, “it is estimated that Musk’s fortune exceeds 315,000 million dollars, so that the taxes paid in 2021 on his assets would mean little more than 3%”.

According to an investigation by ProPublica published in June, the Tesla mogul, between 2014 and 2018, made 14,000 million dollars, but only paid 455 million. “The payment of taxes has been deferred. The super-rich or the large rentiers have the advantage of having much more capacity to do so, because they have enough income not to have the need to have to sell, for example, any participation or dividend. This them them It benefits, since during the five or ten years it takes to give this money to the state, they invest it and get a return, “Esteller points out. In addition to Musk, ProPublica also made public that the 25 richest Americans – Jeff Bezos, Bill Gates, Marck Zuckerberg, Michael Bloomberg, George Soros or Warren Buffett, among them – pay less than 3% of their wealth.

Thus, one of the options that Joe Biden’s administration is studying to make tycoons pass a bit through the box is the implementation of a wealth tax that affects only the super-rich (and not much). Biden has long repeated that “it is time for big business and the richest 1% in the country to pay what is fair.” Other Democratic leaders, such as Elizabeth Warren, Bernie Sanders or Alexandria Ocasio-Cortez, also press for the slogan Tax the rich.

Beyond the United States, the will to further record big business and the wealthy is also spreading. In fact, in the last year 136 countries around the world have reached an agreement in principle to apply a minimum rate of 15% to multinationals. “This is the way to go. In a global economy, a global tax system is needed,” says tax advisor and UPF professor Albert Sagués. Along these lines, Estellés points out that the next step would be the creation of a global wealth tax. “Perhaps it is to be a bit delusional, but well that, a few years ago, the tax on multinationals was also unthinkable.” In addition, they emphasize that competition between administrations should be avoided. “Musk has left California to go to Texas, for the same reason that many here choose to go to Madrid. You are generating wealth at the expense of others and benefiting the richest. Bread for today, hunger for tomorrow,” says Esteller.

“An even more ideal solution – Esteller continues – is to make the rich see the need to pay taxes in order to have a cohesive, secure society without populist parties.” Unlike Musk, however, there are several US superricis calling for higher taxes. Warren Buffet, for example, as early as 2007, in one of the interviews most cited by supporters of Tax the rich, publicly denounced that he paid a lower rate than his secretary.

The rich pay much less in the US than in Catalonia

The first difference between the two tax authorities is that in the United States they do not have a wealth tax. “Spain is the only country in the European Union that has it, but with many exceptions, and as always, once the law is made, the trap is made. It is flawed: the rich may have to pay more, but the super-rich, with a little of fiscal engineering, they find gaps “, says Alejandro Esteller, professor of Economics at the UB and director of the tax department at the Barcelona Institute of Economics.

On the other hand, as pointed out by the tax expert and professor at the UB Eva Andrés, in the USA the income tax is lower than here. As he explains, while the tax rate in Catalonia from more than 175,000 euros is 48%, in the United States from half a million dollars onwards it is only 37%. It must be said, however, that many federal states charge more taxes – 6% more on average – on income than they do statewide. However, Andrés underlines that in the United States there are many more exemptions and that the difference with Catalonia is “abysmal.”

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Elon Musk boasts of the taxes he pays and rekindles the ‘Tax the rich’