In context: Tesla shares fell 9% this morning, and it is partly due to Twitter. Effectively, Twitter and Elon Musk. The EV firm’s CEO tweeted on Saturday that he would promote 10% of his inventory if the platform’s customers accredited the transfer in a ballot. After greater than 3.5 million votes, 57.9% of members selected in favor of the sale.
Musk posted his tweet following the latest legislative proposal that will see unrealized positive aspects taxed. A report earlier this yr confirmed the billionaire averted paying any federal revenue tax in 2018 whereas handing over simply $68,000 in 2015 and $65,000 in 2017.
Most billionaires are in a position to pay such little tax as a result of the federal government solely taxes what it defines as revenue, so when the worth of the inventory they maintain will increase, their wealth is not taxed. They’ll then borrow towards the inventory to pay residing bills.
A lot is made currently of unrealized positive aspects being a method of tax avoidance, so I suggest promoting 10% of my Tesla inventory.
Do you help this?
— Lorde Edge (@elonmusk) November 6, 2021
Musk later tweeted that he solely receives fee from his firms in inventory and does not take a money wage or bonus, so “the one manner for me to pay taxes personally is to promote inventory.” The BBC notes that he has made billions of {dollars} by means of a compensation package deal, which supplies him energy to train giant quantities of inventory choices when Tesla meets efficiency targets and its shares hit sure costs.
Musk owed about 170.5 million Tesla shares as of 30 June. Promoting 10% of these would quantity to round $21 billion, in accordance with Reuters’ calculations.
Musk has been fairly quiet relating to the ballot’s end result, apart from to say that he “will abide by the outcomes of this ballot, whichever manner it goes.”
Whereas Musk seems to have been placing the choice of whether or not to promote his Tesla inventory into the palms of his 62.7 million Twitter followers, he might have bought his holdings regardless. CNBC notes that Musk faces a billion-dollar tax invoice within the coming months on the 22.8 million shares he was awarded as inventory choices in 2012. To train the choices, Musk should pay tax on what he is made on these shares at their present value, which is round $28 billion. With a mixed state and federal tax fee of 54.1%, that will quantity to $15 billion. Musk beforehand stated that he can be promoting a few of his choices within the fourth quarter of this yr as a result of they have been set to run out.