Elon Musk is on pace to become the world’s first trillionaire by 2027, according to a report from Informa Connect Academy. Musk, who is already the world’s richest individual, saw his wealth skyrocket during the COVID-19 pandemic, largely due to the surge in Tesla’s stock. At the start of 2020, his net worth was around $28.5 billion, but by September 2024, it had reached an astounding $265 billion, according to the Bloomberg Billionaires Index.
The meteoric rise in Tesla’s stock value has been the primary engine behind Musk’s rapid wealth accumulation. Tesla’s share price grew from $30 per share in January 2020 to nearly $300 per share by January 2021, as the electric vehicle maker capitalized on booming demand and investor enthusiasm during the pandemic.
James Pethokoukis, an economic policy analyst at the American Enterprise Institute, explains that individuals like Musk and Jeff Bezos achieve extraordinary wealth by founding companies that continue to grow by producing valuable goods and services that people want. This model has driven a significant concentration of wealth among the ultrawealthy, with billionaires often holding substantial portions of their assets in stocks, which appreciate rapidly in value when their companies thrive.
Data from the Federal Reserve highlights this disparity in wealth accumulation, with the richest 1% of Americans owning nearly 50% of all U.S. stocks, while the bottom 50% hold just 1% of total stock wealth. Middle-income households tend to have a larger proportion of their wealth tied up in real estate, rather than the stock market, limiting their participation in the capital-driven growth that has benefited the wealthiest.
In 2022, about 58% of American families owned stock, either directly or through passive investments like retirement accounts, but the distribution of wealth remains heavily skewed towards the ultrawealthy.
The growing wealth gap has sparked debate over the role of taxation and compensation in driving wealth inequality. Pethokoukis argues that large compensation packages for company founders like Musk are the result of creating valuable companies that provide jobs and innovation. Others, like economist John Sabelhaus, contend that tax loopholes create an unfair advantage for the ultrawealthy, enabling them to grow their wealth at a faster rate than those who rely on wages.
Unlike middle-income earners, who primarily generate income by exchanging their labor for a paycheck and are taxed based on their income, the ultrawealthy often derive much of their wealth from assets such as stocks, which can appreciate without triggering the same tax obligations as regular income. This difference in how wealth is accumulated and taxed contributes to the widening gap between the rich and everyone else.
As Musk’s wealth continues to soar, his potential path to trillionaire status highlights not only the tremendous wealth-generating power of successful companies but also the growing challenge of addressing income inequality in an era of capital-driven wealth creation.
