- Lucy Hooker
- BBC Business Correspondent in New York
Elon Musk, the world’s richest man, has written on his Twitter account that he will pay $ 11 billion in taxes this year (more than R $ 60 billion).
Musk has been embroiled in a public debate on social media about how much he pays in taxes.
Earlier this week, Democrat Senator Elizabeth Warren wrote on Twitter that Musk should stop “exploiting everyone.”
“To my surprise, I’m going to pay more than $ 11 billion in taxes this year,” the millionaire replied.
Musk, the founder of electric car maker Tesla and space maker SpaceX, became the world’s richest man earlier this year.
Bloomberg’s billionaires are valued at $ 243 billion, while Tesla is worth $ 1 trillion and SpaceX $ 100 billion.
Last week, Musk was named Time Magazine’s Person of the Year.
This prompted Warren to write on Twitter: “We are going to change the fraudulent tax code so that the ‘best person of the year’ actually pays taxes and stops using others.”
US President Joe Biden wants to raise taxes on super-rich, even though bills have stalled in Congress so far.
Some senators, including Warren, supported the idea of taxing not only the income of wealthy citizens of the United States, but also the growing value of their property, such as stocks.
Many of America’s wealthiest citizens do not receive directly taxable wages. Instead, they hold their shares in stocks and other investments and then borrow using those assets as a network.
Musk responded to Warren’s tweet by saying, “I’ll pay more taxes this year than any American in history.”
Robert Villans, a professor and tax expert at Columbia University, said this may be Musk’s reasonable opinion on being subject to the “staggering amount of taxable income” tax by 2020 through “stock options”.
Stock options are contracts that deal with the right to buy or sell a property at a limited price in the future.
Villains explained that the current value of Tesla’s shares is significantly higher than that of Musk’s original stock options, so the value he earns by using those options will be substantial and will be calculated as taxable income.
“Musk may have realized that it would be prudent to create as much taxable income as possible in 2021, based on the principle that income can be taxed at higher rates in 2022,” he said.
If some drastic measures are passed by Congress, it will have a huge impact on Muskin’s tax obligations, Villains added.
Most of Musk’s tax payments will go to federal tax authorities next year, but until recently the state of California, where Tesla and Musk were, will also have a stake.
Earlier this month, the US Securities and Exchange Corporation (SEC) announced in a lawsuit that Tesla would relocate its headquarters to Texas – citing dissatisfaction with US government laws – and Musk pointed to the plan in media interviews several months ago. And criticized the high cost of living in Silicon Valley.
Texas has much softer tax rules – it does not levy income tax according to the ThinkTank Tax Foundation, which has higher income tax rates than any other U.S. state, unlike California.
In recent weeks, Musk has sold about $ 14 billion worth of Tesla shares, saying the villains could raise money as part of its tax obligations.
Although the numbers involved in the Musk case are exceptional, using a boot option in a situation like this is a normal approach for a large company executive, he adds.
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