Elon Musk will likely pay at least $9 billion in taxes this year, on income he makes partly due to his creativity and risk-taking as an entrepreneur. Most American households will pay no federal income taxes. But Senator Elizabeth Warren, who lives off taxpayers and paid a low tax rate as a wealthy law professor at Harvard (and collected $14,000 in special tax credits in 2018), claims Musk is “freeloading off everyone else.”
As Reason Magazine notes:
Tesla CEO and world’s richest person Elon Musk, who has an estimated net worth of $251 billion, was denounced yesterday by Sen. Elizabeth Warren (D–Mass.), who has long been in showy pursuit of getting millionaires and billionaires to pay their “fair share.”
Time had just named Musk its Person of the Year, so Warren tweeted: “Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else.” Musk tried a few different responses on for size, including “You remind me of when I was a kid and my friend’s angry Mom would just randomly yell at everyone for no reason,” “Please don’t call the manager on me, Senator Karen,” and then “Don’t spend it all at once … oh wait you did already.”
Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else. https://t.co/jqQxL9Run6
— Elizabeth Warren (@SenWarren) December 13, 2021
But as Reason observes, this year, Musk “will be on the hook to pay … between $9 billion and $10 billion, if he exercises soon-to-expire stock options.” The Wall Street Journal reports that Musk
faces an August deadline to convert roughly 22.9 million vested stock options into shares or let them expire worthless, according to a regulatory filing. He would need about $143 million to exercise those options, and could owe more than $9 billion in federal income and Medicare taxes upon exercising them.
Under California law, Mr. Musk also likely would face a sizable state tax burden because exercised options are treated as compensation partly earned in the state while he lived there.
As Reason notes,
While Warren was hectoring Musk for failing to “actually pay taxes,” 61 percent of Americans (roughly 100 million households) actually, for real, didn’t pay federal income taxes last year. Now, last year was a bit anomalous due to high unemployment and the stimulus checks, but the number typically hovers somewhere between 40 and 47 percent, comprised by people who make low incomes, take advantage of child-related tax credits, or are elderly. And roughly 20 percent of Americans end up paying neither federal income tax nor payroll taxes.
The Tax Foundation noted that in 2018, the top 25 percent of taxpayers paid 87 percent of total federal income taxes. The top 1 percent pony up roughly 40 percent of total federal income taxes. Warren’s spending priorities are largely bankrolled by the richest people in America—to the extent that they’re bankrolled at all, as opposed to being added to the exorbitant national debt.