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Elon Musk’s Taxes, Build Back Better Bill, & Year End Financial Tips
Welcome back to another episode of “Money Matters.” Today we are going to talk about how much Elon Musk will pay in taxes this year and the debate on who should really be paying for the social services that are being contemplated as a part of the Build Back Better bill. Then we will have some closing reflections on 2021 and some tips for starting off the year right.
Starting off, how much will Elon Musk Pay in Taxes This Year? The Wall-Street Journal put together an interesting article in response to a tweet on Sunday where he answered this question. Now why do we care how many dollars in taxes Elon Musk pays? He happens to be the world’s wealthiest person on paper, with a net worth of $243 billion. For those who don’t know who Elon Musk is, he started the car company Tesla, and also owns a rocket company called Space Ex that looks to make space tourism a reality. He is cutting edge in every way and some would say controversial. Senator Elizabeth Warren recently called him out in a tweet of her own calling for billionaires to pay more in taxes, and she apparently addressed Musk specifically as the “Person of the Year” referring to the Time Magazine choosing his as such. Her tweet stated, “Let’s change the rigged tax code so the Person of the Year will actually pay taxes and stop freeloading off everyone else.” Musk responded that he will pay more taxes this year than anyone has ever paid in U.S. history. He then tweeted on Sunday that he estimates that he will pay over $11 billion in taxes. Part of that amount is due to him selling a large portion of his Tesla stock.
This back and forth highlights a theme that promises to be front and center for the foreseeable future: who should pay for what republicans call entitlements and democrats call social infrastructure. In the Build Back Better Bill passed by the House of Representatives and now being debated in the Senate, much of the cost will be covered by instituting a 15% minimum corporate income tax to address companies paying less than that currently. The bill would also include a surtax on gross income above $10 million and an additional 3% on adjusted gross income above $25 million. In other words, the bill would be turning to the ultra wealthy to pay for it. Is this fair? Should the highest income earners in the country be called upon to invest in social programs to help and serve those making less money? And to follow up, are those social programs the best way to help the most people? These topics will be debated on Twitter, on cable news, and in election debates for years to come. What can you do as you watch a tax climate that is constantly in flux?
If you are a small business owner, find an honest and competent CPA by asking for referrals from friends that you trust. With the tax landscape changing so often, a CPA is your best resource to stay on top of these changes and to advise you on the particular business moves that you need to make in response to those changes.
Now if you are an individual or a business owner, you can educate yourself from multiple sources that actually have differing opinions. While this may seem counterintuitive, the best way to be truly informed is to get perspectives from trustworthy news sources that represent two different sides of an argument. To come to a true conviction about a particular policy, listening to both sides of the argument can help you identify a more accurate picture of the pros and cons of whatever is being debated. Limiting your news sources to outlets that are all saying the same thing could limit your ability to truly understand the issue at hand and might lead to you making decisions prematurely without a complete understanding of the ramifications. Those are some ways you can be active in an environment that seems to be constantly changing, particularly when it comes to the tax landscape.
When it comes to the Build Back Better Bill and its chance for passage, Senator Joe Manchin from West Virginia communicated over the weekend that he is unable to support the bill in its current form. He has concerns with the potential exacerbation of inflation, as well as the accuracy of the price tag estimates. What his hard line could lead towards is future conversations that involve stripping out those components which the Senator could support and approving them in a smaller legislative package. There are even rumors today that Manchin sent a $1.75 billion framework to the President that did not include the child tax credit among other things. The bottom line is that Build Back Better is not dead as long as Democrats retain the legislative majority.
2021 is coming to a close. Has it been a fast year, slow year, or even a good year for you? For many small business owners listening to this podcast, this has been the best year you have ever had. That is simply amazing, if you can say that. That means despite all of the challenges in finding and retaining employees, in spite of rising costs, and in supply chain delays, if you can say this was your best year of, it is a testament to the nimbleness and adaptability of your business and the US economy as a whole. It is good to take some time to evaluate and think about next year. Here are some questions you can consider. What went well in 2021? What do you need to improve on in 2022? How can you make a more positive impact in the lives of your clients and teammates in the future? A time of year end reflection and goal setting for the year ahead can be an investment that reaps big dividends. I hope that you will seriously consider, whether it is looking at your personal finances or reviewing your small business’ finances, taking some time to get away from any interruptions and having a retreat with your company’s data, with your own thoughts, and with your dreams. I do this every year in the beginning of January. Self-evaluation is so important because we are always works in progress. There are always ways we can grow and improve. If we find ourselves further down the path in those areas here at the end of the year than in the beginning, then that is reason for celebration. For me personally, one of the things I celebrate most this time of year is the birth of Jesus Christ. If you do not know Him, then I would commend Him to you with all of my heart.
If one of your goals for the upcoming year is to find a bank who knows your name, understands your strategy, and values your business, we’d love for you to consider MBC/Foundation Bank. We want to add value to your personal life and your small business by being a source of objective financial counsel as you seek to make wise financial and business decisions. Start a financial conversation with us today by contacting your local branch. If you have found this podcast helpful, we do hope you will subscribe on your favorite podcast app or share it on social media with your friends and family. Until next year… God Bless.
– President Chad P. Wilson, CFP
Today’s episode of “Money Matters” was written and recorded by President Chad P. Wilson of McKenzie Banking Company / Foundation Bank on December 21, 2021. This episode does not constitute financial advice. Please consult a financial professional to discuss your specific needs. MBC/Foundation Bank is an Equal Housing Lender, Member FDIC.