>Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times.
Not bad compared to the $12 billion cost for the GM bailout and $4 billion+/yr for oil & gas subsidies.
He is far from being the sole owner of those companies.
Basically, you take revenue, divide it by the poverty level (he's got six kids, so around $45k - $50k), take the log base 10, and multiply by some constant that would be the same for everyone to match the government spending level - that constant these days is probably around 9 or 10. The result is your fair tax rate.
I'll go as far as to say simplicity should be the driving motivation, not equality.
Do you mean that if someone earns R, they pay $C*log10(R/P), where P is some poverty level for them and C is a constant around 9?
To find C, you have to sum up the log10(R/P) for everyone (including corporations) in the nation and divide that into what the government needs. There's various ways to calculate what the government needs, perhaps you separate FICA and payroll tax income entirely if you keep that, or perhaps you just look at entire Federal spending, I believe around 3.8 trillion.
But to sum up the log10(R/P), you need income distribution data. Someone else did that very roughly with a spreadsheet, I haven't tried it myself. A few years ago when they did that, they figured 3.7 trillion for spending, and C was something like 8.86.
C would also be a bit higher if you were also trying to pay down the debt over a period of time.
If the tax itself is proportional to the utility function, that has the effect of taking much less utility from people with greater R. I'm also unclear on how your C works out. The largest company in the world makes less than $1 trillion per year, so even if P is $1, log10(R/P) is bounded above by 12. Given a US budget of several trillion USD, that seems to make C multiple orders of magnitude bigger.
Sorry if I'm missing something. That was my original reason for asking for a formula above.
It's always interesting to see the opinions of different cultures about how much tax is reasonable :)
Here in he US the middle income pays taxes and receives almost no directive social benefit, as most social programs are geared towards lower income and the rich can afford accountants and lawyers to keep their tax burden very light.
The only techniques that apply to income taxes are the "borrow against stock technique" (has a big caveat about a rich person who lost in court when he used it) and the deferred compensation example (which is also zero liquidity; presumably you pay all of the income taxes when you actual get the money).
The article makes a better case for ways to avoid death taxes or real estate taxes though.
The top 5% in the US pay 55% of all Federal income taxes.
I'm not sure how entrepreneurs do this in the US, is Musk being patriotic paying so much taxes, or is there really no way to delay/avoid having to sell stock to pay taxes?
I think you're missing his point. The raw percentage isn't as unreasonable as the difference between the parent-poster's and Musk's tax rate.
At some point, theft becomes a more suitable word for it.
In 1958, the top 3% of taxpayers earned 14.7% of all adjusted gross income and paid 29.2% of all federal income taxes. In 2010, the top 3% earned 27.2% of adjusted gross income and their share of all federal taxes rose proportionally, to 51%
Moreover, the law enforcement that prevents him from being robbed is paid for by tax revenue, but not federal tax revenue, and the amount he's paid is in addition to the $593 million he paid in income tax (assuming that doesn't account for state income tax - the actual article isn't available for me to read right now due to server load).
Not only are his financial institutions protected by federal law enforcement, but state and local law enforcement recieves federal funds, so the above claim is false on several grounds.
Edit, to respond to your edit, which added "Also, who mentioned federal tax revenue or income tax? It wasn't me."
The title of the article we are ostensibly discussing.
Assuming some keeps some share of his money in US banks, or invested in firms which keep their money in US banks, absolutely. Well, "bank robbers" instead of "muggers and highwaymen", but I'm assuming that Musk doesn't carry enough cash on him that the latter are nearly as important as the former in terms of risk to his money, though they might be a bigger threat to his personal safety.
If your assertion is that you're referring to all forms of tax revenue, then your original post should probably not refer to tax rates. Otherwise, if you're just arguing in favor of all taxes, then it seems overly broad for a discussion on income tax revenue.
Either way, we've had public ways that existed without having been funded by any forms of taxation. Unless you're specifically attempting to pick the only definition of the word that bolsters your argument, while ignoring all other definitions, then it remains a truism that highways themselves do not exclusively originate from tax revenues, and are in fact capable of existing without taxes altogether... and it remains true whether or not one considers taxes to be universally good, bad, or anywhere in between.
Traditionally, all the things you mention are NOT paid for by income taxes even now.
Did I say income tax revenue or just tax revenue?
That leaves him with $747M for the year.
I'm not sure what this is supposed to suggest/demonstrate.
Surely you agree that taxing (say) 20% of 60k is different from taxing 20% of 1B. Namely: the former has a much more significant impact on quality-of-life then the latter...
Figuratively speaking, what can you do with 747M that you can't do with 300M?
(Before the pedants inevitably pick this rhetorical question appart: the point is that it's not prima facie unreasonable to tax extreme wealth significantly more heavily than the median income)
Edit: the first of the pedants have arrived... sigh...
Invest in starting brain-computer interface and rocket companies
A more substantive question is how that money would be spent by the relevant parties. I would argue that Musk would spend it better than the federal government and as such, he should have it.
The idea that the argument is stupid should be presented with an argument as to why. For what it's worth, we have existing law in most (American) municipalities that support the argument that if Musk can be shown to be a better steward here, then he might have a claim to make, i.e., adverse possession, which is basically a claim against the state that says "I can tend to this property better than you, and my doing so provides social and financial utility to the state, to my would-be neighbors, and to myself as well.
To be sure, it's an argument in abstracts, but there's precedent enough that it clearly isn't an entirely meritless (or stupid) argument to be made.
Also, in the mid 20th century (a very high growth time for the US) personal income tax topped out around 90%. "Harsh" is definitely a matter of perspective.
I like the fact that I get great weather year round, that I live amongst a diverse group of people, and can get just about any kind of food I want very close by. I like that my child will go to school with people of all colors and religions and beliefs. And my cost of living is lower in the sense that I don't have to pay a ton of money for heating in the winter and cooling in the summer, nor for a bunch of clothes I can only wear 1/2 the year.
As for the business, yeah, it's not great, I'll admit that. I don't like paying extra corporate taxes for no apparent reason (I'm incorporated in Delaware, why am I paying CA tax?). And I may not even hire here, since I'm fully remote and hiring in other states is viable for me.
But if I were going to open an office and hire local, I would most definitely do it here in California, where a lot of the talent live and a lot of the people I would want to hire who like the same things I do.
Today's top rates are no different, in that people including corporate artifcial ones don't pay it.
The implicit subtext (especially with highly successful people like Musk) is that we do this to "make sure they pay their fair share". Here's the reality: the top 1% of US tax filers pay nearly half of all US income taxes. The bottom 80% of filers (by income) pay only 15% of all taxes. This myth that the rich don't pay taxes is completely, utterly false. It is a myth promulgated for political purposes.
you're equating two unrelated issues. Nobody needs or is entitled to a private company's CEO's tax returns. However, it is totally reasonable to see the tax returns of a politician who makes decisions on a daily basis that could very easily be tailored to line his pockets. It is not about tax returns, it is about transparency and accountability.
Even in the CEO's case, if the board of his company wants to see his returns, I would not really fault them.
It is pretty basic requirement that you have to be accountable to the people you work for.
In case of the Trump (I am assuming he is the reason for your comment), he seems to be confused about the roles. People are not his employees or customers. They are his bosses. The former don't need to see his finances, the latter do.
Comparing total of taxes paid and leaving it at that is generally a tactic to distract from the proportion problem.
Are you suggesting someone makes less money so they pay less taxes? or are you just trying to change the subject?
The top 1% also own more than 50% , so if they would pay their "fair share" they'd still need to pay more. Much more if you think that the differences should become smaller.
I wonder how much of the world's burden those 1% actually are paying? Why do you think they would still need to pay more?
My problem with this is not so much the wealth of the top 1% in itself, but the lack of equal opportunity in the bottom 50%. A child that is born in this demography has much, much lower chance on a successful life than a child that is born in a wealthy family. That simply can't be fair.
This word "fair" keeps being thrown about in these discussions.
All such discussions are useless unless the people involved specify what they mean by "fair". And I'll give you a hint: You'll find many people will disagree with your definition (and there isn't consensus on any one definition).
A simple example: Fairness in equality vs fairness in proportion. The former is about everyone having equal services/wealth/etc (usually aligned with far left), and the latter is about everyone having these in proportion to their efforts (usually aligned with far right).
Neither is right or wrong.
High wealth inequality, while often correlated with lower opportunities, does not fundamentally imply it - it is not a causation. Using it as a metric is a poor choice. Instead, the metric should be what the lowest N% have access to, regardless of the wealth inequality. You can get low wealth inequality where everything is bad for everyone, or high wealth inequality where only a few "suffer".
Just saying something is "unfair" without explanation is merely an attempt at making an emotional argument. It is identical to just saying something is "wrong".
The world is unfair in many ways, and I thought I was quite specific in my example of this by comparing two baby's: one born with top 1% wealthy parents, and another one born in the bottom 50% income parents. The baby's have done nothing in their lives yet and are equally talented, yet one of them will almost certainly have a much better life.
Unless you want to argue that the rich baby somehow deserves more, I think it's better to assume she was just lucky being born rich. And this luck will extend throughout childhood: positive environment, more friends, better care, better schools, etc.
You are right that this still does not make it unfair. This is all luck. But what would be unfair is when the rich kid gets to inherit all of the wealth, and not pay a disproportionate part of that wealth toward taxes that are needed to pay for the poor kids' education and healthcare, to give her at least some chance to grab an opportunity and work herself to a somewhat better life.
Merely begging the question. You might as well say "fairness means doing the right thing."
In your comment, you've use the word fair/unfair, but still not specified a proper criterion.
If you want to say baby's born to the lowest percentile should have the same opportunities as those in the top, that's a concrete statement (measurable, etc). Why do you have to bring the word "fair" into it?
Incidentally (and off the topic of fairness), there are easy ways to solve the problem - but those are ways no one (including, I'm sure, you) would accept. So looking at one criterion in a vacuum with the rest of society is problematic.
The truth is if you're going to be a public figure like a CEO or Elected Official you better be ready to give up some if not all of your privacy.
That 5 billion number for Musk I think is a grand total of all subsidies, spanning all time.
Why does the invented aspect matter? Because it's comical. It leads to the premise that over just the next 10 years, the subsidies are a likely cumulative ... $56 trillion or so (about 20%-25% of all wealth on earth). Aka, greater than the combined profit of every oil company in world history going back ~140 years.
Now, we could look at your tax returns and see that you have a successful business. Or we could "invent" some figure to represent the lives you ended.
Is it really crazy to imagine that the total we invent would be higher than your yearly, or even total profits?
Just scale that up to the point that you're starting wars, causing a crime epidemic with lead poisoning, overheating the planet, etc.
Calling out Musk's companies as exceptional in this regard makes for a nice narrative, but isn't necessarily supported by the facts.
> No checks of $100 million or more accepted.
> The IRS can’t accept a single check (including a cashier’s check) for amounts of $100,000,000 ($100 million) or more. If you are sending $100 million or more by check, you’ll need to spread the payment over 2 or more checks with each check made out for an amount less than $100 million. This limit does not apply to other methods of payment (such as electronic payments). Please consider a method of payment other than check if the amount of the payment is over $100 million.
Am I supposed to feel sorry for people with hundreds of millions in liquid assets?
Stick to "Justice for Most"
I initially misread "company" as "country" - and in that interpretation I wholeheartedly agree.
However, it's not a narrow reading of events. Musk is African. Head a bit out of the way in South Africa and you'll find white kids who spend all day running around with black friends with the whole group speaking fluent Zulu. They've grown up there and their families have been there for generations.
Although I've met a surprising number of intelligent people who somehow do not believe we are all descended from Africa. Which I suppose is related to people failing to understand that all individuals have innate inalienable rights, regardless of their citizenship.
Actually, since we're being technical about it, he's American-Canadian-African. How else to define it? One could say African born, certainly.
He has lived in the US longer than he lived in South Africa at this point. He hated South Africa according to his brother, and sought to flee as soon as he could. He considers himself an American and has stated so on numerous occasions.
If you are in your 20's or 30's or even 40's then having white skin in South Africa has not had the same advantages as before, there has been government legislation to make the place a bit more equal opportunity, which means to the younger people in South Africa that, if you are white, it is time to claim some type of UK passport (maybe based on some grandfather that was Scottish).
I am no defender of Apartheid but the ruling baby boomer white class essentially retired and threw their own children under the bus.
I know that it sounds simple, and lots of people on this site will disagree, but I'm having trouble justifying this kind of extreme wealth to myself anymore.
There are so many people in poverty and ignorance. What's it for any way if people are starving and illiterate?
I'm really not looking forward to some of the responses to this comment, but I find myself thinking more and more about the morality of letting people accumulate massive sums when the resources that wealth could muster go unused by the people that need them most.
I don't know. I'm genuinely interested in hearing what other people here have to say if you can keep from being condescending or mean. Please be nice.
From a strictly utilitarian/consequentialist perspective, capitalist systems has proven to be pretty good at improving the quality of life for everyone. You're suggesting essentially eliminating medium-to-large prizes for succeeding in that system. Destroying those incentives strikes me as being fairly risky. You could end up causing more harm than good.
An interesting thought experiment to go through might be to compare two worlds: One in which we do as you suggest, and another where we continue on with the current system.
In your world, we might use the extra taxes to fund a medicare-for-all style healthcare system, free college tuition for everyone, and perhaps some large infrastructure program. More people have better health care coverage, would go to school for free, and be able to subsist on government-funded jobs. However, innovators, investors and entrepreneurs would be curbed back -- we get less technological innovation, fewer improvements in communication, education, medicine, technology, food production, travel, etc. It's difficult to predict what kinds of technologies we would miss out on, but it could be massive.
Would we miss out on an important cancer drug? Or perhaps the solution to climate change? Or maybe we would miss the boat on AI-driven cars?
As a heuristic, it seems to me that the biggest improvements in the quality of life of humanity so far have come not from socially engineered programs, but have rather come from entrepreneurs and inventors. It seems unwise to take our foot of the gas in that regards.
SpaceX is interesting because we could be doing that stuff at NASA if it were funded well.
I get what you are saying though, it would have an effect on investment and speculation. Maybe we don't need as much of those things.
I'm also not saying that this is particularly well thought out.
Not that I'm anywhere close to this problem, but I would simply stop working after hitting that mark. Why would I work for free?
The huge bulk of this tax bill was from exercising stock options. According to another commenter here, 44% on $1.34B earnings from these options.
So given a $1.5M cap, these options simply wouldn't have been exercised. You'd use your options up to the $1.5m earnings ceiling, and then stop. So the tax 'purse' would receive the pre-ceiling rate on $1.5M instead of 44% of $1.34B.
A 100% ceiling sounds very straightforward, but the end result would have been that Musk would have paid over $592M less in taxes over the same period - and I'm pretty sure that wasn't your intent.
(sidenote: With regards to the morality - under your proposal, the Bill & Melinda Gates Foundation wouldn't exist. I think I'd rather any proposal allowed for such altruism.)