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The billionaire who earns nothing and borrows money to survive10 min read

November 15, 2021 7 min read

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The billionaire who earns nothing and borrows money to survive10 min read

Reading Time: 7 minutes

This is the first part of a two part story. Head to the bottom of the page for part two.

Taxes:

Taxes Accountant GIF by Natalie Palamides

No! Come back. Taxes may sound boring and alien to you, but this tax story involves the colonisation of Mars, bizarre polls on Twitter, and the world’s favourite billionaire, Elon Musk. So, strap in; because we are about to go on a supersonic ride through a Universe of unimaginable amounts of money and the paradox that leaves the richest man penniless. 

GIF by Sky

Elon Musk

...So, strap in; because we are about to go on a supersonic ride through a Universe of unimaginable amounts of money and the paradox that leaves the richest man penniless. 

Before we even get into most adults’ arch-nemesis or taxes, let’s meet the man at the centre of it all; The wealthiest man alive- Elon Musk. 

Elon Musk under fire for tweeting about Bernie Sanders being dead | The  Independent
Elon Musk.

Although Elon Musk now lives in the United States of America, he was born in South Africa. As a child, Elon was bullied quite a lot. This was, in most part, since he suffered from a-then-misunderstood-disability known as Aspergers Syndrome. However, despite his troubles, by the age of twelve, Elon was already programming and selling his own computer games! 

You can still play Elon Musk’s first video game, Blastar, online. 

Click on this image to play Elon Musk’s space themed game, Blastar. Image: The Verge.

A billionaire is born

Elon Musk led SpaceX to partner with local firms to make satellite gear in  India - NewsOnAIR -
Space X has revolutionised the way in which we travel to space.Image: NewsOnAir

Cut to ten years later, and Elon Musk had sold more of his brilliant ideas for millions of dollars (and that’s a lot o money, but for Elon Musk, it was only a humble beginning). His real victory came when he started his Space exploration company, SpaceX, to enable people to live on and colonise other planets. Next up, in 2004, Elon Musk’s out-of-the-box and disruptive thinking helped set up the electric car company, Tesla. 

What We Know About New Tesla Models Coming Out, Future Vehicles
Elon Musk’s company Tesla makes non-polluting electric and futuristic self-driving cars. Image: Business Insider

A sticky situation

However, in 2008, trouble came knocking at Elon Musk’s door, his companies were failing, and he was running out of money. Nonetheless, anyone with eyes could see that Elon’s ideas were both rare and valuable, and that’s why the United States government came to his rescue. They allowed Space X to collaborate with the government on its projects, and even gave Tesla a whopping 465 million dollars to survive!

Health Help GIF by Seize the Awkward

...So, strap in; because we are about to go on a supersonic ride through a Universe of unimaginable amounts of money and the paradox that leaves the richest man penniless. 

Space X has sent several rockets, astronauts, and regular people into space. But, the company’s most game-changing achievement was probably building a space rocket that could be reused. Believe it or not, until 2018, every time humans sent a rocket into space, they would blast it to smithereens. 

Now, in 2021, Space X is planning to send humans on their first Mars mission. Elon Musk is already sending people on joyrides to space, and the company is about to send the first person to the Moon since 1972. On the other hand, Tesla is worth over 1 trillion dollars– that’s 7,43,82,50,00,00,000 rupees! And Elon Musk is the world’s richest man with 300 billion dollars, all to himself. That’s enough money for Elon Musk to buy entire countries if they were on the market!

ya GIF

So, does Elon Musk just sit around in piles of money and riches all day? No, in fact, Elon Musk has to borrow money for his personal expenses.

Huh?

Yes, you read that right. Elon Musk is, in some ways, broke! But of course, that’s not entirely true. See, to understand Elon Musk’s situation, you have to understand the difference between wealth and money. 

Make It Rain Money GIF by Boomerang Official

Uh, Yeah! Wealth is a lot of money.

Are your Assets under the Purview of Wealth Tax? – SIMPLIFY Your Financial  Life

Well, sort of. Your wealth includes everything you own, including your pencil box and backpack. Whereas your riches or money include the actual $$ that you have in your bank. 

So for Elon Musk, his wealth includes all the things that he owns, including his shares in his companies. 

What in this bazongers world are shares?

Well, let’s imagine that you start a lemonade stand. At first, you will probably fund your business yourself. You can buy your lemons and sugar and have your lemonade ready to sell. Now, imagine that you do well in your business and start making a lot of profits. You may start to think: What if I had not one but ten stalls? I could make so much money. But of course, you may not have the money to start those ten stalls, and that’s when you could come up with an idea. 

Lemonade Stand Pictures | Download Free Images on Unsplash
Save Cash Money Sticker by Tommy Perez

What if you could borrow the money without having to beg for it? You could show people how well your store is doing and tell them that if they put some money into your company, they will also own a part of your lemonade business. So, let’s assume you decide to split up your company into a thousand parts and invite people or investors to buy each of these bits for ten rupees each. Each of these parts would be known as a share.

Once you have enough investors or shareholders, you can take the money you gain to build up even more stalls. Now, as these stalls make profits, you can invest some of those profits back into the company and slowly your company will have more and more money at its expense. So, the value of each bit or share of the company will also rise. Thereby, the value of all your shares will rise and the shareholders can now sell their shares to other people who hope their money doubles in the same way. 

Growing Inner Circle Sticker by Amber Housley

Elon Musk’s Shares

Now, back to Elon Musk. This man owns shares in one of America’s most valuable businesses: Tesla. And thanks to that and a few other investments, Elon Musk now has almost 300 billion dollars or enough money to send cars for joyrides into space simply because he can.

So, it’s safe to say that Elon Musk is, in fact, the wealthiest man on this planet. But…. wait… why is he borrowing money just to live? Well, it’s time for you to meet the most dreaded taxes.

Tax Time

So, before we meet Elon Musk’s strained relationship with taxes, it’s time to untangle taxes themselves. To put it simply, the tax you pay is the money that you return to the government so that they can keep the country running smoothly.

Take a moment to think of all the services that you take for granted. How many of these are provided by the government?
.

Yup, that’s right! Services such as roads, sidewalks, trains, buses, and lawmaking are all provided by the government or rather, by us, the people. What? We don’t spend our days building roads or debating in parliament. Well, sure, we don’t. But every time we buy something or consume something, we pay taxes that go to the government.

But the type of tax that we are concerned with today is not the tax you pay when you buy things. Rather, it is the tax that you pay when you earn money (probably not you just yet, but the adults around you). Most people that earn more than a certain amount of money, have to pay taxes. And as they earn more and more, they have to pay a larger and larger percentage of their money in tax. You may think, why should richer people be punished? And while some people do feel that a taxation system that treats people differently is unfair, others claim that, to richer people, losing larger chunks of their money would still leave them with more money than the rest of the population.

Not all countries follow a tax system where people pay larger chunks of their income as they make more money. However, both the United States and India follow this staggered taxation system.

So, now that we’ve gone through all the players in the game, let’s get back to the main story of the day: Elon Musk and his odd money situation. So, first of all, how does the richest man on the planet earn nothing at all. If you just guessed that it has something to do with shares, then you’re absolutely correct!

Elon Musk doesn’t take a monthly paycheck like the usual adult worker (you’ll get there in a few years too, don’t you worry!). Instead, he gets to own stock in the worlds most valuable companies. Almost 300 billion dollars of shares!

Head to Part 2 for more on Elon Musk’s big tax conundrum.