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.
For those wondering, I will pay over $11 billion in taxes this year
— Elon Musk (@elonmusk) December 20, 2021
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 his 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 that were 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.
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.”
And if you opened your eyes for 2 seconds, you would realize I will pay more taxes than any American in history this year
— Elon Musk (@elonmusk) December 14, 2021
Tesla shares have dropped by about a quarter since Musk’s tweet about selling his shares. They fell a further 3% on Monday. The company’s market value has dipped to just over $900bn, down from the trillion-dollar valuation it hit in October.
Analysts at the investment bank Guggenheim Partners on Monday warned investors that electric vehicle production might fall short of forecasts, and said it feared that Tesla’s share price could be hit as more competitors entered the electric and autonomous vehicle (AV) market at cheaper prices.
“We believe EV adoption may fall short of industry forecasts, particularly in the US due to a less onerous regulatory backdrop and limited product launches in key market segments,” the Guggenheim analyst Ali Faghri said. “We also believe Tesla’s scarcity value from a stock perspective is waning, with significantly more EV and AV-focused companies going public over the last 12-18 months, giving investors more options at lower valuations to get exposure to secular growth in EVs and AVs.”