Musk had taken issues with the bill before because it aims to tax tradeable assets like stock holdings instead of income. Like many other multi-millionaires and billionaires, Musk doesn’t take a salary or bonus from his companies. Still, it holds stock in them, or what is known as unrealized gains. Should he sell these off, he would realize the gains, and he’d be taxed on income. Also, like many other multi-millionaires, Musk takes loans against these stocks, offering some as collateral.
The Twitter poll has now ended, and the majority has decided that Musk must sell 10% of his Tesla stock to pay taxes: 57.9% of over 3.5 million voters said yes. Estimates put the worth of the stock at $21 to $24 billion, so you can imagine that his very cavalier attitude about it (letting Twitter decide, that is) has caused serious controversy in the virtual space. Controversy aside, Musk says he was ready from the start for either alternative, which is a close indication that he will, indeed, sell the shares.
The reasons behind the highly debated move are equally controversial. Industry analysts are saying Musk would have sold either way, since he has stock that expires in Q1 of 2022, and there are reports that there’s a looming $15 billion tax he needs liquidity for. Critics claim that he’s just manipulating public opinion to paint himself in a positive light while doing something he would have done regardless. Others claim the move is showing lack of faith in the current over-valuation of Tesla stock, while others say he’s trying to distract from other things, like negative coverage of the FSD rollout and Autopilot accidents.
In the end, the real reason is known only to Musk, but the effects of it will be known to all, customers and investors alike. As long as Musk keeps his word.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.— Lorde Edge (@elonmusk) November 6, 2021
Do you support this?
I was prepared to accept either outcome— Lorde Edge (@elonmusk) November 7, 2021