Billionaire SpaceX and Tesla CEO Elon Musk, who is the richest person in the world, pledged that he will be paying more than $11 billion from his personal wealth to pay for taxes this year alone.
Musk made his announcement via a disclosure post on Twitter on Sunday and did not provide further details about the news. With a net worth of $243 billion as of Sunday, the Tesla Inc. chief executive is the wealthiest person on the planet.
For those wondering, I will pay over $11 billion in taxes this year
— Elon Musk (@elonmusk) December 20, 2021
$11 Billion in Taxes
The majority of the billionaire's wealth comes from his share of Tesla and Space Exploration Technologies Corp.'s stocks. Last week, Musk butted heads with Democratic Sen. Elizabeth Warren who urged the billionaire to pay more in taxes.
"Let's change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else," said Warren in a Twitter post, referring to the billionaire CEO who was recently named Time magazine's person of the year for 2021, MSN reported.
A previous report noted that Musk will be required to pay up to $7 billion in state and federal taxes this year with an additional $5 million by Jan. 1. The figure represents the "single largest tax bill ever" in the history of the United States.
In November this year, Musk sold off billions of dollars worth of his Tesla shares, including paying a combined tax rate of more than 53%. The incident was apparently the result of a Twitter poll in the same month where users voted for the billionaire CEO to sell off 10% of his Tesla stock shares.
However, many observers noted that the world's richest person would be required to pay a large tax bill on stock options that would be expiring next year regardless. But by choosing to exercise his stock options now instead of doing the same in August 2022, Musk could potentially be avoiding higher tax rates that were introduced with United States President Joe Biden's Build Back Better bill, The Verge reported.
Minimizing Tax Rates
Recently, many billionaires, including Musk and other tech CEOs have received criticism for the amount of tax they pay every year. In June, ProPublica, an investigative site, reported that the Tesla CEO, along with others, has experienced a surge in their wealth with disproportionately growing federal tax rates.
Many people claim that the situation is mainly due to how extremely wealthy individuals structure their income or salary. While ProPublica said that the strategy is not against the law, tax records have shown that the richest people in the world minimize the amount they pay in taxes by taking out loans or using their stock holdings as collateral.
Musk's two companies, Tesla and SpaceX, have received negative attention last week on unrelated matters. The two companies are facing sexual harassment claims where six women accused Tesla of "rampant" sexual harassment at its Fremont, California, factory. On the other hand, a former SpaceX engineer said that the space company fostered what they called a culture of misogyny and abuse, CNET reported.
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