Fact Check: Is Elon Musk’s Tax Rate Only 3 Percent?
A congresswoman cites a misleading figure.
Democratic Rep. Pramila Jayapal claimed in a recent tweet that billionaire Elon Musk paid an effective tax rate of only 3.27 percent from 2014 to 2018.

The data point comes from a 2021 ProPublica article that divulged tax information of some of America’s wealthiest citizens.
As the ProPublica article notes, much of billionaires’ wealth is derived from the value of their assets, such as stocks or property, not cash on hand. When those assets increase in value, so does the wealth of the owner. This does not correlate into actual money, however, until the assets are sold. Once an asset is sold, the money received qualifies as taxable income.
Under current tax law, taxpayers pay taxes only on the income derived in a year, not increases in the value of assets. ProPublica, however, “compared how much in taxes the 25 richest Americans paid each year to how much Forbes estimated their wealth grew in that same time period.” (Emphasis added.)
In other words, ProPublica used a definition of taxable income that is not the same as that used by the U.S. government. According to the data obtained by ProPublica, Musk reported $1.52 billion in income from 2014 to 2018, during which time he paid $455 million in taxes, a tax rate of 30 percent. The value of his assets during that time increased by $13.9 billion, and using this instead of Musk’s $1.52 billion in income led ProPublica to calculate a “true tax rate” of 3.27 percent.
ProPublica’s “true tax rate” may have some value in the ongoing debate over whether unrealized gains should be taxed, but Jayapal distorted the truth by comparing that figure to the tax rate of the average American household. Jaypal noted that the “average working family pays an average tax rate of 13%.” This number aligns with analysis performed by the Tax Foundation.
But those tax rates are calculated using the typical model of taxes as a percent of gross income, not ProPublica’s “true tax rate,” giving an apples and oranges comparison between Musk’s “true tax rate” and the average American’s federal income tax rate. The value of property, stocks, retirement accounts, and other assets for the average American household would have to be included to get an accurate comparison by the standard ProPublica creates.
Jayapal did not respond to a request for comment.
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Remember just a few weeks ago when Musk was in negotiations regarding the purchase of Twitter and he had to come up with the cash? There was a statement issued saying that he didn't want to sell a bunch of stock and make the stock price go down. There was also capital gains which would have increased the number of stocks sold to ensure he had the cash for the amount needed.
My point is that one's net value based on assets is just an estimate and is really quite meaningless. Just ask anyone who bought a house in 2005-07 and tried to sell it circa 2009-10.
> The value of property, stocks, retirement accounts, and other assets for the median and average American household would have to be included to get an accurate comparison by the standard ProPublica creates.
From ProPublica's report, the median American household earned $70k and paid 14% annually (around $9.8k) of that in federal taxes. Using data from the same report, the median American household gained around $7.5k in wealth annually from 2006-2018 (mostly of it in the value of their homes).
Adding that into their annual income brings it to their effective tax rate to around 13%, right in line with Jayapal's numbers, assuming you trust ProPublica's numbers.
Are we sure that Jayapal's figure is misleading?