304 North Cardinal St.
Dorchester Center, MA 02124
Elon Musk could have a quiet partner in his $ 44 billion purchase agreement with Twitter Inc .: US tax code.
Head of Tesla Inc. and SpaceX announced on Monday a deal to keep Twitter private with a $ 54.20 share, promising a $ 21 billion equity and using $ 12.5 billion in loans and shares of Tesla as collateral. Banks are making another $ 13 billion to finance their loans. Critics, including Senator Elizabeth Warren, claim that the only way to do so is to pay billions.
“If you look at Musk’s ‘salary’ as defined by our tax code, you can see that the boy is really rich, but not rich enough to buy Twitter,” Steve Wamhoff, director of state tax policy at the Taxation and Economic Policy Center, said: “If he looks at the full definition of his salary – which includes the exceptions as taxable under our tax laws and thus tax-free – then you begin to see how the boy can. buy Twitter. “
Musk uses a proven and authentic strategy that is popular with millions of American billionaires who have accumulated the most valuable stock – borrowing those goods to earn cash without having to sell and pay taxes. Musk has borrowed money from some of his Tesla assets with a $ 12.5 billion contract.
The details of Musk’s plans to raise another $ 21 billion are still unclear in the financing agreement. He could sell Tesla or other stock, which could impose a significant tax. He may be able to fund some of that by borrowing his money from SpaceX and Boring Co. continuously using IRS rules to earn tax revenue.
Musk is worth $ 257.4 billion, according to the Bloomberg Billionaires Index. Most of that fortune is in stock for Tesla and SpaceX, which can grow permanently tax-free. In any loan of his property, Musk also receives a tax deduction for interest on that debt. Musk faced a multi-billion dollar tax debt last year after selling part of his Tesla shares.
“Elon Musk has a very valuable Tesla stock, he does not want to sell it and pay taxes. And so he can borrow from that stock without selling it,” said Steve Rosenthal, chief executive officer of the Urban-Brookings Tax Policy Center on the left, he said. obligation to repay. “
The rich have the ability to be very selective when it comes to paying taxes – by postponing sales for years when they have lost to pay off debts, or simply to seize assets until they die to avoid taxes altogether – has created resentment among many. Democrats. Superintendents, Warren, Bernie Sanders, and Ron Wyden have for years worked on various types of property taxes following wealth that are often unaffected by income tax laws.
Warren, who turned the idea of a 2% wealth tax on the richest Americans into a campaign for primaries for the Democratic Alliance by 2020, said late Monday that Musk’s take to Twitter showed its need.
President Joe Biden joined a dispute earlier this month with his “Billionaires Minimum Income Tax” which will pay for the annual financial tax and business assets of at least $ 100 million. Under that proposal, such individuals will be required to pay income tax annually with appreciation, said Kyle Pomerleau, chief executive officer at the American Enterprise Institute.
The new multi-billion dollar tax is unlikely to become a law anytime soon by the U.S. Senate’s minor jury. Joe Manchin, a moderate Democrat from West Virginia, immediately added the Biden plan within hours of being released as part of the president’s budget request.
However, the concept of tax evasion for unattainable benefits is almost non-existent. The idea has shifted from the weird notion of what is popular only among developing lawmakers to the general policy of Democracy in just a few years.