(The Fiscal Times) - Tesla founder Elon Musk –the richest person in the world — polled Twitter users on Saturday whether he should sell 10% of his stock in the company. “I will abide by the results of this poll, whichever way it goes,” he wrote.
The question appeared to come in response to a Democratic proposal to tax the unrealized gains of billionaires — a plan that Musk has slammed.
The congressional Joint Committee on Taxation estimated on Friday that the proposal, developed by Sen. Ron Wyden (D-OR), would raise more than $557 billion in federal revenue over 10 years — enough to, say, cover all the new spending in the infrastructure bill the House just passed . It would apply to about 700 taxpayers with more than $1 billion in assets or reported income topping $100 million for three consecutive years. The idea wasn’t included in the White House’s Build Back Better framework and faces opposition from many Democrats.
“Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock,” Musk tweeted.
His poll question got more than 3.5 million votes, with 58% saying he should sell — a result that sent Tesla shares lower on Monday.
“Musk said he was raising the question because he does not take a cash salary as Tesla’s chief executive, and therefore wouldn’t have any way to pay a large tax bill without selling some of his Tesla shares, which make up the vast majority of his wealth,” Stephen Gandel notes at The New York Times.
But Gandel and numerous other outlets report that, poll or no poll, Musk likely would have had to start selling millions of his shares soon because he faces a tax bill of potentially more than $10- billion as the result of stock options for 22.8 million shares he was awarded in 2012 — options that are set to expire in August 2022 that could be worth nearly $30 billion now. In order to exercise the options, Musk would have to pay the income tax on his gains. “Combined, the state and federal tax rate will be 54.1%,” CNBC’s Robert Frank reports. “So the total tax bill on his options, at the current price, would be $15 billion.”
Yet Business Insider’s Ben Winck and Andy Kiersz note that Musk’s tax bill could potentially be far higher if the Wyden tax proposal was in force right now. “If the ‘billionaires' tax’ was already law, and Musk's net worth stayed the same through the end of the year, the Tesla CEO would owe the government about $40 billion,” they write.
By Yuval Rosenberg
