Elon Musk Could Become the Highest Tax Payer Ever in the US With $12 Billion
After being ridiculed for not paying his share of taxes, Elon Musk could make the U.S. history by becoming the highest taxpayer in a financial year, Business Insider reported. Just a couple of days ago, Musk had made this claim on Twitter to Senator Elizabeth Warren as well.
Like most billionaires in the U.S., Elon Musk has also been accused of evading taxes. An investigation has revealed that Musk paid $455 million in federal taxes between the years 2014 and 2017 while his personal wealth grew by $13.8 billion, Forbes reported. Musk completely avoided paying taxes in 2018 since he didn't get a salary from his companies but only stock options.
Last month, Musk ran a Twitter poll in order to get over the accusations of not paying taxes. In the poll, Musk had proposed to offload 10 percent of Tesla stock and even began selling them after Twitterati said yes. As per current tax laws in the U.S., Musk is now required to pay taxes on this income which Forbes estimates to be around $8.3 billion. Jeff Bezos paid around $2.4 billion in taxes for the sale of his 10 percent share in Amazon last year, while hedge fund manager Steven Cohen reportedly paid $3 billion in taxes in 2018.
Business Insider adds that Musk is also liable to pay $842 million in Net Investment Income Tax, and his move from California to Texas, where Musk sold his mansion, will also increase taxes worth nearly three billion dollars. Put together, Musk could end up with a tax bill nearly worth $12 billion.
As filings with the Securities and Exchange Commission have shown, the sale of some stock was preplanned, and, while Musk also sold some additional shares, it is still slightly over three percent that Musk owns. Tesla CEO has little less than a fortnight to reach the 10 percent figure he had promised in the Twitter poll. If he does exercise that, his tax bill will definitely go higher.
However, it is this very requirement of gains being realized for them to be taxed that has lawmakers like Elizabeth Warren anguished. The new proposed Billionaire Tax bill allows for unrealized gains to be taxed as well. This would mean that Musk and other billionaires would be taxed on the growth of their net worth every year.
As Forbes reported, current taxation laws also allow individuals to reduce their tax burden by donating their realized gains to charities and non-profit organizations. Musk could divert some of his funds to his own charity and not pay taxes on that amount. However, the balance is still a large number that could see Musk making tax history anyways.
The Internal Revenue Services (IRS) does not publicly reveal the tax numbers of individuals, Forbes reported. So, this is likely to be an unofficial achievement.