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Think of the billionaire tax as the Tesla solution to Democrats’ search for revenue to pay for their expansion of the social safety net … if only they can convince Sen. Joe Manchin, the West Virginia Democrat.
Tesla was built on government cash. For years it used government incentives for people to buy electric vehicles. Much of its current profits are thanks to the sale of government regulatory credits to other, traditional automakers, which allowed them to keep making gas-guzzling pickups and SUVs rather than reduce their emissions.
Investors think it’s a good scheme, which is why Tesla is worth three times more than Toyota but sells far fewer vehicles. CNN’s Chris Isidore has written repeatedly about Tesla’s various tax credits and incentives.
Its founder, the most epically rich billionaire Elon Musk, has also been known to avoid paying personal income taxes, according to ProPublica.
Amazon, another massive company, has similarly been known to avoid paying corporate income taxes.
Its founder, the just slightly less epically rich billionaire Jeff Bezos, has also been known to avoid paying personal income taxes, according to ProPublica.
The twin solution from Democrats – who want money to fund universal pre-K, a Medicare expansion and a host of other priorities – would seek some redress from the men as well as their companies:
Musk is no fan. “Eventually, they run out of other people’s money and then they come for you,” he said on Twitter of the billionaire tax proposal. He did not mention Tesla’s reliance on government help.
About that billionaire tax. It appeared like an elegant, if hastily thrown together, solution Tuesday and was already in serious jeopardy Wednesday.
Instead of being stuck behind their moderates, now Democrats are stuck between them.
- Sen. Kyrsten Sinema of Arizona won’t accept tax rate hikes, even for corporations, which saw a massive cut in the Trump years.
- Manchin thinks a tax on the wealth of billionaires, which Sinema supports, is divisive.
So Democrats are still working on a way to tie their caucus together, deliver President Joe Biden his promised platform and sew up the expanded social safety net for all Americans.
The tax on billionaires could be a game-changing concept in a country where income inequality has been a top issue. Most new wealth is concentrated among the very rich.
Why is a billionaire tax necessary? The biggest billionaires often don’t appear to live off their own billions. Rather, they keep value in their companies or assets, avoid taxes by never selling them and instead borrow spending money from creditors. When they die, their heirs pick up where they left off.
The method, as described on CNN.com by the University of Southern California law professor Edward J. McCaffery, is simple: Buy. Borrow. Die. And avoid a lot of income tax in the process. McCaffery argues the plan released by Sen. Ron