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Oct. 27, 2021, 2:48 p.m. EDT

Elon Musk slams billionaire tax: ‘Eventually, they run out of other people’s money and then they come for you’

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By Victor Reklaitis

Elon Musk is among those finding fault with a proposed new annual tax on billionaires’ unrealized capital gains , with the world’s richest man agreeing with the view that this type of tax eventually would hit others as well.

The CEO of Tesla /zigman2/quotes/203558040/composite TSLA +1.64% and SpaceX tweeted his critique of the proposal from congressional Democrats in response to another Twitter user’s suggestion that “any new unrealized capital gains taxes will slowly make their way down to middle class retirement investments over the next several years.”

Musk said the following in reply:

That other Twitter user’s suggestion came in the form of a letter template that Americans could use in writing to their elected representatives to express opposition to the proposed tax.

Musk is ranked No. 1 on  Forbes’ real-time billionaires list , with a fortune of $275 billion as of Wednesday. He is known for being outspoken on Twitter /zigman2/quotes/203180645/composite TWTR +2.83% — so much so that the Securities and Exchange Commission has tried to rein him in, but the regulatory agency’s efforts largely have been seen as toothless .

When asked Wednesday about Musk’s criticism of the proposed tax, White House press secretary Jen Psaki said: “Our response to anyone who opposes is that we believe that the highest-income Americans can afford to pay a little bit more in order to make historic investments in our workforce, in our economy, in our competitiveness. And that has a net benefit on people across the country.”

Top Democrats last weekend said the new annual tax on billionaires’ unrealized capital gains is likely to be included in a massive social-spending bill that they’re trying to enact. But the proposal has been met with some flak from other Democrats, including House Ways and Means Committee Chairman Richard Neal of Massachusetts, who has said implementing it would be challenging.

See: What’s in — and not in — Democrats’ big social-spending bill, as billionaire tax hits resistance

The billionaire tax likely would face a legal challenge, according to a Wall Street Journal report . Attorneys probably would argue that taxing capital gains that haven’t been realized yet falls outside the income taxes allowed by the U.S. Constitution’s 16th Amendment that don’t have to be apportioned based on state population, the report said.

Musk also responded to a separate tweet that said he would be better at allocating money than Treasury Secretary Janet Yellen, saying : “Who is best at capital allocation — government or entrepreneurs — is indeed what it comes down to.” He added that “tricksters will conflate capital allocation with consumption.”

U.S. stock gauges /zigman2/quotes/210599714/realtime SPX +0.31% /zigman2/quotes/210598365/realtime COMP +0.64% /zigman2/quotes/210598065/realtime DJIA +0.10% traded mostly higher Wednesday, as investors absorbed a big batch of earnings from tech giants and other heavyweights.

Now read: Elon Musk made $36 billion in a single day on Tesla’s historic stock surge

From the archives (October 2018): This timeline charts Elon Musk’s dramatic rise to internet fame (or descent into internet infamy)

MarketWatch’s Andrew Keshner contributed to this report.

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