Earlier this month, Tesla and SpaceX founder and CEO Elon Musk said he’ll pay “more taxes than any American in history this year,” in response to US senator Elizabeth Warren calling him out for “freeloading off everyone else” after he was named Time Magazine’s person of the year.
On Dec. 20, Musk tweeted, “I will pay over $11 billion in taxes this year.” That figure is close to CNBC’s $12 billion estimate from last week, and if he keeps his word, it’ll be the largest sum Musk has paid so far. (Only the IRS knows who has paid the most tax in history.)
Elon Musk has barely paid any taxes so far
Like many of the world’s wealthiest magnates, Musk has paid next to nothing in taxes so far. He paid no federal income taxes in 2018, a ProPublica investigation revealed. Between 2014 and 2018, when his wealth grew by nearly $14 billion, he paid just $455 million in taxes.
How did he get away with that? The world’s richest man, with a net worth of over $243 billion, does not draw a salary or receive cash bonuses. His wealth is derived from his massive stakes in SpaceX and Tesla, which he has uses as collateral to get loans when he needs them. He doesn’t need to pay any tax until those assets are sold, or capital gains are otherwise realized.
Then why is he paying now? Because he is exercising Tesla stock options that are due to expire in August next year—something the chief of the world’s most valuable car company last did in 2016, when he paid at least $593 million in taxes.
Musk offloaded stock this year to avoid an even higher tax bill
After conducting a Twitter poll on Nov. 6—which may or may not have had any bearing on his decision—Musk started offloading stock. He sold more than $13 billion worth through Dec. 13. This already racked up an $8.3 billion tax bill, Forbes estimated. And he probably owes additional taxes from all the mansions he sold earlier this year, before renting a 400 square foot cabin on the SpaceX site in Texas.
If he were to sell all the stock options that expire in August 2022, Musk would be looking at a way bigger $15 billion tax payout this year.
