Yesterday, Twitter accepted a $44 billion buyout offer from Elon Musk, the CEO of Tesla and SpaceX and richest man in the world. The buyout will take one of the world’s largest and most popular social media platforms private.
The news has dominated headlines around the world since it broke. While politicians and media pundits have largely been discussing how the move will impact the future of Twitter itself and the larger debate around free speech, we would instead like to highlight how the buyout brings attention to a more important issue: the out-of-control growth of billionaire wealth and power in America today.
Billionaires like to cry wolf about how they aren’t really as wealthy as they seem because they don’t really “have” their fortunes. They maintain that, because most of their wealth is tied up in illiquid assets like stocks and bonds, they are only billionaires on paper, not in their everyday lives.
The Musk buyout throws this specious argument out the window. If the richest man in the world can come up with $21 billion of his own money and secure $25.5 billion in loans to purchase an entire social media company at the drop of a hat, then it’s safe to say that billionaires absolutely “have” every cent of their wealth. After this charade, billionaires – not to mention the politicians that work on their behalf – can no longer plausibly use this ploy as a way to avoid paying their fair share in taxes.
Musk’s Twitter buyout also spotlights just how much power billionaires have because of their wealth. The fact that a single person could have so much money as to buy out one of the largest social media platforms in the world on a whim is incredible. But what’s even more incredible, and even somewhat frightening, is that the decisions and changes that Musk makes to Twitter as its new leader will affect millions of people around the globe directly and indirectly.
Musk is by no means the only powerful billionaire – there is no shortage of billionaires using their wealth to influence how our society is run. Bill Gates used his billions to help fund COVID-19 vaccine development efforts, giving him an outsized say in vaccination strategies that affected virtually the entire planet. Jeff Bezos owns The Washington Post and Rupert Murdoch owns Fox News and The Wall Street Journal, which undoubtedly gives them an enormous say in the messaging of these media companies. Billionaires even manage to get a say in dormitory construction designs, like Charles Munger recently did at the University of California Santa Barbara.
Billionaires certainly use their wealth to purchase private power in these sorts of ways but, critically, they also use it to purchase public power. In the wake of the 2010 Citizens United Supreme Court ruling, billionaires have used their bloated fortunes to dominate the campaign finance scene in America. In the last decade, the top twelve billionaire mega-donors alone have accounted for one out of every thirteen political dollars spent in federal elections.
With this level of political power, it should come as no surprise that billionaires have gotten some serious bang for their buck on Capitol Hill in the form of special tax breaks. Today, because of the way the tax code is structured, billionaires pay much lower effective tax rates on their fortunes compared to everyday Americans who work for a living. Between 2014 and 2018, the richest 25 billionaires paid an average effective tax rate of just 3.4% on over $400 billion in gains while the average American pays 13.3%. To make matters worse, billionaires even sometimes get away with paying nothing at all in taxes (Elon Musk, for example, paid nothing in federal income taxes in 2018).
This has to change. If we don’t want a handful of billionaires dictating how we go about living our day-to-day lives, then we need to tax them more. It’s that simple. If we can’t change the systems that allow people like Elon Musk to have so much public and private power, then we need to strip them of the resources – i.e. their wealth – that enable that power in the first place.
Thankfully, there are already policy solutions in play, most notably President Biden’s Billionaire Minimum Income Tax, that would go a long way in making this happen. Now it’s just up to Democrats to muster the political will to pass them, especially before the political window of opportunity potentially closes with the 2022 midterm elections.
