When the Biden administration announced that it was considering a new tax on unrealized capital gains to help pay for the massive “Build Back Better” spending package earlier this week, Elon Musk didn’t hold back in quickly criticizing the concept.
The founder and CEO of electric vehicle manufacturing giant Tesla, Elon Musk, warned that the proposed new tax would establish a dangerous new precedent, and like essentially all other taxes, it would not stop with the “ultra-wealthy.”
The tax is being floated as only applying to billionaires or people earning more than $100 million per year, at least for now. It would assess a federal capital gains tax but would attach even before the gains are “recognized.” An owner would not have to sell the asset for a profit before assessing a tax on the increased value.
Musk responded to a tweet by Rick McCracken about “scope creep” problems that would likely arise from the proposed tax by writing that when the federal government eventually “runs out of other people’s money, they come for you.”
McCracken’s posts include proposed language for any interested citizen to write to lawmakers to oppose the tax proposal. The template points out that the new tax is very likely to experience “scope creep” as it begins to bring more and more Americans under its grip. The likelihood that the tax would eventually capture unrealized gains in middle-class retirement investments and primary residences was shown to be sufficient reason to reject it.
Even though it is easy to chalk Musk’s opposition to the tax up to his status as the “world’s richest man,” his reasons for standing against it are likely to be attractive to ordinary working Americans who are rightfully suspicious of any tax that promises only to impact the “super-rich.”
Criticism of the tax proposal should be a natural fit with almost all Republican politicians since it is being rolled out now as a “pay-for” proposal to justify the multi-trillion dollar budget reconciliation spending bill.
As initially proposed, the tax would raise around $200 billion in new revenue over the next decade. While that is a vast amount of new money, it is tiny relative to the $3.5 trillion Democrats propose to spend on a wide array of new socialistic domestic programs. That gives even more support to the concern that Democrats would naturally look to bring more people into their view of the tax as more money is inevitably needed in Washington.