Musk urged to sell 10% stake in Tesla after hosting Twitter poll



Elon Musk asked Twitter users this weekend to decide if he should sell more than $ 20 billion worth of his Tesla stock and pay taxes – and the crowd online responded with a resounding “yes”.

Musk’s apparent willingness to cash out a tenth of his shares and incur a tax bill of more than $ 4 billion on the basis of the Twittersphere’s will follows a proposition in the United States that billionaires should pay taxes on their unrealized capital gain. He warned last month, that any new tax would one day be extended to the middle classes, tweeting, “Finally, they don’t have any more other people’s money and then they come and get you,” he tweeted.

Leaving it up to the crowd to decide if he should make his first large-scale sale of Tesla shares was the kind of stunt that thrilled Musk fans and made him the most followed business leader on Twitter, with 62.7 million subscribers, while sharpening its a lot of criticism.

“Whether or not the richest man in the world pays taxes shouldn’t depend on the results of a Twitter poll,” said Ron Wyden, Democratic leader of the Senate Finance Committee, before the result of the vote. be known. Wyden proposed a new tax on unrealized billionaire capital gains that would hit America’s 700 richest people.

Musk said he does not receive any salaries or bonuses from any of his companies, leaving him with no income on which to pay income tax. However, he made billions of dollars thanks to a controversial compensation package from Tesla agreed three years ago, under which he was able to exercise large slices of stock options when the automaker reached. certain performance targets and that its actions reach predetermined levels.

“There has been a lot of talk lately about unrealized gains as a means of tax evasion, so I am proposing to sell 10% of my Tesla shares,” the CEO of Tesla tweeted on Saturday. He added that he “would comply with the results of this poll, whatever it is”.

The 24-hour survey ended with nearly 58% of the 3.5 million responses calling it for sale. Musk did not immediately react to the result.

If he goes ahead, the vote will bring a huge block of Tesla shares to the market. Based on Friday’s closing price, Musk’s 17% stake in Tesla was worth $ 208 billion. He did not indicate when or how he would dispose of the stock. Many CEOs use so-called “blind” sales programs when divesting large farms, in order to spread sales over a longer period of time and avoid any claims that they are using inside information to plan their operations. sales.

Musk’s promised sale would be significantly higher than the $ 12.3 billion in shares that Tesla itself sold in 2020, when it took advantage of the soaring share price to beef up its balance sheet. The sale was split into three tranches during the year, with the two largest reaching $ 5 billion each.

Average daily stock trading volume reached $ 25 billion, making it one of the most liquid stocks on Wall Street.

Long-term capital gains are subject to a federal tax rate of up to 20%, although Musk may have saved billions of dollars in additional taxes. California, where Tesla was founded and was based for most of its life, imposes up to 12.3% capital gains tax. Last year, Musk put up for sale three homes he owns in California and said last month that Tesla is officially moving its headquarters to Texas, which does not levy any personal income or capital gains taxes.

To say publicly that he would sell such a large block of shares and not follow through could expose Musk to actions from regulators, if that were seen as something that could affect Tesla’s share price. Three years ago, the Securities and Exchange Commission asked the company to begin verifying all communications from Musk that could affect his stock price, after falsely tweeting that Tesla was about to be taken over. .



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