Musk’s response to “tax avoidance” report: unpaid wages have been taxed according to regulations


According to Tencent technology news on June 10, after US News Investigation Agency propublica disclosed the “fancy tax avoidance” of the country’s super rich on Tuesday, “Silicon Valley Iron Man” and Tesla chief executive Elon Musk responded on Wednesday that he did not pay income tax because he did not receive salary from Tesla, And according to the capital gains tax, the tax is only paid when the shares are sold.
According to a secret IRS data released by propublica, the wealth of 25 top US millionaires, including Amazon CEO Jeff Bezos, musk, Warren Buffet and former mayor of New York Michael Bloomberg, increased by $401 billion between 2014 and 2018, But during that time, they paid only $13.6 billion in federal income taxes, with an average tax rate of about 3.4%. Information shows that compared with the huge wealth of these symbols, they pay very little income tax every year, and in some years they even pay $0. According to the report, these rich people did not pay personal income tax for a certain period of time. Although they did not commit any illegal acts in tax declaration, they adopted tax avoidance strategies that ordinary people could not match.
Interestingly, the growth of Musk’s personal wealth is mainly due to the soaring share price of Tesla in the past year, rather than the high salary paid to him by Tesla. According to the compensation plan of Musk for the next 10 years approved by Tesla’s special general meeting in 2018, musk does not have any salary or bonus, and its income will be linked to Tesla’s market value and operating performance. Only when Tesla’s market value reaches some milestones, can it get the option award. And unless musk sells the shares, the shares he holds don’t have to be taxed. On the issue of his equity award, musk previously said: “I will not cash out, it will only accumulate in Tesla’s bank account in the end.”
On Wednesday, musk added more color to the topic of “fancy tax avoidance” for the super rich, giving people a better understanding of his situation. It seems to be misunderstood that many people think that musk and other CEOs are evading income taxes. First of all, it is important to note that musk does get performance-based incentives in his pay package. Only when Tesla reaches the threshold of delivery, profitability or other indicators will musk be rewarded. These are paid with stock options.
“I only sell Tesla shares when the option is about to expire because there is no other option,” Musk tweeted on Wednesday. In addition, I will continue to pay income taxes in California commensurate with my time in the state, which will be a huge sum of money. ” “Yes, I’ve sold my house in California and left only one in the bay area, which has been let out for activities,” he added. I’m working with Tesla on sustainable energy, working with SpaceX to protect the future through multi planet life. In addition, I work with neuralink to mitigate AI risks and with boring to solve traffic problems. ”
It should be noted that the tax is only for the realized income and cannot be attributed to the increase in the number of shares. If so, musk will be forced to sell many of his shares to pay the taxes he will be required to pay. However, it would be harmful, not only to Tesla’s shares, but also to the shares of basically any large company, as CEOs would give up their majority stake to pay high tax rates. What’s more, most of the CEO’s wealth is in the stocks they hold, not in the cash in their bank accounts. Unfortunately, these stories continue to spread through the media. Many have not done their due diligence to find out the real reason why the chief executive has not cut back on the large amount of tax he pays to the IRS.
In short, taxes are based on income, not wealth. That’s why musk and other wealthy CEOs don’t have to pay tens of millions or even billions of dollars a year in taxes( Compiled by Tencent technology / Wuji)