Elon Musk is on track to become the world's first trillionaire by 2027. Musk is the closest person to the 13-figure mark. The biggest driver of Elon Musk's wealth has been Tesla's stock. If you look before the pandemic, that stock was trading at below $50 a share. Now it's at $230 a share. Some people think it could easily go to $300 a share if they have self-driving taxis, autonomous vehicles. But not all Americans benefit from stock market plays. Wealth inequality in the US has significantly increased over the past 30 years. Federal Reserve data shows the wealth of the top 1% has grown dramatically, while the wealth of the bottom 50% has stagnated. In the early 1990s, the top 1% held about $4.76 trillion, or 23% of the nation's wealth, while the bottom 50% had about $730

billion in equity, or 3.5% of total wealth. Fast forward to Q1 2020 for the top 1% share increased to nearly $46.1 trillion, or 30% of the total wealth, while the bottom 50% held $3.78 trillion, or 2.5% of total wealth. The American system, which is an economy fundamentally driven by entrepreneurs and innovation, where you're rewarded for taking risks, that that creates growth for everybody. While others feel that wealth concentration can be harmful to society. So talk of a trillionaire is frightening. Billions of dollars of wealth translate into billions of dollars of power. A hundred years after the first billionaire. What has led to the concentration of wealth that could make the first trillionaire possible? And what does it mean for the U.S. economy? Elon Musk was named

the richest man in the world in January 2021. He started 2020 worth about $28.5 billion and ended it being worth around 167 billion as of September 2024. His net worth is valued at roughly $265 billion, according to the Bloomberg Billionaires Index. One of the reasons that Elon Musk has grown so wealthy is not only because Tesla stock has gone up so rapidly, but also because the number of shares that he owns is growing rapidly. Over that five-year period, from 2019 to 2024, that stock went up 1,300%. If that stock continues to go up 100% a year along with his wealth, he will get to trillionaire status by 2027. Tesla's stock rise during the pandemic wasn't necessarily tied to production or revenue growth alone. The stock of Tesla is now up 677% for the year, and that

move has changed everything. Yet it only plans to make a half a million cars this year. But this new generation of stock pickers. They believe that Elon Musk is a genius, and they want to stick with him as he takes over the world. People invest for all kinds of reasons. Some invest for very short-term reasons. Other people invest because they think this stock is going to be a good one, and it's going to generate profits for years and years and years. Musk is in a unique position because of how he's compensated at Tesla. Elon certainly had a lot of other shareholders, and his stake in the company was fairly low when they started out. But he has had these massive pay packages, the most recent of which was over $50 billion. That's $50 billion in pay, not just what he owns in the company and the value of that stock.

And so, in addition to growing rich from his existing stock, he has grown rich every year from options that are part of these massive pay packages. We have never seen pay packages like this in corporate America, where somebody is given, if they meet certain benchmarks, a $50 billion pay day. And so that has actually grown his share of the company over time to 13%. Some say based on current options, he could get to 20%. So one of the things that helps him reach trillionaire status is that Tesla stock grows, but also his ownership of the company grows because of these massive and unprecedented options. Neither Tesla nor SpaceX representatives responded to CNBC's request for comment. Usually when we think about the Forbes 400, we think about them owning about 3 or 4% of the total wealth in the economy, which is already quite large and quite outsized. But this would be an order of

magnitude difference for one individual. Whether or not it comes to fruition, I think depends on a lot of things happening, particularly what is the value of the businesses with which he has associated himself. Musk made his wealth through equity in the major companies he's led, such as PayPal, Tesla, and SpaceX. This is a pretty typical wealth story for the 1%. If you look at the list of the richest Americans, you know, whether we're talking about Elon Musk or Jeff Bezos. The reason people get super rich is they start a company and they grow that company. And the reason that company keeps growing and growing is producing something valuable that people want. Wealthier individuals typically have larger portions of their assets invested in the stock market, while middle-income households tend to have more of their wealth tied up in real estate. The wealthiest 1% of Americans own nearly 50% of

all U.S. stocks, while the bottom 50% of Americans hold about 1% of all stocks as of mid-2024. About 58% of families own stock in 2022, either directly or indirectly, through passive investments such as retirement accounts. Wealth inequality is very much driven by the prices of different types of assets. And so one of the things that will cause wealth inequality to go up, as measured by wealth concentration, is the stock market. And the stock market has done well. But other assets, especially housing, have also done quite well. House values go up. That tends to raise wealth in the middle of the distribution, which offsets some of the gains that are happening at the top. Most Americans' wealth is in home ownership, with more than 66% of families owning their own home in 2022. The typical American, if you know, a median house price has gone up by 50% or

100% over the past five six years, that's a lot of wealth that's being created. So when we talk about wealth distribution, that's going to be an offsetting factor. But home ownership as a main source of wealth creation can be a double-edged sword. Although increasing house values can benefit homeowners, this trend also signifies decreasing house affordability for potential buyers. Many Americans primarily earn their income by trading their time and skills for a paycheck, which is then taxed based on how much that individual earns. On paper, the ultra-wealthy's income isn't quite as clear. We think about income as being sort of the improvement in one's ability to spend over time. You and I have paychecks, and those paychecks measure how much we can spend. Musk has a gigantic compensation package, but even that package, only a fraction of it shows up as taxable income, because much of it is in bonuses and

other ways of getting paid that make it easy to avoid taxation. Elon Musk has seen his fortune more than double over the past five years. What he does is he borrows against that $200 billion in equity, takes those loans, and uses them for income. And so he has millions and millions of dollars in income that he never has to pay taxes on. Over the past quarter century, in particular, changes in tax policy have made it much more difficult to tax the rich. There are many more exclusions, many more ways to get around paying taxes. Those same changes are what lead to a buildup in unrealized capital gains. Capital gains are the profits someone makes once they sell an asset, such as stocks or real estate. We should think about taxing unrealized gains and other policies like that. Many people like Musk are probably going to die with very substantial unrealized capital gains.

And the question is, do we allow those unrealized capital gains to pass untaxed to the next generation? Or do we impose something like a tax on gains at death? So I think we need to do a better job of taxing the income while it's being earned. And that involves changes in tax law and eliminating some of these loopholes that have been put in place over the past quarter century. What assumption could be that it's only because of the tax code that these people got rich, which is absurd. They got rich because they built a company and spent a lot of time building that company. We have to create valuable products. That's why those people got rich, not because of the tax code and any big change you make, you have to think, will that change the incentives in the system? So I would be careful making small changes. It's not surprising that in this election cycle, the

theme of taxing the wealthy and taking some of what they have to help those who have less has become very prominent, especially among Democrats and Vice President Harris. So one of the things that she has proposed is to tax what are called unrealized gains. And so what the Harris campaign has said is, look, it's not fair that because your wealth grows in value and you can borrow against that, that you never pay taxes, whereas the teacher, the firefighter, they have normal income and they have to pay taxes on that. We need to tax the ultra-rich. We need to tax corporations. That's one of the most powerful ways to reduce inequality. President Trump and a Republican-controlled Congress passed the 2017 Tax Cuts and Jobs Act. The Tax Policy Center found that while the average American saved on taxes because of the legislation, the savings was disproportionate. A middle

income taxpayer saved about $900 by 2025, whereas the top 1% saved about $61,000. We're going to be seeing the expiry of many provisions of President Trump's tax cuts for the rich and for corporations that arrives in 2025. That's a huge opportunity to address the long-standing problems with our tax code. We should also think about getting rid of loopholes that cause a disconnect between what someone is really earning, what their income is, and how much they're paying in tax because how much they're really earning. That's what determines how fast their wealth is going to grow. Elon Musk, if his wealth is truly going up $200 billion a year and his income is nothing, it's zero. That tells us we have a real problem. America has always had a love-hate relationship with wealth. Great wealth in America is admired, but it's

also envied. And there's a political strain in America that says we should redistribute some of that wealth to help those who need it most. And so Americans are very conflicted about inequality. Extreme levels of inequality slow down and undermine the fight against poverty. I'm inspired by the work of people like former US Supreme Court Justice Louis Brandeis. He's the one who said, we can either have extreme concentration of wealth in this country, or we can have democracy, but we can't have both. And I believe that's a choice that we're facing today. So far, the desire by most Americans to tax the wealthy has not played out in Congress. It's not played out in the White House. And there are some that say, well, that's because the wealthy buy the politicians and they have lobbyists who have fought this successfully for years. And that may be true, but it also has to do with the

fact that if you have a tax that only applies to people worth $1 million or more with $1 million in income, like Harris has proposed, a lot of people say, wait, I don't have $1 million in income, but I might someday. So therefore I don't support a tax on those who make more than $1 million a year because I might get there, too. It's hard to form policy when Americans themselves are so conflicted about. Yes. We're envious. We'd like to tax them, but I also want to get there, too. And I admire these people.

Why The Rich Keep Getting Richer In The U.S.

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Why The Rich Keep Getting Richer In The U.S.

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