AUSTIN, Texas: Elon Musk, the world’s richest person, has said that he will pay $11 billion in taxes this year, after being embroiled in a public debate with Democratic U.S. Senator Elizabeth Warren on social media over how much tax he pays.
“For those wondering, I will pay over $11 billion in taxes this year. I will pay more taxes than any American in history,” said Musk, co-founder of electric car maker Tesla and aerospace manufacturer SpaceX.
According to Bloomberg’s Billionaires Index, Musk’s personal wealth is $243 billion, while Tesla is worth some $1 trillion and SpaceX $100 billion.
Time Magazine named Musk “Person of the Year” in 2021, which prompted Warren to tweet, “Let us change the rigged tax code so ‘The Person of the Year’ will actually pay taxes and stop freeloading off everyone else.”
Instead of taking a directly taxable income, many of America’s wealthiest citizens hold their wealth in shares and other investments, then take out loans using those assets as collateral.
Robert Willens, Columbia University professor and tax expert, said Musk made himself liable for “mind-boggling amounts of taxable income” in 2020, through exercising stock options that would otherwise have expired and become worthless.
Most of Musk’s tax payments to be made next year will go to federal tax authorities, but the state of California, where Tesla and Musk have been based until recently, will also claim a portion.
Earlier this month in a U.S. Securities Exchange Corporation (SEC) filing, Tesla announced it was moving its corporate headquarters to Texas, after Musk cited his unhappiness with California state laws and criticized the high cost of living in Silicon Valley.
According to think tank the Tax Foundation, Texas has less stringent tax rules and does not collect personal income tax, while California has the highest income tax rates in the country.
Over the last few weeks, Musk sold Tesla shares worth some $14 billion, which Willens said was likely to generate cash to pay his tax liabilities, which is a standard approach for a corporate executive when dealing with expiring stock options, he added.
