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Elon Musk’s Big Government Grift

The Tesla mogul says he wants to be left alone. But he’s been living off the taxpayer’s dime for years.

Maja Hitij/Getty Images

The world’s second-richest man—and second-most irritating Twitter user, after the president—has moved to Texas. After months of complaining about Covid-19 shutdowns affecting his factories, while also predicting in March that the virus would be almost gone by the end of April, Elon Musk announced Tuesday at a Wall Street Journal conference that he has bailed on San Francisco. “He said relocating made sense with Tesla’s new factory being built in Texas,” the Journal reported. “He lamented that California, in his view, had become complacent with its innovators.” Musk, who is worth more than $150 billion, also struck a vaguely populist note, saying Silicon Valley “has too much influence on the world.”

Musk himself is moving—not his car company and rocket company, SpaceX, which remain headquartered in California. But the appeal of Texas extends well beyond a new Tesla factory, or even the state’s lack of capital-gains and state income taxes for individuals. Musk’s growing footprint in the state is just the latest step in his lifelong mission, which he’s long since accomplished, to get unimaginably rich by maximally gaming the government’s largesse—even, we now know, taking advantage of programs meant to help people who earn in a lifetime what he earns every minute.

Bloomberg reported Wednesday that a Trump administration economic program designed to spur new investment in impoverished areas has done little of the sort, instead providing tax breaks for space-travel moguls like Musk, Jeff Bezos, and Richard Branson. The Qualified Opportunity Zones program has been criticized for doling out its benefits to huge businesses seeking the latest tax advantage, rather than the scrappy local entrepreneurs it was supposed to help. The program’s operations—from how it chooses the sites of economic zones to how many jobs are created to whether companies even choose to take the tax benefits—are opaque, but its utility for the ultrarich is clear. By moving to Texas and pushing more of his money into opportunity-zone ventures, Elon Musk may save billions in taxes.

These opportunities to leverage government programs, some designed for people much further down the income ladder, have driven Musk throughout his career: The megabillionaire built his companies on the backs of enormous government subsidies, tax breaks, and exclusive contracts. A 2015 Los Angeles Times investigation estimated that Tesla, SolarCity, and SpaceX had together benefited from “$4.9 billion in government support.” That included, for example, a $465 million low-interest loan from the Department of Energy in 2010 that helped Tesla ride out the effects of the Great Recession. Since then, Texas’s Travis County has offered a $14.7 million (at minimum) tax break for the building of a Tesla factory. A Nevada factory was built on the promise of up to $1.3 billion in tax benefits over two decades. Musk has also played government officials off one another, dangling the next proposed Tesla “gigafactory” as a prize for whoever offers the best inducements.

Musk’s companies even dipped into the $600 billion bucket of cash that Treasury Secretary Steve Mnuchin held out for corporations in the early days of the pandemic. As Business Insider reported in July, while Musk spent his time tweeting against government aid for individuals, Tesla received its own tranche from the bailout fund. (A June 2020 Securities and Exchange Commission filing doesn’t specify how much money Tesla received, only that it “received certain payroll related benefits.”) Also in July, Musk tweeted that “another government stimulus package is not in the best interests of the people imo,” before going on to explain, in apparent contradiction, that he was in favor of a universal basic income.

To call for a UBI, after dismissing the urgent financial concerns of millions of Americans who would benefit from a stimulus package, is characteristic of Musk’s hypocrisy and political ignorance. Musk bends markets to his will and crushes unionization efforts but calls himself a socialist. At other times, he plays the libertarian—ranting against the intrusive hand of big government and claiming to be self-made despite the government handouts (and tens of thousands of dollars in seed money from his emerald mine–owning parents).

With Tesla’s high stock price unlocking enormous compensation packages, everything is going as well as it could be for Elon Musk. (Sure, his mother-in-law hates him, but that’s another matter.) Despite producing a fraction of the cars of GM or Toyota, Tesla is the most valuable car company in the world, according to the U.S. stock market, which seems to rise in inverse proportion to the health of the overall economy. Musk’s SpaceX rockets are now ferrying astronauts and supplies to the International Space Station. His wayward tweets and antics—joking about taking the company private at $420 per share; smoking weed on Joe Rogan’s podcast—are brushed off as long as the proper numbers keep rising on the charts.

But Musk’s entire enterprise is so gilded in arrogance and hype that one might miss the serious underlying problems, such as the numerous worker safety complaints at Tesla’s Fremont factory, where workers were also pressured to work during quarantine conditions. It’s also possible that Tesla is not nearly as profitable as it seems. In the third quarter of 2020, Tesla reported a $331 million profit, but the company also sold $397 million in energy credits during that period—another clever loophole for Musk, who, if nothing else, knows where to find free money.

It’s entirely possible that this carnival barker of a CEO will continue finding crafty ways to extract tax breaks and favorable contracts from government entities for the rest of his career. But we should be alive to the ways in which Musk’s reputation is built on a faulty foundation of borrowed money and worker exploitation. To Musk, the government is only useful in helping to enrich him, and he otherwise expects it to stay the hell out of his way. The problem is that he is now powerful and rich enough to get his wish. For all his supposed brilliance in developing electric vehicles and rockets, this may be his greatest talent: grifting the government. In doing so, he’s creating a roadmap for reform, if politicians care to notice.