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Tesla's Musk Paid at Least $593M in Income Taxes in 2016

bloomberg.com

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Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#21

Post by tunesmith »

tdehollain wrote: post #13

That's $593M taxes on $1.34B earnings on exercising stock options...44% tax rate is pretty harsh!

I got interested in the utility of money a while back and how the "value" of money is roughly logarithmic as it goes up. I found a couple of thought experiments regarding a "logarithmic flat tax". Anyway, going by that I think it's about right - it might still be a little bit high, though. Depending on how you calculate it those plans can be configured so that he should have paid more in the 35-40% range.

Basically, you take revenue, divide it by the poverty level (he's got six kids, so around $45k - $50k), take the log base 10, and multiply by some constant that would be the same for everyone to match the government spending level - that constant these days is probably around 9 or 10. The result is your fair tax rate.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#22

Post by idbehold »

tdehollain wrote: post #13

That's $593M taxes on $1.34B earnings on exercising stock options...44% tax rate is pretty harsh!

Not really. Go look at the tax-rates of the 1950's. The only way he was able to acquire that much money was because of the infrastructure paid for by tax revenue. The only reason he wasn't robbed by someone else was because of the law enforcement paid for by tax revenue. I could go on, but I think you get the point. His wealth is built upon the shoulders of tax revenue.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#25

Post by WJW »

tdehollain wrote: post #13

That's $593M taxes on $1.34B earnings on exercising stock options...44% tax rate is pretty harsh!

For the US maybe. Income tax in the Netherlands (my country) in the top bracket is 52%. On the second hand, we have no capital gains tax so he might come out ahead when exercising options. On the third hand, we have a wealth tax of 1.2% on your entire capital above a certain floor (of about 20k) so he might not come out ahead in the end.

It's always interesting to see the opinions of different cultures about how much tax is reasonable :)

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#26

Post by user5994461 »

SEJeff wrote: post #10

Not sure about everyone else, but I'd love to have this problem. Oh I have to pay $593 million in taxes? Boo hoo, let me cry all the way to the bank to write the check.

Imagine that you are a GAFA CEO 2 years before you IPO and you are asked to pay 593 millions based on the estimated value of your shares.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#27

Post by jkchu »

The article mentions that he kept the remaining shares (as opposed to selling them as well). I wonder what is the general strategy for founders to cash out their stocks? Of course holding the shares for 1 or 2 years to get short/long-term capital gains tax breaks makes sense. But outside of that I imagine there is a balancing act of not selling so many shares to raise investor's eyebrows, but also freeing up money to diversify your assets.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#28

Post by omginternets »

WJW wrote: post #25
tdehollain wrote: post #13

That's $593M taxes on $1.34B earnings on exercising stock options...44% tax rate is pretty harsh!

For the US maybe. Income tax in the Netherlands (my country) in the top bracket is 52%. On the second hand, we have no capital gains tax so he might come out ahead when exercising options. On the third hand, we have a wealth tax of 1.2% on your entire capital above a certain floor (of about 20k) so he might not come out ahead in the end. It's always interesting to see the opinions of different cultures about how much…

>It's always interesting to see the opinions of different cultures about how much tax is reasonable :)

I think you're missing his point. The raw percentage isn't as unreasonable as the difference between the parent-poster's and Musk's tax rate.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#29

Post by Cyph0n »

niroze wrote: post #9
neaanopri wrote: post #3

Earlier quoted context omitted.

A narrow and literal reading of events makes Musk the richest african american. It's pretty depressing the richest african american is white

A lot of Africans are white, especially ones settled and controlled by Brits at some point.

Not to mention North Africans (Morocco, Algeria, Tunisia, Libya) and Egyptians. I'm a Tunisian-American, but I obviously select "white" in demographic questionnaires. I heard that the U.S. Census Bureau is planning to introduce a Arab/Middle Eastern category in the near future.

Re: Tesla's Musk Paid at Least $593M in Income Taxes in 2016

#30

Post by omginternets »

NegativeK wrote: post #23
tdehollain wrote: post #13

That's $593M taxes on $1.34B earnings on exercising stock options...44% tax rate is pretty harsh!

I agree that it's a lot, but I disagree that it's harsh. That leaves him with $747M for the year.

>That leaves him with $747M for the year.

I'm not sure what this is supposed to suggest/demonstrate.

Surely you agree that taxing (say) 20% of 60k is different from taxing 20% of 1B. Namely: the former has a much more significant impact on quality-of-life then the latter...

Figuratively speaking, what can you do with 747M that you can't do with 300M?

(Before the pedants inevitably pick this rhetorical question appart: the point is that it's not prima facie unreasonable to tax extreme wealth significantly more heavily than the median income)

Edit: the first of the pedants have arrived... sigh...

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