Wow, can you imagine owing 11 billion dollars in personal income tax?
Well, Elon Musk, the founder, CEO, and Chief Engineer at SpaceX; CEO, and Product Architect of Tesla, Inc.; founder of The Boring Company; and co-founder of Neuralink and OpenAI, is scheduled to pay this massive amount of tax, while his company Tesla will be paying $0 in federal tax on 5.5 billion in profits.
Far-left radicals, like Sen. Elizabeth Warren (D-Mass)’s, are still claiming that Musk doesn’t pay enough taxes and is “freeloading off everyone else.”
“Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else,” Sen. Warren tweeted last Monday tagging a Boston Globe article about Musk being named TIME magazine’s “Person of the Year.”
Let’s change the rigged tax code so The Person of the Year will actually pay taxes and stop freeloading off everyone else. https://t.co/jqQxL9Run6
— Elizabeth Warren (@SenWarren) December 13, 2021
Musk tweeted, in response, that he will pay more in income taxes this year than anyone ever has—about $11 billion—as a result of his exercising a massive package of Tesla stock options in 2021.
For those wondering, I will pay over $11 billion in taxes this year
— Elon Musk (@elonmusk) December 20, 2021
In its annual report filed with the SEC on February 7, Tesla said in an inconspicuous note section on page 86, as first reported by CNN, that its U.S. operations recorded a loss of $130 million in 2021 and that all of its pre-tax net income stemmed from overseas operations.
As a result, Tesla said it expects to pay $0 in federal corporate income tax and $9 million in state tax (Tesla relocated its headquarters from California to Texas on December 1, 2021.) On its foreign profit, Tesla will pay $699 million in income taxes.
45 percent of Tesla’s global revenue in 2021 came from U.S. sales, but because of the U.S. tax code, it didn’t generate any domestic profit.
Why no tax, Tesla could be structuring its global operations in such a way that income is reported from entities in overseas subsidiaries, often registered in tax havens like Bermuda and Ireland, while U.S. operations have little or no taxable income to report.
Tax experts say it’s a common practice for American multinational corporations. “It’s very common. It’s almost malpractice not to do that. That defies common sense, but it does not defy the U.S. tax code,” Martin Sullivan, chief economist for Tax Analysts, told CNN.
The Observer reports:
Another possible explanation is that Tesla was really losing money at home, as pointed out by Gordon Johnson, CEO of the equity research firm GLJ Research and a prominent Tesla critic.
Tesla had been losing money for a decade until turning its first quarterly profit in 2019, the same year it opened a Gigafactory in Shanghai, China. Johnson has said he believes Tesla was able to turn a profit only after it began making cars in China, where costs are lower than in its home factory in Fremont, Calif.
Tesla didn’t pay any federal corporate income tax in 2020 and 2019, despite reporting profits in both years, thanks to a tax benefit known as “net operating loss carry-forward,” which allows businesses to deduct past losses from future profits when reporting taxes.
Tesla has accumulated a huge amount of loss carry-forwards from its decade of losses, which will help it reduce tax bills for the years to come. Its annual report, Tesla said it had $31.2 billion in federal and $21.6 billion in state net operating loss carry-forwards at the end of 2021. Some of these are set to expire in 2022 if not utilized.
Hey liberals, don’t blame Elon Musk for what Tesla is paying in federal taxes, blame the tax code the U.S. congress passed setting the ground rules.
Eric Thompson, host of the Eric Thompson Show.
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This story syndicated with permission from Eric Thompson Show