Musk personally paid $11 billion in taxes to the United States in 2021, Tesla

Share with friends and circles of friends with wechat scanning QR code February 11 news. As the world's richest man, Elon Musk has repeatedly claimed that he paid more taxes than anyone else in 2021, about $11 billion. However, the federal tax paid by Tesla, his electric vehicle manufacturer, is zero Tesla may also not plan to pay federal taxes for the foreseeable future, although the company has just announced its most profitable annual results to date. In 2021, Tesla recorded a net profit of $5.5 billion, with an adjusted profit of $7.6 billion but in its recent annual financial report to the securities and Exchange Commission (SEC), Tesla claimed that its US business lost $130 million before tax last year. The company claims that although 45% of its revenue comes from sales in the United States, all its pre tax profits (worth more than $6 billion) come from overseas operations although Tesla said that its foreign tax bill reached $839 million, its state tax amount in the United States was only $9 million, while the federal tax bill was zero. Martin Sullivan, chief economist of tax analysts, a non-profit tax publisher, and an expert on US corporate tax practice, said: "this is against common sense, but it does not violate US tax law." transfer profits overseas Sullivan believes that the $130 million loss of Tesla's U.S. business is most likely due to a common practice of U.S. multinational companies: restructure their business, making overseas subsidiaries the main body of reported income, so that there is almost no taxable income for the U.S. business to report for example, a company may transfer intellectual property to its foreign entity and charge its U.S. Department for the use of the asset. As a result, overseas businesses are often profitable, while the US parent company is under "cost pressure" and is either at a loss or has little income. "This is a strategy often used by American multinationals," Sullivan said a recent report released by the US Treasury Department found that 61% of the international profits of US multinationals come from seven small countries, namely Bermuda, Cayman Islands, Ireland, Luxembourg, Netherlands, Singapore and Switzerland. These countries are known as "tax havens" Senator Elizabeth Warren, who often criticizes musk, said: "Tesla and other large companies have long used deceptive strategies and loopholes to help them evade taxes, which must be stopped. Democrats are trying to end Republican tax breaks for companies that transfer profits and jobs overseas." however, so far, the US Congress has not taken action to stop this behavior. However, the financial documents submitted by Tesla did not specify its practice. For example, when reporting losses on its U.S. operations, the company did not say in which country or countries it made profits. Tesla declined to respond to questions about its documents Tesla will not pay taxes to the United States in the short term for a long time, Tesla has received a lot of financial help from the U.S. government's support for its electric vehicles, so the company does not have to avoid taxes by transferring profits to overseas. However, Tesla can use past business losses to protect its current income from tax exemption this is also a common practice for loss making companies, because losses can help them reduce tax bills in the future. Technology companies that had lost money for years before they made a profit used this strategy, such as Amazon. The same is true for established airlines with financial problems. For example, after all American Airlines recorded billions of dollars in losses during the epidemic, they are likely not to have to pay taxes in the next few years, despite billions of dollars in federal aid similarly, Tesla's auto manufacturing competitors in the United States suffered heavy losses in the first decade of the 21st century, so that general motors and Chrysler need government assistance. Despite these bailouts, once these companies return to profitability, they will not have to pay taxes for several years. The past loss is a huge and valuable future tax preference, which is called "net operating loss carry forward" Tesla has been losing money for more than a decade before finally announcing its profits in 2020. These are real losses because the cost of developing and manufacturing cars in the early years far exceeded the income. The company did so because it expected to turn losses into profits in the future as demand increased and costs fell. Things did go as expected. However, after accumulating billions of dollars of losses, Tesla was able to accumulate a net operating loss carry forward for future needs nevertheless, Tesla disclosed in its recent financial filing that the company did not use any past losses to protect its current income from tax. Tesla has also adopted a bookkeeping strategy, which shows that it does not know whether it will have to use past losses to protect its income in the United States Tesla is quite optimistic about its future. It is expected that the annual sales growth rate will reach 50% in the foreseeable future. Sullivan said that if the company believes that the pre tax losses of its domestic business are temporary, it may not take measures to reduce the value of past losses as a means to offset future taxes did Tesla lose money at home Tesla may report pre tax losses in its US business for another possible reason: it is not so much an accounting operation aimed at reducing taxes as a warning signal to the company's viability. Perhaps the company is still losing money on cars sold in the United States, and it can only make money from its Shanghai factory many critics and skeptics of Tesla believe it. Gordon Johnson, CEO of Tesla bear GLJ research, pointed out that Tesla was generally at a loss until it began producing cars in Shanghai in October 2019. He believes that investors believe in Tesla's profits in the United States, but in fact, these profits are not true referring to Tesla's latest application, Johnson said: "I think this is a huge deal. Tesla is actually saying that they do not intend to carry forward any net operating losses. This means that their U.S. business is losing money. This is our repeated argument. Tesla is losing money outside China." but other analysts who have studied Tesla's books insist that Tesla's profits are real, both at home and abroad, regardless of whether they are in the United StatesWhat does the tax return say. In this regard, Johnson said that if he was wrong, Tesla would have to improve transparency. "The reality is that both explanations may be correct before Tesla discloses information," he said rare huge personal tax bill musk has a history of paying little or no personal income tax using the U.S. tax law. According to a report by propublica, musk and many other super rich Americans did not pay personal income tax in 2018 take musk as an example. He didn't get salary from Tesla, only stock options as compensation. Under U.S. tax law, musk does not have to pay tax on these options until he exercises them. However, musk would have to pay taxes if he sold shares acquired as a result of his earlier investment in the company, which he rarely did most of Musk's options have not been exercised. However, he has the right to buy 22.9 million stock options, which will expire in August 2022, and began to exercise these options to buy additional shares at the end of last year musk spent a total of $142.6 million on $23.6 billion worth of shares, which earned him $23.5 billion in taxable income at a federal tax rate of about 41%. Musk also sold some of his existing Tesla shares, which earned him $5.8 billion in taxable income with lower capital gains tax. Together, these stock transactions could result in about $11 billion in federal tax bills but this is likely to be the last time musk will pay a huge federal tax in the next few years, unless Congress passes a number of proposals to tax the net assets of the super rich in the United States, not just their income. Several Democratic senators, including Elizabeth Warren, Bernie Sanders and Ron Wyden, have proposed a bill, but so far it has not been passed Musk's exercise of stock options generated huge tax bills last year, but this does not mean that he no longer has options. Tesla's financial documents submitted this week show that musk has obtained another 8.4 million options, bringing the total number of his options to 67.5 million. But these options will not expire until 2028. Therefore, unless he leaves the company before that, it may take him five years to start exercising these options in the next five years, if Musk's federal tax bill is still zero, his personal tax bill and Tesla's tax bill are likely not to change much. (small)

2023-03-22 10:04:50

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