Elon Musk, the world'srichest man and CEO of Tesla, said on Twitter that he would pay more than $11billion (€9.77 billion) in taxes this year, perhaps setting a new record forthe US Internal Revenue Service.
If the billionaireexercises all of his options before they expire next year, he might owe morethan $10 billion (€8.87 billion) in taxes in 2021, according to calculationspublished last week by Bloomberg News.
Mr. Musk exercised about15 million options and sold millions of shares to satisfy the taxes associatedwith those transactions, resulting in an extremely high penalty. That cameafter he questioned followers on Twitter last month if he should sell 10% ofhis interest in the electric automaker, whose stock has increased by more than2,300% in the previous five years.
Move that sets a new record
Tesla's stock hasdropped roughly a quarter since the unusual step to poll Twitter followers onthe proposal, and the company's market capitalization has fallen below $1trillion (€890 billion) to $937 billion (€831 billion). In premarket trading onMonday, the stock was down 2.7 percent from Friday's finish in New York.
According to ProPublica,Mr. Musk paid very little income tax in comparison to his enormous wealth.However, he has fought back against this portrayal, claiming that he does notget a salary from either SpaceX or Tesla and that the stock options heexercises are subject to an effective tax rate of 53%. He went on to say thathe expects the tax rate to rise next year.
Mr. Musk declaredearlier this month that he would pay more taxes this year than any otherAmerican in history. That was in reaction to a tweet from Massachusetts senatorElizabeth Warren, who used Mr. Musk's Time Magazine Person of the Year award tocriticize his taxes.
Although legislativemeasures to raise taxes on the ultra-rich have stalled in Congress, USPresident Joe Biden is determined to do so. Some senators, including Ms.Warren, support taxing not only the income of America's wealthiest residentsbut also the increased value of their assets, such as stocks.
Many of America'srichest residents do not earn a wage that is directly taxed. Instead, they puttheir money in stocks and other investments and then borrow against thoseassets.
Mr. Musk's taxresponsibilities would have been significantly impacted if some of Congress'more drastic policies had been implemented. The majority of Mr. Musk's taxpayment will be sent to federal tax authorities next year, but the state ofCalifornia, where Tesla and Mr. Musk were located until recently, will alsoclaim a chunk.
Tesla announced in a USSecurities Exchange Corporation (SEC) filing earlier this month that it wasmoving its corporate headquarters to Texas, a plan Mr. Musk had hinted at formonths in media interviews, citing dissatisfaction with Californian stategovernment laws and criticizing the high cost of living in Silicon Valley. Accordingto the Tax Foundation, Texas has more lax tax laws and does not collect incometax, in contrast to California, which has the highest income tax rates among US states.