In a single day, Elon Musk made $37 billion.
On Monday, Elon Musk's enormous personal wealth grew by $37 billion, a one-day rise greater than the market worth of whole firms like Best Buy and Bridgestone Tires.
On the same day, word emerged that Democrats were working on a new tax plan in which capital gains like those might result in multibillion-dollar tax liabilities for Musk and the world's other billionaires.
Musk's net worth climbed from roughly $252 billion on Sunday to $289 billion on Monday, according to the Bloomberg Billionaires Index, after Tesla's stock price soared almost 13% on news that vehicle rental company Hertz had agreed to acquire 100,000 electric cars from the company.
The majority of the Tesla CEO's fortune stems from his ownership of a big portion of the electric automaker's shares; the company's market valuation surpassed $1 trillion following the Hertz news.
Musk's $37 billion gain in wealth does not constitute as income under existing tax law: Appreciation in the value of an item, such as a stock or a privately held company, is taxed only when it is sold. Musk won't have to pay taxes on his unrealized capital gains as long as he keeps the majority of his Tesla stock.
As a result of this strategy, most of the world's wealthiest people have paid a comparatively modest portion of their fortunes in taxes. ProPublica conducted an analysis based on IRS tax return data in June that revealed that billionaires like Musk and Amazon founder Jeff Bezos had paid no income taxes in recent years.
Sen. Ron Wyden's plan for a "billionaires' income tax," which would target these types of unrealized capital gains for the wealthiest Americans, might change that in the near future. The basic idea would be to treat increases in the market value of assets like stock holdings as taxable income for billionaires and super-high earners. While the details of the plan are still being worked out and are expected to be released in the coming days, the basic idea would be to treat increases in the market value of assets like stock holdings as taxable income for billionaires and super-high earners.
Even if you don't sell a single share, but you possess a billion-dollar share in a corporation at the start of the year and the price of that stock rises 50% by the end of the year, you will have $500 million of income subject to the new proposed tax.
Elon Musk, for example, would be severely impacted by this idea. As previously stated, the plan's details are still being worked out, but assuming that unrealized profits be taxed at the same rate as realized long-term capital gains, Musk's one-day $37 billion haul might result in a tax payment of around $7.4 billion.
On Monday night, Musk slammed the tax idea, saying that while the plan is strictly confined to billionaires and ultra-high earnings — the tax would likely affect less than 1,000 Americans — it may open the way to similar levies for individuals with more modest fortunes. He commented on Twitter, "Eventually, they run out of other people's money, and then they come for you."
Nonetheless, most Americans are unlikely to make $37 billion in unrealized financial gains in a single day. On Tuesday evening, Wyden retaliated at Musk. "Those who are plainly attempting to be deceptive are those who are attempting to avoid paying taxes," he told reporters.
by Flexi Team
*DISCLAIMER: This article and its publication are intended to provide a brief introduction and act as a general guide. This is provided for information purposes only and cannot be utilized as a substitute for professional advice. This document does not represent a legal opinion and one must not rely on it without receiving independent advice based on the particular facts of its own case. No responsibility is accepted by the author or the publishers for any loss suffered from acting or refraining from acting based on the contents of this publication.
We are a team of experienced professionals, all sharing a unique drive for learning and development through teamwork. The Group utilizes its various core activities to implement customized solutions for its clients. Our collective experience spans the areas of Global Corporate & Fiduciary Services, Assurance & Advisory Services, Fund Administration, Tax Advisory, Corporate Governance, Financial Services, Private Wealth Services and Compliance.
Start a conversation with us today to find out how you can benefit from a relationship with Flexi Group.
Please get in contact with our Head of Business Development:
Mrs Daniella May / Head of Business Development
Tel.: + 357 7000 2 5555 / + 357 22 87 57 55
We also organize calls using Skype. Our flexi Skype ID is firstname.lastname@example.org