So, Elon's a Trillionaire

Let's Tax the Hell Outta Him

ElonThe SpaceX IPO (initial public offering) last week was a tremendous success. The 555 million plus shares offered raised $75 billion but represented only 4% of the total shares of the company making the company worth over $2 trillion. Elon Musk, SpaceX’s founder and CEO owns 42% of the shares of the company worth over $800 billion. Of course, he was already the world’s richest man before the IPO so the new issue easily makes him the world’s first trillionaire.

The company itself would hardly seem to be worth even one trillion dollars. SpaceX (SPCX) only  has $92 billion in assets and equity capital of $42 billion making its market capitalization at $2.1 trillion equivalent of 50 times book value. An almost unheard of valuation in the history of the stock market (except for Apple (AAPL) and Nvidia (NVDA)). What’s more SpaceX lost $4.9 billion last year and has accumulated losses of $41 billion since its founding. Of course, Amazon (AMZN) lost money for a decade before making a profit but was a relative piker losing only $3 billion in that period.

So why is a company of middling size with so many consecutive years of losses worth such an astounding amount? It’s partially due to what the company has already done. SpaceX has reduced the cost of putting stuff in orbit by 95%, from about $54,000 per kilogram aboard the space shuttle to only $2,700 per kilogram aboard the Falcon 9 booster. At that price I could almost afford to put myself in orbit (if I sold my house). The cost per kilogram is expected to drop by half again with its Falcon Heavy booster. But the dominant revenue generator at SpaceX is its Starlink satellite system.

SpaceX’s current achievements are nothing compared to Elon’s vision for the future. It is Elon’s vision and his proven ability to realize his visions that commands SpaceX’s exorbitant valuation. Orbiting data centers powering his artificial intelligence dreams along mining asteroids and colonies on Mars are fantastic but still a long ways from realization. But investors have faith in Elon’s ability to deliver even though there are many obstacles to achieving those dreams.

Even though Elon’s vast wealth rests more on hopes and dreams than in reality at this time, that does not mean that there aren’t people out there that want to tax those ephemeral visions. They say that nobody should be so wealthy, even though that wealth could evaporate with one catastrophic explosion on the launch pad. They say that he must pay his fair share even though he has given us so much already.

In California, the Service Employee International Union (SEIU) United Healthcare Workers circulated petitions to put on the ballot a tax on anyone with a net worth of more than one billion dollars, a one-time 5% tax in the hopes of raising $100 billion dollars (one time – ha – who’s the fool?). Their purported reason is that President Trump’s One Big Beautiful Bill cut health care and food support in part to pay for tax cuts for the very wealthiest Americans. But that excuse is only the latest in the left’s attempt to tap into all the wealth created in Silicon Valley and other West Coast high-tech centers. They have been talking about wealth taxes long before OBBBA. This is why Elon moved to Texas and Amazon is building its new headquarters in Memphis.

The Wall Street Journal recently exposed the financial shenanigans the SEIU is throwing out there to support this new tax. The WSJ article highlights the efforts of Emmanuel Saez and Gabriel Zucman to highlight the nefarious wealth inequality created by the OBBBA. The Far left ideologues (you can’t really call their magical thinking economics) Zucman and Saez are faithful acolytes of Thomas Piketty (also not really an economist) and are long-time advisors to Bernie Sanders and Elizabeth Warren. They will happily manipulate numbers and ignore inconvenient facts in their lifelong endeavor to eliminate income and wealth inequality.

But why? More taxes just means that there will be less wealth and less wealth creation (income). Punishing people that create wealth and rewarding people who don’t means there will be less and less wealth to redistribute. Paraphrasing Margaret Thatcher “eventually you run out of other peoples’ money.” That’s why the Soviet Union collapsed. That’s why Mao’s Great Leap Forward was such a disaster.

Working people should be in favor of wealth creation. Union leaders get fat salaries and Zucman and Saez  do pretty well as tenured professors (making around $350,000 annually plus consulting, speaking engagements and books). Why do all the union dues working people pay go to left wing causes that expand government but don’t really make their lives much better? One reason might be that most of SEIU’s members are government employees as are all of the teachers’ union employees. But all those government employees live off the wealth created by the private sector.

But while union leaders and left-wing politicians supposedly make lives better for the poor by taxing working people, Elon’s SpaceX IPO made over four thousand-four hundred SpaceX employees millionaires. Not to mention all the blue-collar and middle-management jobs in around the SpaceX Starbase outside Brownsville, Texas, his Tesla gigafactory in Bastrop, Texas and his Terafab plant near College Station and other companies all together employing around 150,00 people (plus all the people selling food, car, clothing etcetera to those workers). Now that’s wealth creation.

It’s not that people shouldn’t pay taxes. Of course people should pay taxes. But creating wealth is not evil and it should not be punished. More wealth creation will make everybody better off. Poor people in America live better than kings and queens of medieval Europe. Elon and other tech billionaires got super wealthy by making our lives better and their wealth does not detract from my life or your life. Their wealth has made my life better. And yours too.