Elon Musk, the richest person in the world, will make the highest tax payment in US history. As the billionaire said on Twitter, this year he accumulated a tax liability of about 11.1 billion dollars.
Some statements leave a clue about the actions that he will take before the end of the year, since Musk would have to exercise all his options that expire this year to reach this figure, according to Bloomberg calculations. In fact, the CEO of Tesla assured us last Thursday that he has almost finished disposing of 10% of his stake in the company.
The announcement that the tycoon made through the social network responds to a recent dispute with Massachusetts Senator Elizabeth Warren, who took advantage of the “Person of the Year” award that Time magazine awarded to the businessman to say that Musk should “pay taxes and stop taking advantage of everyone else.”
“I will pay more taxes than any American in history,” Musk responded to the senator. However, despite the fact that it was announced that the bill would reach 11,000 million, in reality, it could increase to 12,000 million dollars.
Where does the 12 billion come from?
This unusual payment obligation responds, for the most part, to the 15 million options that the billionaire has exercised on his shares, precisely to cover the taxes derived from this type of operation.
Specifically, the CEO of Tesla will pay more than $8 billion in taxes on the shares he sold in 2021, according to Forbes estimates, since he dumped almost $13 billion in securities until December 13 of this year, just before Musk announced his tax bill.
On the other hand, there is a factor that makes the tycoon’s tax rates more expensive. Although Musk moved from California to Texas in 2020, his old place of residence could also tax the options he obtained while living there, even though he exercised them in the southern state. Between state and federal taxes, Musk could end up with an overall tax rate of more than 50%.
California used to be the land of opportunity. Now it has become and is increasingly becoming the land of overregulation, over-litigation, overburden and contempt, “he said during an interview with The Babylon Bee.
Summing up Musk’s bill, the payment obligations would be $8.1 billion for the 37% federal income tax rate, $842.2 million for the 3.8% net investment income tax, and $2.9 billion for taxes on the rent owed to California, with a maximum marginal rate of 13.3%. Adding up all these concepts, the bill for the CEO of Tesla and SpaceX would reach close to 12,000 million dollars.
No tax havens
Although Musk’s payment seems extremely high, it should be noted that Warren was not so misguided when he said that the billionaire paid very little taxes. In fact, it should be noted that another advantage of moving to Texas is that there are no state income taxes there.
Elon Musk has been paying very little compared to his wealth in recent years. Specifically, according to a ProPublica investigation published in June, the mogul only paid a total of $455 million in taxes from 2014 to 2018, despite his wealth growing by $1.3 billion. Plus, you also didn’t pay federal income taxes in 2018.
However, it is also necessary to put on the table the ease of calculating the taxes that the billionaire will have to pay. Unlike some of his peers, Musk has recently been able to show off his transparency.
“My taxes are super simple,” Musk said. “I don’t have accounts abroad, I don’t have tax shelters.” On the other hand, the richest man in the world also assured that he would not use “elaborate tax evasion schemes or anything like that.” He concluded, “My supposed wealth is not a deep mystery.”