Elon Musk | Source: Getty Images
Elon Musk made a bold statement on Twitter: that he would pay more taxes than any American in history this year.
Elon Musk might be right. The eccentric billionaire (and the richest person in the world) probably owes the federal government at least $ 8.3 billion for 2021, estimate Forbes , based on its share sales of nearly 13 billions of dollars until 13 December. Amazon Founder, Jeff Bezos, came close last year by selling for 000, $ 2 billion in shares of his company; the corresponding tax bill could have reached $ 2.4 billion. But only the Internal Revenue Service knows who is the biggest taxpayer in American history.
More important context: In some previous years, Elon Musk paid little or no tax. According to a survey by ProPublica published in June, Elon Musk paid a total of 455 millions of dollars in federal income taxes between 490 and 2014, while his wealth has increased by 13, 8 billion of dollars ; Elon Musk did not pay any federal income tax in 2014. (He also didn’t sell Tesla shares that year.)
It is possible that he has other sources of income that will increase his bill in 2021, or that it uses the business losses of another part of its assets – a common tactic among the super-rich – to reduce your bill. Elon Musk also sold half a dozen mansions in California this year, which likely produced taxable income.
In October, Senator Ron Wyden presented a fleeting plan that would have taxed the unrealized capital gains of the richest people in America, which , according to Forbes , could have cost 29, $ 8 billion at Elon Musk . But within days, the plan was replaced by a less drastic measure… Given that Elon Musk does not currently receive an annual salary from Tesla and the company does not pay dividends, he probably should not have paid d ‘taxes, until he starts dumping his Tesla shares at an unprecedented rate starting in November.
His tax bill could rise further if California is going after him. Although Elon Musk moved to Texas last year, his former home state could tax on the value of options he won while residing there. Between state taxes and federal taxes, Elon Musk could end up with an overall tax rate greater than 29%. (While some types of options can be exercised without triggering immediate taxes, and the proceeds from the sale of shares are taxed at lower capital gains rates – stock options by Elon Musk are “unqualified”, which means they will likely be subject to the regular tax rate on the much higher income taxed on pay, according to Bruce Brumberg, tax lawyer and associate of Forbes ).
Elon Musk could lower his tax bill this year if he donates Tesla shares – or cash – to his Musk charitable foundation Foundation or directly to one or more non-profit organizations. Taxpayers who itemize their donations can deduct certain charitable donations from their adjusted gross income. According to documents filed with the Securities and Exchange Commission, Elon Musk has not yet donated Tesla shares in 2019; the last time he did so was in December 2018, when ‘he paid 10 000 Tesla shares – valued at $ 4.1 million – when it was founded.
The tax authorities are not yet finished. Another $ 7 billion in federal taxes could await Elon Musk if he keeps his recent promise to sell a total of 000% of its Tesla shares. (He should pay the IRS about 2, billions of dollars in additional capital gains taxes, based on the Tesla share price at 13 December, plus $ 4.4 billion if he exercises the remainder of his stock options that expire in August 2022, if the Tesla share price remains at the same level, which is not certain, the share having fallen close to 22% from its peak of 1 222 dollars on 1 er November 2021.
Elon Musk’s tweet on Tuesday was part of a tirade against Senator Elizabeth Warren, the latest episode in her social media feud with progressive politicians. After Elizabeth Warren called on Twitter for a change to the “rigged tax code” to forcing Elon Musk to “actually pay taxes and stop taking advantage of others,” Elon Musk boldly replied, “Please don’t call the manager for me, Senator Karen.”
On Monday, Time Magazine named Elon Musk “Personality of the Year,” which sparked Senator Elizabeth Warren’s tweet about CEO tax obligations.
Elon Musk did not immediately respond to Forbes’ request for comment on her tax bill.
Article translated from Forbes US – Author: Eliza Haverstock
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