Tesla's Elon Musk to pay $15 billion in record payment to US tax office

The billionaire may face a tax bill of more than US$10 billion for 2021. PHOTO: REUTERS

SINGAPORE (BLOOMBERG) - Mr Elon Musk, the world's richest person and chief executive of Tesla, said on Twitter that he will pay more than US$11 billion (S$15 billion) in taxes this year, an amount that could constitute a record payment to the United States Internal Revenue Service.

The billionaire may face a tax bill of more than US$10 billion for 2021 if he exercises all his share options due to expire next year, calculations last week by Bloomberg News showed.

The unusually high levy comes after Mr Musk exercised almost 15 million options and sold millions of shares to cover the taxes related to those transactions.

That was following a Twitter poll last month when he asked followers whether he should sell 10 per cent of his stake in the electric-car maker, whose shares have rocketed more than 2,300 per cent over the past five years.

A report by ProPublica in June said Mr Musk paid little income tax relative to his outsize wealth. But he has pushed back against that characterisation, saying he does not draw a salary from either SpaceX or Tesla, and pays an effective tax rate of 53 per cent on stock options he exercises. He added that he expects that tax rate to increase next year.

Mr Musk earlier this month said he will pay more taxes than any American in history this year. That was in response to another tweet from Massachusetts Senator Elizabeth Warren, who used Mr Musk's Time Magazine "Person of the Year" accolade to call him out on his taxes.

His latest Twitter spat with the Massachusetts senator began after Ms Warren blasted the tax code for being "rigged" and asked to change it "so the Person of the Year will actually pay taxes and stop freeloading off everyone else".

Even a US$10 billion payment is just a fraction of Mr Musk's overall wealth. His net worth is a quarter of a trillion dollars on the Bloomberg Billionaires Index, having risen by US$95 billion so far this year.

Mr Musk is not the only billionaire likely to pay a big tax bill this year. Stock sales by the top US billionaires have more than doubled this year, as the richest Americans unload shares after a run-up in stock valuations and before a potential tax hike in 2022.

So far this year, Mr Jeff Bezos - the world's second-richest person - has sold more than US$9 billion in Amazon.com stock, and Mr Mark Zuckerberg has liquidated US$4.5 billion in shares of Meta Platforms - formerly known as Facebook.

Both men are likely to pay a lower tax rate than Mr Musk, partly because their sales are designed to fund charitable endeavours, which allow tax deductions.

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