Until you sell, it's unrealized. That's according to our current tax law.
Elon is using basic leverage strategy. It's not much different than what many other investors do when they take out margin debt to buy more stocks and other investments. Elon takes out these small margin loans to pay his living expenses but most of the borrowed money is spent to finance his other companies like SpaceX, Boring Company, Neuralink, and other side businesses/projects. He's using leverage to compound his return on his investments in other companies. Not to live extravagant luxurious lifestyle like some of the other billionaires.
I don't understand why you and others are upset at this. You and I can do the same but on smaller scale. People do it all the time. Currently in the US, the amount of margin debt outstanding in the stock market is around $900 billion. The means whole lot of people are borrowing money using their stock as collateral to buy more stocks and pay for other stuff. But all this is not risk-free. You have to pay interest on the debt and you face potential margin call and can lose more money than you have if the market decline and your bets turn against you. There are plenty rich people who lost everything by using margin and leveraging up. Most recent big example is Bill Hwang and Archegos Capital.
https://www.bloomberg.com/news/feat...-archegos-capital-lost-20-billion-in-two-days
Bill Hwang lost $20 billion in 2 days and lost everything to margin call when his massive levered bets went against him. Leverage helps you compound on the way up but can quickly kill you on the way down.
Elon risked his entire fortune on Tesla and SpaceX and nearly went broke many times. Most recently, he was close to getting margin call back in spring of 2019 when Tesla shares dropped to $180 pre-split price. TSLAQ and the shorts were all trying their hardest to drop Tesla stock price below $180 because Elon faced margin call at around $130. If TSLA would've broken $180, it would've dropped quickly to $130 and triggered massive margin call for Elon. And if Elon received margin call and had to sell some of his shares, it could've caused domino effect on Tesla stock price and death downward spiral for the company. Elon could've gone broke and lost everything he built. That's the whole reason Adam Jonas of Morgan Stanley came out with that bullshit pre-split $10 TSLA price target and held that ridiculous conference call when TSLA was on that death downward march. He was trying to help Jim Chanos, David Einhorn, Bill Gates, and others who were short TSLA and create massive payday for them. Too bad for them their slimy plan to kill Tesla by relentlessly shorting it failed and eventually blew up in their face.
Many people use home equity loans as their personal piggybank. They take out home equity loans and lines for home improvements but many times, it's to finance their lifestyles and other purchases because they're getting favorable terms on the loan rates. They're effectively doing the same thing Elon Musk is doing except he is using his stock and people are using their homes. And people are writing off the home equity loan interest on their personal taxes and double dipping while Elon and I can't write off the margin interest we pay on our stock loans. Where is your outrage and anger at all the Americans who are using and abusing home equity loans? Do you want to ban this practice too? Home equity loan is basically realizing the gain on the property value while not paying any income taxes on that realized gains while getting tax deduction to top.
Elon does pay his taxes. Yes, Elon has massively benefitted from government incentives. But so have the governments. Think about all the massive wealth Elon has created for his employees, shareholders, suppliers, and anyone doing businesses with him and his companies. The amount of money he's saving NASA and not having us rely on Russia to get us to space. He's creating things and building value for him, his shareholders, and society. And he's paying his taxes under the current law. You want to make sure he and other rich people pay their taxes? Eliminate the death step up basis loophole that exist today so the rich people can't pass on their assets with step up basis. But Elon is going to spend all his money and fortune to build sustainable city on Mars. Or die trying.