Musk, what to do with the money of the rich?

Musk, what to do with the money of the rich?

The recent decision of Elon Muskthe second richest person in the world, to ask via a Twitter poll if he should sell 10% of his shares in Tesla to pay the corresponding taxes, is generating not only a lot of comments, but also an opportunity for many people to rethink what is the meaning of being rich, having money or contributing to the global economy.

Tesla’s market capitalization is estimated at around $1.22 trillion, which would make Musk’s 193.3 million shares, 20.7%, worth around $250 billion. 10% of that, obviously, around $25 billion.

If we simply estimated the 20% that is usually paid in the United States for capital gains – although Musk claims that some of his old options would generate taxes at a rate higher than 54% – we would be talking about a massive tax injectionmulti-billion dollar, completely unprecedented… and decided in a Twitter poll.

We would be talking about a very important injection of taxes, of several billion dollars, without precedent… and decided in a poll on Twitter

The survey, after finishing, offered a clear result: after more than three and a half million votes, 57.9% voted in favor of the sale and 42.1% against itwhich will presumably lead, since Musk himself stated that the result would be binding on him, to carry out the operation.

Of course, a sale like that wouldn’t happen all at once so as not to hurt Tesla’s stock value, but still, it’s an absolutely unprecedented move by one of the world’s richest people.

Musk himself, in fact, replied a few days ago to a tweet from the United Nations stating that a donation of 2% of his wealth could significantly contribute to ending hunger in the world, and he did. asking for a detailed plan of the use to be made of such a donationsubject to open and visible accounting.

What is being considered here? The first issue is obvious, although it seems not for everyone: many of the so-called billionaires actually have very little money as such. What they own are their shares in the companies they created and that, with their growth, they have made them immensely rich. And this, obviously, opens the possibility of requesting all the money they want from any bank in the world with the guarantee of those actions.

In the case of Musk, for example, who does not own property, or huge yachts, or other extravagances, and who does not receive a significant salary from his companies, we speak of a fortune that, in reality, we could not take away and distributeor that if we did, in practice, we would be preventing the viability of some very interesting companies with great potential for contributing to the future.

Could we hang up, for example, Jeff Bezos and share your money? No, because that money does not exist. They are shares in a company, Amazon, that if we were to distribute and execute them, they would lead to the company not being able to function, and to an evident destruction of value.

Many billionaires, in practice, are worth what they are worth for what they have managed to do with their companies, something that is not available to everyone. If Musk now sells shares and thus provides a fortune to the US treasury, is that money going to generate more value than it generated where it was before, or is it going to enter the usual dynamic of inefficiency which is usual in many public institutions?

The idea, obviously, is not to make an epic of the billionaires, but to discuss whether it is better for society that this money is generating productivity in a company, or being managed by various public entities.

The idea is to discuss whether it is better for society that this money is generating productivity in a company or being managed by various public entities

What would happen, for example, if some traditional car company used the opportunity to take a position in Tesla and managed, for example, to destabilize the company, or make it less efficient than it is? The opportunity to continue feeding a company that, without any doubt, has contributed a lot to the future of transport, decarbonization or technology, would have been lost.

Should billionaires pay more taxes, or contribute donations to alleviate the world’s problems? Sure, but the equation is not as simple as some populists want to sell us. In practice, the well-being that a billionaire enjoys comes from having managed to make a significant contribution to society, which society has recognized by highly valuing his company, and the money they have, in reality, is linked to the evolution of those companies. As in everything, the key is not to prevent them from doing what they do, but to prevent them from abusing it.

With his move, Musk preempts possible US legislation that seeks to make the wealthy pay taxes on their assets regardless of whether or not they materialize them. With this, he has created a small earthquake -acceptable- for the market and investment funds, and has given rise to an interesting process of collective reflection.

With his offer, which will surely force other billionaires to ask similar questions, Musk has done more to help society assimilate, beyond crude simplistic populism, the value creation phenomenonthan you can probably imagine.

Andrés Rodríguez, founder of SpainMedia

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