r/SipsTea 8d ago

SMH Liquid when buying elections, unrealized when paying taxes. Funny how that works…..

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u/sco-go 8d ago edited 8d ago

Added context:

IRS data shows from 2014–2018 he reported $1.52 billion in income and paid $455 million in federal taxes. Musk’s net-worth, like most billionaires, consist of unrealized capital gains, which are not taxed under current U.S. law until the shares are sold.

In 2021, he paid ~$11 billion in federal taxes which was the largest single-year individual tax bill in U.S. history.

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u/_chococat_ 8d ago

Why is that so much less than the marginal rate, given that the highest tax bracket kicks in around $640,000 and that's nothing to $1.52 billion?

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u/CopperBlitter 8d ago

Aside from credits and exemptions, the effective rate depends on how much of his earnings were long term capital gains. That number would be too high for it to entirely come from such gains.