Elon Musk's net worth increases by over $100 billions in a single day, yet his effective tax rate is lower than that of a truck driver

Glonghui, June 19th | According to Yicai, with the listing of SpaceX, founder Elon Musk's personal fortune has soared. On June 18, data from the Forbes Billionaires List showed that Musk's personal wealth reached 1.3 trillion yuan, with his primary sources of wealth being Tesla and SpaceX. Over two trading days, his fortune increased by 200 billion yuan. As Musk’s net worth soared, multiple U.S. politicians criticized the unfairness of the tax system, demanding that the wealthy bear more tax responsibilities. Some lawmakers mentioned on social media, "The world's first trillionaire Musk has an effective tax rate lower than that of truck drivers, firefighters, or nurses. We do, in fact, need to tax the rich." KPMG China tax partner He Lipeng pointed out that the U.S. federal government does not tax individual net assets, but taxes income instead. Income is categorized into wages/ordinary income, capital gains (stocks, bonds), inheritance, and so on. From the composition of Musk’s net assets, most of it is actually "paper wealth" and is highly tied to the share prices of the two companies. Some media reports state that Musk will receive zero actual salary in 2025 as Tesla failed to meet any specified market capitalization or operational performance targets, and he has not received any salary from Tesla for several consecutive years. When his net assets previously approached one trillion dollars, Musk explained the details on social media, saying, "I've said it thousands of times. ‘Net assets’ are almost entirely due to my shareholdings in Tesla and SpaceX. The cash I hold is less than 0.1%." He Lipeng analyzed that if Musk does not plan his taxes, the annual salary he receives from SpaceX and Tesla would be subject to a 37% federal tax rate, with no further taxes payable in Texas. He also mentioned that most high-net-worth individuals in the U.S. derive their income from stock appreciation, which is generally subject to a 23.8% federal income tax, while the wage-earning class with higher salaries may pay taxes at the regular income tax rate, reaching the top rate of 37%. This also means Musk's effective tax rate could indeed be lower than that of a truck driver.