Elon Musk Says He’ll Pay an $11B Tax Bill for 2021 -Breaking
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In a Monday tweet to his more than 67 million Twitter (NYSE:) followers, Elon Musk stated that for 2021 he’ll have a multi-billion dollar federal tax bill due to the U.S. government.
According to Forbes, Musk is worth over $244 billion on paper, making him the world’s richest person. The fact that ProPublica earlier this year published an investigative report showing Musk, along with several billionaires, paid no federal income tax in 2018, likely inspired Musk to tweet about this staggering tax burden.
According to ProPublica’s estimates, Musk paid $455m in taxes between 2014 and 2018. This was despite having $13.9billion more wealth over the same period. This article has been widely reprinted and is still a topic of heated debate. SpaceX’s CEO (NASDAQ: Tesla) and SpaceX have been trading barbs on Twitter lately regarding the exact issue of overtaxation, and tax payment avoidance.
During a back-and-forth last week with Senator Elizabeth Warren Musk tweeted, “I will pay more taxes than any American in history this year.” And that’s probably going to be true.
Musk sold $14 billion of Tesla stock in November for cash to pay off a huge tax bill. This was done to get rid of stock options that Tesla vested. Musk’s 2012 stock options will expire next August. He would need to sell the stock options to get them value. This would result in a long-term capital gain tax. That is why he sold his first batch of stocks in November. He’ll use the proceeds from that sale to cover the taxes of the options that expire next August.
Musk doesn’t draw a salary or cash bonus from SpaceX or Tesla. Instead, his executive compensation package consists largely of stock options that increase in value as the company’s stock price does. It’s based on a pay-for-performance model. Musk is eligible to reap the rewards of Tesla stock’s success. Though Tesla shares have dipped since his stock sale, Tesla’s share price is still up 28% year-to-date.
To The Flipside
- When Musk wants cash, he can simply borrow money using his company’s stock as collateral. Some politicians have criticized this as an unfair tax loophole that benefits the super-rich.
- Musk could have waited until next year to pay the tax bill, but that would have meant potentially getting hit by higher tax rates under the Democrats’ Build Back Better bill.
Why you should care
Tesla is the current second largest corporate holder. The amount is reportedly 38,300 Bitcoin on Tesla’s corporate balance sheet, which is worth nearly $2 billion at the time of writing.
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