Elizabeth Warren says Elon Musk’s Twitter buy shows need for wealth tax in U.S.

The Supreme Court heard arguments Tuesday on a case about a part of the 2017 Trump tax law that levied a one-time tax on foreign earnings of U.S. companies. The eventual ruling could have implications for whether a Warren-style wealth tax is constitutional.

Read more: The Supreme Court could gut wealth taxes before they exist — and upend the rest of the tax code

She pointed to the example of Elon Musk’s 2022 acquisition of Twitter as an example of why a wealth tax is needed, noting that Musk financed a portion of the purchase with margin loans on his stock holdings, which enabled him to avoid paying income taxes because he didn’t sell the stock and therefore realize capital gains income.

“The billionaires can buy their yachts, finance their 87-room houses, all on the notion that they never cashed out, they’ve never sold any [stock],” Warren said. “And that creates a terrible problem in this country because it means the people who are paying taxes are Boston public school teachers instead of the wealthiest people in this country.”

Though Musk did rely on margin loans for a portion of the financing to acquire Twitter — now X — he sold billions of dollars worth of Tesla Inc.
TSLA,
+0.27%
stock in last year and claimed that he paid $11 billion in taxes in 2021 as a result of stock sales.

Warren said a more “minimalist approach” to her wealth tax idea would be to change the tax code so that the proceeds of securities-based loans were taxed like income.

That idea, she said, “certainly moves in the right direction.”