Musk Has Bet Over $100 million On Trump. How Much Return Is He Looking For?
The failed assassination attempt on Trump in July caused Musk, who was previously reluctant to take a political stance, to immediately side with the former president and gradually become one of Trump's biggest sugar daddies.
According to documents released by the Federal Election Commission in mid-October, Musk has donated more than $118 million to the political action committee America PAC to cheer for the Republican presidential candidate Trump. In addition to his support for Trump, Musk donated more than $289,000 to the Republican campaign for Congress, fully revealing his strong expectation for the Republican Party to govern.
It is hard to find a second person in Silicon Valley and Wall Street who is as high-profile and fully invested in Trump as Musk. Although Musk repeatedly emphasizes that supporting Trump is based on his conscience as an American citizen, the alliance between the two big businessmen has never been so simple.
According to professionals, Musk's investment of more than $1 billion in Trump has the potential to return at least tens of billions of dollars.
Tax Is Definitely A Thing
According to the review of tax and ethics experts, if Musk, as Trump said before, will serve as a senior advisor in the new government, Musk may benefit from a hidden clause in U.S. tax law, thus winning a large tax deduction for himself.
Thirty-five years ago, a new clause was added to U.S. tax law. The original provision stipulated that senior officials of the U.S. federal government are not allowed to participate in economic affairs that have conflicts of interest with their work in a personal or substantial way, while the supplementary clause allows government officials to indefinitely defer the capital gains tax arising from the withdrawal of funds due to such conflicts.
In Musk's case, if he finally gets Trump's financial advisor or other public office, he may need to sell his holdings in Tesla, X, and other companies that may be involved in his work, without paying the relevant taxes.
Previously, Henry Paulson, the Treasury Secretary of the Bush administration, enjoyed this tax benefit. At that time, he withdrew nearly $500 million from Goldman Sachs without paying capital tax. According to experts, Musk can enjoy at least tens of billions of dollars in tax benefits through this provision.
However, Musk himself may not care much about this part of the tax. In fact, he cannot completely sell out of any of his companies, even if he needs money, he can borrow by mortgaging stocks. In addition, he can also rely on declaring other investment failures (such as acquiring Twitter and continuing losses) to offset this tax.
But the potential benefits is far more than this. Trump also has a large-scale tax cut policy, which can not only increase Musk's personal wealth sharply but also give his enterprises greater freedom. This is obviously more attractive to Musk than the Democratic government that is heavily taxed.
SpaceX
At the beginning of Musk's defection to Trump, the market was confused about why the boss of an electric car company would support a presidential candidate who wanted to revive fuel vehicles. When thinking about this question, people need to understand that Musk is not only the CEO of Tesla.
The companies that Musk currently holds or owns include the electric car company Tesla, the rocket launch company SpaceX, the brain-computer company Neuralink, the social platform X, and the artificial intelligence startup xAI.
In terms of market value based on publicly available information, the listed Tesla is currently valued at around $807 billion, SpaceX is second with $210 billion, followed by the hot xAI, with the latest estimate of about $40 billion. Then there is X ($9.4 billion), Neuralink ($6.6 billion), and the tunnel company The Boring Company ($5.6 billion).
Among them, SpaceX, due to its unique industry advantages and the strength of the company itself, is regarded as the most potential among U.S. private companies and is also regarded as a rising star with the potential to surpass Tesla in the future. But it is such a rising star that has repeatedly complained about unfair treatment under the Biden administration.
In recent months, the Federal Aviation Administration has tightened its review of SpaceX and proposed in September to impose a civil fine of $633,000 on SpaceX. Musk himself has complained on X that SpaceX not only has to wipe the butt for its competitor Boeing but is also fined by the government for trivial matters, which is really hard for him to swallow.
Interestingly, since Biden took office in 2021, SpaceX has spent more and more money on political lobbying, spending nearly $1.4 million more than during the Trump period. Spending a lot of money but getting such results obviously makes Musk resentful towards the Biden administration.
The Biden administration has been committed to fighting monopolies, and SpaceX's current position in the industry has already caused the Democratic Party to be wary. If Harris succeeds as President of the United States, then SpaceX's future profitable hundreds of billions of dollars in government contracts may be in danger.
Musk has also spoken about the connection between SpaceX and the election, saying that voting for Trump is voting for Mars, and if the U.S. government's excessive regulation is not stopped, the Earth will never be able to grow into a multi-planetary civilization, and Mars immigration has always been regarded by SpaceX as its founding goal.
X And xAI
And it's not just SpaceX that has this trouble, another company of Musk, X, is also coldly treated by Democratic politicians. Previously, when Meta launched a competing product Threads, Biden, Harris, and other Democratic executives quickly supported it, which is an obvious move by the party to weaken X's discourse power.
At the same time, xAI, a company Musk recently invested in, is also an important reason for his defection to Trump. Under Biden's rule, artificial intelligence in the United States has suddenly exploded, driving the entire U.S. market, but the Democratic government has been hesitant about whether to strictly regulate the industry to avoid disasters. In the eyes of many industry insiders, the Biden administration is somewhat overcautious, and the more intervention, the more likely it is to stifle industry vitality.
From these perspectives, the Biden administration has almost precisely stepped on the minefields of Musk's many companies, but Trump, who is a businessman, will not have this problem.
These business considerations are destined to make Musk surrender to Trump this year, but from simply donating to later campaigning, it seems that Musk is showing more and more fanatical signs.
Compared with predicting the market's return on Trump's election, Musk's bet is bigger, the risk is bigger, and the return is higher. Once Trump wins, Musk will get at least dozens of times the current donation amount and potentially countless benefits