Musk pledges $10bn in SpaceX shares for US children: Who really gains?

Elon Musk has pledged to springiness 1 SpaceX stock to each kid successful the United States adjacent twelvemonth – a acquisition that could beryllium worthy much than $10bn.

“This volition beryllium the archetypal of many,” the world’s richest antheral wrote connected X connected Monday.

About 73 cardinal children nether 18 unrecorded successful the US, according to US Census Bureau data.

At Friday’s closing terms of $146.03, the pledge would beryllium worthy astir $10.7bn.

President Donald Trump thanked Musk connected his Truth Social platform, and claimed the shares would beryllium fixed to children “through TRUMP ACCOUNTS”, the tax-friendly concern accounts for children created nether his signature taxation and spending instrumentality past year.

The pledge comes 2 weeks earlier the November 3 midterm elections.

Musk is the biggest known donor successful the run-up to those elections, having fixed much than $276m to Republican groups since July.

Musk has not said which children volition qualify, erstwhile the shares volition beryllium handed over, oregon how.

So however mightiness the giveaway work, and who stands to gain?

Here’s what you request to know:

SpaceX, the world’s seventh-largest company, began trading connected the Nasdaq successful June astatine an archetypal nationalist offering terms of $135 per share.
That terms has been volatile. SpaceX shares person fallen 35.3 percent since peaking days aft the listing.

The shares are presently trading astatine astir $146 a share. Every $1 determination successful the stock terms volition alteration the gift’s worth by astir $73m.

Musk owns 4.8 cardinal shares successful SpaceX outright, according to a filing with the US Securities and Exchange Commission (SEC) successful August.

Including unvested awards and banal options, his involvement rises to astir 6.4 cardinal shares, oregon 48.4 percent of the company.

Giving distant 73 cardinal shares would trim his outright holding by astir 1.5 percent, hardly affecting his power of the company. That’s due to the fact that his voting power, which is presently astir 82 percent due to the fact that SpaceX has 2 classes of shares, would autumn by lone 0.1 percent points, according to a Bloomberg Opinion calculation.

It would beryllium the largest azygous acquisition linked to Trump accounts truthful far.

Musk has not said.

Trump said the shares would beryllium held successful Trump accounts, and Musk thanked Brad Gerstner, the tech capitalist down the accounts, for “helping alteration this”.

Nearly 70 cardinal Trump accounts person been opened, 1 for each kid nether 18 with a Social Security number, according to the White House. Investments held successful Trump accounts tin rotation up with taxation deferred until they are withdrawn erstwhile a kid turns 18. Alternatively, they tin beryllium rolled into a tax-friendly IRA – a status relationship for adults – and proceed with the tax-friendly status.

Under Treasury rules published connected September 30, donors tin present acquisition idiosyncratic institution banal to children via the accounts. Families and friends making regular contributions to a child’s Trump relationship are constricted to investing low-risk scale funds.

Families cannot garbage the shares connected behalf of their children and mostly cannot merchantability them for 5 years, oregon until the extremity of the twelvemonth the kid turns 17 if that comes sooner.

Musk cannot merchantability oregon commercialized astir of his SpaceX shares until June 2027, the Wall Street Journal reported.

Who gains?

The accounts transportation the president’s name, and Trump has tied himself intimately to the gift.

He thanked Musk connected Truth Social, saying the pledge was “exactly what was envisioned erstwhile we created TRUMP ACCOUNTS”.

The White House has presented the accounts arsenic a signature accomplishment of Trump’s taxation law, noting that “every azygous Democrat voted against” the legislation.

The pledge besides marks a nationalist reconciliation. Musk and Trump fell retired successful 2025 implicit Trump’s tax-and-spending bill, a rift Trump aboriginal called a “little dispute”.

Children volition beryllium gaining a stock for free, but the acquisition could besides prevention Musk money.

Donors who springiness appreciated banal to foundation debar superior gains taxation and tin usually assertion a deduction, the US broadcaster CNBC reported.

As SpaceX’s founder, Musk paid precise small for his shares, and selling $10.7bn of them could mean a taxation measure of up to astir $2.5bn.

It is “a fashionable signifier for peculiarly high-income taxpayers that would different beryllium paying a precocious rate”, Will McBride, main economist astatine the Tax Foundation, told the broadcaster successful May.

Ann Lipton, a instrumentality prof astatine the University of Colorado Boulder, told Inc. mag that millions of shareholders incapable to merchantability would besides person an involvement successful SpaceX’s occurrence and successful “minimising its regulatory burdens”.

For Mitchell Downey, an economist astatine Stockholm University’s Institute for International Economic Studies who studies governmental power successful the US, the much striking portion of the pledge is what helium called “the horseshoe facet of this” – the thought that right-wing and left-wing policies tin curve astir and meet.

For decades, progressives person backed the conception of Child Development Accounts, concern accounts for each newborn designed to trim inequality successful wealth, helium said. The thought was associated with groups specified arsenic the Democracy Collaborative but struggled to summation national support. Now the thought whitethorn go much mainstream arsenic a effect of Musk’s acquisition and Trump accounts.

“It ever felt similar it mightiness beryllium retired of reach,” Downey said. “But I don’t spot however Musk’s connection would beryllium imaginable without gathering immoderate infrastructure similar this.”

Why is the timing important?

The pledge comes conscionable 2 weeks earlier the November 3 midterm elections, which volition determine power of the 2 houses of Congress. All seats successful the House of Representatives and one-third of the Senate are up for re-election.

Trump’s support standing has meantime fallen to a record low of 33 percent, according to a Washington Post-ABC News-Ipsos poll, with galore governmental observers expecting to spot the Republicans suffer seats to the Democratic Party arsenic a result.

Musk, who campaigned with Trump successful 2024 and spearheaded the president’s Department of Government Efficiency inaugural to trim the size of the national workforce, has contributed heavy to Republican candidates successful beforehand of the midterm elections.

US President Donald Trump dances arsenic helium walks disconnected signifier aft speaking astatine a midterm run rally astatine Pitt-Greenville Airport successful Greenville, North Carolina [AFP]

Is this legal, and wherefore is it controversial?

Downey said helium does not judge the pledge raises ineligible concerns.

“Individuals are allowed to walk their wealth successful enactment of a politician,” helium told Al Jazeera. “The instrumentality lone gets violated erstwhile either it isn’t publically reported, oregon it is portion of an explicit and documented quid-pro-quo.”

But helium said it does rise ethical concerns, though not ones unsocial to Musk’s approach.

Those concerns subordinate to “the outsized relation that outer donors play successful US elections”, Downey said. In his view, they use overmuch similar erstwhile idiosyncratic spends heavy connected tv advertisements for a candidate.

Has anyone done this before?

Downey said the precedent was “hard to assess”.

Because Musk is the richest idiosyncratic successful modern history, helium said, it is possibly unsurprising that helium is “doing thing that involves much wealth than different precise affluent radical person done”.

He pointed to the Gates Foundation’s spending implicit the past 3 decades arsenic “a antithetic benignant of ‘gift to the public’”. The difference, helium said, is that the Gates Foundation focuses backing connected wellness crises successful countries successful Africa and South Asia – not connected voters successful the US.

Last year, Gates pledged to “give distant virtually each my wealthiness done the Gates Foundation implicit the adjacent 20 years to the origin of redeeming and improving lives astir the world”.