In Response to My Viral Musk Tweet Reply: Fixing Wealth Inequality
People were quick to point out that net worth is not the same as annual income, which is how income tax is calculated. I’m well aware of the difference between the two. In my Facebook edit, I pointed out that I was unable to find the actual income that was calculated to arrive at $11 billion in tax— which is more to the point of how broken the system is that it allows such wealth-hoarding to occur, while so many suffer living below the poverty line.
The point of my tweet was to highlight wealth and contribution inequality.
But Don’t Worry, I Got an Actual Tax Expert to Explain This
Because I have been lambasted for not being an expert on the predatory system that is US tax law, I got a CPA to weigh in on this:
The system is broken because it taxes income and not wealth. For years and years, Musk didn’t need an income because the stock he owned was worth so much. Essentially what overnight billionaires like him get to do is borrow and borrow and borrow against their company’s stock, therefore paying NO taxes besides sales tax, etc. Then, when the banks make him finally sell some of the stock to cover all the loans, THIS is when — and only when — he pays taxes. Otherwise, he’s just a billionaire free-rider. The system allows it.
The PRIMARY reason the system is broken is that it devalues earned income while greatly favoring unearned income like stock gains and dividends.
Musk’s income wasn’t earned. It was long-term capital gains. He could plan to have this one year of income and possibly get the maximum deductions this year and next. Regular wage earners don’t benefit from this sophisticated practice we CPAs call ‘tax planning.’
The government itself incentivizes investing in more capital rather than people, thus devaluing and undermining its own spending power. The less Elon pays in taxes, the lower the government's spending power.
Our tax system disproportionately favors the wealthy. It is broken.
“Human Progress” Does Not Justify Extreme Wealth Disparity
Billionaires should not exist in the same society where so many people live in poverty. It does not matter how much “progress” you argue they’ve made for the human race. Billionaires are not elected officials. They’re private entities making profit-driven decisions for their shareholders — not for humanity.
There’s this blind assumption that Musk and every other billionaire deserve their wealth. That’s not only untrue because their wealth is not “earned” and instead strategically hoarded, but it’s also untrue for Musk specifically. He inherited much of his wealth from his daddy’s South African emerald mine, which exploited workers. Then he bought out the foundership of Tesla to get the credit of being an inventor without inventing anything. Actual scientific experts will tell you that Elon isn’t that intelligent or well-educated about the scientific basis for Neuralink or his other “futuristic” investments. His “green” electric cars are being made with lithium batteries, and studies show that these EVs pump out as much or more CO2 than regular cars. His space dick measuring contest isn’t actually helping anyone on earth. His companies are known for violating labor laws, exploiting workers, and even illegally threatening retaliation against Tesla workers to prevent unions.
Elon isn’t doing the good that people think he’s doing; he didn’t earn his wealth. So, how could one argue he deserves such excessive wealth?
Those continuing to make excuses for why Elon Musk or any other billionaire shouldn’t be contributing to our system – or even worse – saying we should be grateful because he’s paying the most tax anyone’s paid in history (DUH, if you earn the most in human history, you pay the most tax in human history) seem desperate to defend someone who only takes and takes. These folks are suffering from delusion brought on by Capitalist Stockholm Syndrome. To defend someone who has such an inconceivably vast sum of ill-gotten gains obtained through exploitation is madness.
We need to build compassionate systems that support and uplift the most marginalized and oppressed in our communities. We do not need average folks making excuses for a manipulative wealthy elite.
Yes, There is More to Discuss Here Than Just Our Tax System
I do agree that the US does a piss poor job of investing in social programs that could help lift people out of poverty (certainly not for lack of trying – we just have an obstructionist party steeped in corruption and Joe Manchin working against every effort to invest in said programs). However, the conversation about wealth inequality needs to be about both input (taxes) and output (government spending). Pointing to output alone as the solution to wealth inequality is a mistake.
We can’t be letting off the ultra-wealthy with ill-gained earnings simply because our political leaders make so many terrible decisions about spending for us. Allowing a billionaire to flout the rules — simply because they can afford to — flies in the face of our democratic system. If someone has so much wealth, they can make decisions for “the progress of humanity,” we are essentially forgoing our democracy in favor of oligarchy.
On the Input Side of The Problem…
We need tax reform. Income shouldn’t be taxed; wealth should be taxed. This isn’t unfathomable. It wouldn’t even be the first time we’ve had a wealth tax in the US.
The Revenue Act of 1935, courtesy of FDR, introduced “The Wealth Tax,” which taxed up to 75% of the highest incomes. To solve the problem of tax evasion through loopholes, the Revenue Act of 1937 revised tax laws and regulations to increase the efficacy of the Wealth Tax. What happened to these tax rates? They were whittled down over time, particularly under presidents Kennedy, Reagan, G.W. Bush, and of course, Trump. Unsurprisingly, the national debt has soared alongside these persistently low tax rates.
Now is usually the point where people point out how big an issue government spending is. I will get to the output problem in a moment, but just because the US government spends an unacceptable amount of money on the military (that could and should be reallocated to social programs) does not mean that the ultra-wealthy are off the hook for contributing fairly to our system. What does “fair” mean here? I think AOC says it best:
We need to advocate for tax reform that prioritizes taxing wealth rather than incentivizing legal loopholes that enable the ultra-wealthy to keep their money out of the tax system and grow their wealth as they continue withholding it.
On the Output Side of The Problem…
We need US campaign finance reform. The reason why government spending is so infuriatingly focused on the wrong things (IE. military and wars, bailing mega corporations out of debt time and time again, etc.) is that corporations and wealthy donors bankroll a majority of our elected decision-makers. These donors ensure spending continues to go toward anything but social programs that would be a conflict of interest for their business’ shareholders. Many politicians, therefore, listen to big donors rather than what the majority of their constituents want.
One of the most important ways to fight against oligarchy is with US campaign finance reform. The Citizens United decision in 2010 was a huge blow to our democracy because it allows corporations and other outside groups to spend unlimited money on elections. This has led to a very small number of US Americans now wielding “more power than at any time since Watergate while many of the rest seem to be disengaging from politics,” said Daniel I. Weiner with the Brennan Center.
Overturning Citizens United in the Supreme Court would be great, but it is highly unlikely given who now sits on the bench. Instead, there is a movement by several organizations to pass a 28th Amendment which would state the following:
"Congress shall make no law that applies to the citizens of the United States that does not apply equally to the Senators and/or Representatives; and, Congress shall make no law that applies to the Senators and/or Representatives that does not apply equally to the citizens of the United States."
This amendment would prevent artificial entities such as corporations from having Constitutional rights, and disallow money from being considered free speech.
In recent polls, 94% of US Americans blamed wealthy donors for political dysfunction, and 77% of registered voters said that “reducing the influence of special interests and corruption in Washington” was either the “single most” or a “very important” factor in deciding their vote for Congress. With these stats in mind, there is legitimate potential for passing this amendment — and it’s certainly more possible than overturning Citizens United at this point.
What You Can Do
It’s a daunting and multi-faceted issue, but there are things we regular folk can do to fight wealth inequality and the systems that facilitate it.
Support Tax Reform (Input)
We have to change the rules for how we collect taxes. Wealth should be taxed — not income. Removing incentives from the ultra-wealthy to game the system and instead incentivizing contribution to the tax system would ensure that those who are making the most are contributing a fair percentage of their wealth.
Support US Campaign Finance Reform and the 28th Amendment (Output)
Under US law, corporations are currently treated as individuals with Constitutional rights, and money is treated as free speech. Passing the 28th Amendment would restrict political spending and choke out corruption in our elections.
Sign the petition to support the 28th Amendment here.
Support Unions
Unions can raise the wages for everyone. When workers organize and unite, their bargaining power with corporate overlords becomes more equitable. This is not new in any way. Unionized workers have secured most of the worker’s rights we now have in modern US law.
Here are resources on how to join and support unions.
Conclusion
I’ll be honest: I was not anticipating my tweet to see such popularity. While that virility is certainly due to support of what I’ve said, it’s also due to opposition.
Musk’s tax contributions are a hotly contested issue, but one thing that most people agree about is that our system is wrought with corruption.
We can fix our broken system by standing together — organizing — and demanding reform. Unless we stand united in our opposition to corruption, those with money and power will continue to make decisions that only benefit those who already have money and power.
If anywhere near the same amount of energy spent defending billionaires was spent pursuing tax and campaign finance reform (as well as fortifying workers’ rights), we would be much further along in stamping out the corruption in our system.
We can do this. We just need to get our priorities right and organize.