Elon Musk Mocks Joe Biden’s Tweet Calling On The Super Rich To Pay ‘Their Fair Share.’ Here’s How Some Billionaires Pay Less Income Tax Than You

The fairness of the U.S. tax system has long been debated.

President Joe Biden recently tweeted, “It’s about time the super-wealthy start paying their fair share.”

The message caught the attention of Tesla Inc. CEO and Twitter Inc. owner Elon Musk.

“Please give him the password, so he can do his own tweets,” Musk replied, implying that the tweet wasn’t written by the commander in chief himself.

But the billionaire business tycoon actually agrees with Biden’s view.

“In all seriousness, I agree that we should make elaborate tax-avoidance schemes illegal,” Musk later tweeted. “But acting upon that would upset a lot of donors, so we will see words but no action.”

The reality is that billionaires build their wealth largely from assets. Their net worth goes up when their assets increase in value over time. But the U.S. tax system is not designed to capture the gains from assets: Capital gains are typically taxed at lower rates than wages and salaries.

“Those who will actually be forced to carry the burden of excess government spending are lower- to middle-income wage earners, as they cannot escape payroll tax,” Musk said.

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Some Billionaires Pay Less Income Tax Than You

According to a report from ProPublica, some billionaires in the U.S. paid little or no income tax relative to the vast amount of wealth they have accumulated over the years.

The report noted that Amazon.com Inc. Founder Jeff Bezos “did not pay a penny in federal income taxes” in 2007 and 2011. It also pointed out that Musk paid no federal income tax in 2018, and investing legend George Soros did the same “three years in a row.”

Billionaires do pay taxes — it’s just that the amount is rather small compared to how much money they actually make. For instance, ProPublica’s report showed that between 2014 and 2018, Bezos paid $972 million in total taxes on $4.22 billion of income. Meanwhile, his wealth grew by $99 billion, meaning the true tax rate was only 0.98% during this period.

The good news? You don’t need to be in the three-comma club to invest in the assets that made these people wealthy.

Billionaire Tax Hacks

For many well-known billionaires, the bulk of their wealth is tied to the companies they helped create.

If these companies are publicly traded, retail investors can hop on the bandwagon by purchasing shares. For those who want to follow Bezos, check out Amazon. If you want to bet on Musk, look into Tesla.

Here’s the neat part: When stocks go up in value, investors only pay tax on realized gains. In other words, if investors don’t sell anything, they don’t have to pay capital gains tax — even if their stock holdings have skyrocketed in value — because the gains are not realized.

According to ProPublica, that’s why some billionaires choose to borrow against their assets instead of selling them. Doing so gives the ultra-wealthy money to spend while deferring taxes on capital gains indefinitely.

That said, when they do sell their shares, they can still get hit with a substantial tax bill. After Musk sold a ton of Tesla shares in 2021, he tweeted that he would pay over $11 billion in taxes that year.

Another popular option for billionaires is real estate, which comes with plenty of tax advantages as well.

When you earn rental income from an investment property, you can claim deductions. These include expenses such as mortgage interest, property taxes, property insurance and ongoing maintenance and repairs.

There’s also depreciation, which refers to the incremental loss of a property’s value as a result of wear and tear. Real estate investors can claim depreciation for many years and accumulate significant tax savings over time.
The best part? It’s easy for retail investors to invest in housing — and you don’t need to buy a house to do it. You can invest in publicly traded real estate investment trusts (REITs) that own income-producing properties and pay dividends to shareholders. And if you don’t like the stock market’s volatility, there are options to invest directly in rental properties with as little as $100 through the private market.

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This article It’ll ‘Upset A Lot Of Donors’: Elon Musk Mocks Joe Biden’s Tweet Calling On The Super Rich To Pay ‘Their Fair Share.’ Here’s How Some Billionaires Pay Less Income Tax Than You originally appeared on Benzinga.com


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