Elon Musk Faces Record $ 10 Billion Tax Bill

Elon Musk’s exercise of an unusually large number of options is supporting his claim that he will pay more taxes this year than any other American in history, while arguing with Senator Elizabeth Warren over wealth inequality.

The world’s richest person and CEO of Tesla Inc. could face a tax bill of more than $ 10 billion by 2021, if he exercises all his options that expire next year, according to calculations by Bloomberg.

While it’s hard to say if that would be a record – the Internal Revenue Service does not publicly disclose people’s tax returns – it would certainly be one of the largest payments of all time.

Even a $ 10 billion payment is only a fraction of Musk’s total wealth. His net worth is a quarter of a trillion dollars on the Bloomberg Billionaires Index, having risen by $ 95 billion so far this year.

His latest Twitter feud with the Massachusetts senator began after Warren criticized the tax code for being “rigged” and asked to change it “so that Person of the Year actually pays taxes and stops taking advantage of everyone else.”

Musk faces an unusually high tax bill after exercising nearly 15 million options and selling millions of shares to cover transaction-related taxes.

That was in the wake of a Twitter poll last month asking whether it should sell 10% of its stake in Tesla, whose shares have soared more than 2,300% in the past five years.

Musk could end up saving a couple billion dollars in capital gains taxes that he would otherwise have owed to California from moving to Texas (where people pay no state income or income tax). capital), according to calculations by Bloomberg News.

A ProPublica report published in June noted that Musk paid little income tax relative to his enormous wealth.

Musk has objected to this claim, saying that he does not receive a salary from SpaceX or Tesla, and that he pays a 53% effective tax rate on call options on the shares he exercises. He added that he expects that tax rate to increase next year.

Musk isn’t the only billionaire likely to pay a big tax bill this year. Stock sales by America’s top billionaires have doubled this year as the wealthiest Americans dump their shares following an increase in stock valuations and before a possible tax increase in 2022 .

So far this year, Jeff Bezos – the second richest person in the world – has sold more than $ 9 billion in shares of Inc. and Mark Zuckerberg have sold $ 4.5 billion in shares of Meta Platforms Inc., formerly known as Facebook.

Both are likely to pay a lower tax rate than Musk, in part because their sales are intended to fund charities, which allow for tax deductions.

Democrats and progressives have been advocating broadening the definition of income to include gains from wealth. Senate Finance Committee Chairman Ron Wyden proposed a billionaires tax, an annual levy on the unrealized gains of the richest Americans in publicly traded assets, like Tesla.

Musk has used Twitter to berate Senators Bernie Sanders and Wyden for their support of a billionaire tax.

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Elon Musk Faces Record $ 10 Billion Tax Bill