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How Much Tax Does Elon Musk Have to Pay? 52.65% When Exercising Stock Options, 40% Estate Tax Upon Death


Urian B., Tech Times





(Photo : Image from Commons.Wikipedia.com) How Much Tax Does Elon Musk Have to Pay? 52.65% When Exercising Stock Options and 40% Estate Tax Upon Death

After Elon Musk sells a little Tesla stock, a lot of people are asking how much he really get to walk away with? The answer to this question was broken down by a Tesla bull on Twitter.

Dave Lee, a Tesla bull on Twitter, broke down how much Elon Musk would have to pay in taxes when he would exercise his stock options. The Tesla CEO then commented later on that this was an “accurate thread.”

How Much Does Elon Musk Pay in Tax?

  • 37% Federal tax

  • 13.3% California tax

  • 1.45% Medicare

  • 0.9% Medicare Supplemental

Total tax Elon Musk has to pay: 52.65%

Dave Lee then gave a clearer example of this breakdown. It was noted that at the $1050 stock price, Elon Musk’s very own 22.8 million exercised shares would actually be worth $24 billion. The thing is, the government would then net $12.6 billion from this in taxes.

Leeway for Taxes

There is a little leeway, however, as Elon’s non-qualified stock option would actually be considered as compensation income. It would mean there would be no net investment income, but taxes on Medicare would still apply as confirmed by Eugene Slutsky and DemocracyFirst on Twitter.

The Tesla bull then pointed out that the biggest winner of Elon Musk’s 2012 CEO compensation plan was the government. Lee then broke down yet again Elon Musk’s 2018 compensation plan showing a total of 47.35%.

Elon Musk’s 2018 CEO Compensation Plan Tax Breakdown:

  • 37% Federal tax

  • 1.45% Medicare

  • 0.9% Medicare supplemental

  • 5% Surtax over $10 million AGI

  • 3% Surtax over $25 million AGI

Total tax Elon Musk has to pay 47.35%

It was noted that the surtax of over $10 million and $25 million AGI have not yet been finalized but still included in the reconciliation bill.

2018 Compensation Plan 101 Million Shares

Elon Musk’s very own 2018 compensation plan options have to be exercised by January 2028; it could equal up to 101 million shares. It means that if TSLA shares hit $5000 in price, the government will be getting a net of $239 billion.

In the end, Lee noted that the Government would be the biggest winner should TSLA stock rises. Lee then countered the statement that “Elon gets to keep 52.65% of the 101M shares” by stating that upon death, if they are not sold earlier, the current estate tax would be 40%.

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Government to Get Up to 73.6% in Taxes

All in all, Dave Lee noted that the Government would make around 68.4% to 69.420% by getting 69 million out of 101 million shares. The Tesla bull shared that if estate tax in the US is increased to 50%, out of the 101 million shares, the government would take 74.4 million shares or about 73.6%.

Elon Musk replied saying that over time, Tesla will also generate hundreds of billions for the government when it comes to income tax, product sales tax, and property tax. This is aside from the standard profit taxation.

Tax the stock gains.

Tax the stock options.

Tax the employee income.

Tax the product.

Tax the property.

Tax the profits.

The government should love you and Tesla. Go figure.

— Dave Lee (@heydave7) November 16, 2021

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Written by Urian B.

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