Elon Musk says he will pay more than $11bn in tax this year

 

Powered by Guardian.co.ukThis article titled “Elon Musk says he will pay more than $11bn in tax this year” was written by Rupert Neate Wealth correspondent, for theguardian.com on Monday 20th December 2021 14.38 UTC

Elon Musk, the world’s richest person and the chief executive of the electric car company Tesla, has said he will pay more than $11bn in tax this year – which could be a record amount of annual tax paid by a single person.

Musk, who was earlier this year accused of paying zero federal taxes in 2018 despite sitting on an estimated $243bn (£184bn), said he would pay the unusually high tax bill this year after the sale of millions of Tesla shares.

It comes after Senator Elizabeth Warren last week described Musk as “the world’s richest freeloader”.

Musk has sold about $14bn worth of Tesla shares since early November, when he asked his Twitter followers whether he should sell 10% of his holdings. Almost 60% of this 67 million followers voted that he should sell the shares. Taxes on the sales are estimated to come in at between $11bn and $12bn.

The controversial entrepreneur would probably have had to begin selling down his 23% stake in Tesla regardless of the outcome of the vote, as he faced a massive tax bill on share options awarded to him in 2012 and set to expire in August 2022. In order to exercise the options, he is required to pay tax on the gain. Tesla shares have risen by more than 20,000% in the past 10 years.

Musk’s tax payments have been a political lightning rod in the US, as rather than collect a salary or bonuses (which are taxed), the billionaire’s wealth comes from Tesla bonus share awards and the rise in the company’s share price (income tax is only paid on share price gains when the shares are sold).

A ProPublica investigation earlier this year found that Musk paid a “true tax rate” of 3.27% between 2014 and 2018, and no federal taxes at all in 2018.

Elizabeth Warren, a progressive Democrat senator who has long campaigned for tax reforms to try to ensure the super-rich pay more tax, last week questioned Time magazine’s decision to name Musk its person of the year.

“Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else,” she tweeted.

Musk responded: “If you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year.”

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