Since his humble beginnings selling toys and comic books, tech mogul and entrepreneur Elon Musk has catapulted to wealthy status, mainly from his forward-thinking solutions in the electric/automotive industry and SpaceX’s space exploration endeavors. People have long pondered the remarkable trajectory of his success and his resulting 2020 tax burden. How much money did Elon Musk pay in taxes 2020? Here we will have a look at the facts, explore options, and consider causes.
Income and Net Worth
In recent years, Elon Musk’s fortunes have grown substantially, through an increase in Tesla’s stock price, SpaceX’s space exploration successes, and his investments in other ventures. In 2019, Musk’s net worth stood at approximately $27.7 billion, up from around $22 billion in 2018. Following the 2020 stock market rally and Tesla’s strong showing, Musk was estimated to be worth $82 billion as of mid-November 2020. His wealth as of early 2021 was estimated to be north of $145 billion.
Tesla Incentives
In 2020, Elon Musk received a $2.3 billion package from Tesla as a performance incentive. Of this, $743 million was in Tesla stock, while the remaining $1.588 billion was unrestricted stock awards. While this money is not considered ‘income’ or ‘wages’, it can still be liable for taxes and must be reported to the Internal Revenue Service (IRS). With some smart investing, the actual value of Musk’s stock awards could be substantially greater.
Tax Strategies
Like just about every billionaire, Musk certainly takes advantage of his favorable tax position to help minimize his tax burden. He likely incorporates strategies such as writing off business expenses, investing in tax-deductible funds, and utilizing the capital gains tax. Additionally, he almost certainly has an army of attorneys and accountants at his disposal to maximize the amount of money legally retained.
Tax Liability
Overall, it is difficult to determine what Elon Musk’s tax burden really is. While we do not have definitive numbers, it is reasonable to assume that he actually pays very little in taxes. In a comment to Vanity Fair, Eugene Steuerle, a former deputy assistant Treasury secretary, said of Musk, “I doubt he pays very much [taxes] relative to his income.” Richard Phillips, a professor of accounting and taxation at the University of California, Irvine, backs this up in his statement that “These wealthy individuals, they’ve got their tax attorneys, they can dominate the system if they know how to work it.”
The Consequences of Low Tax Liability
Naturally, this raises the question of whether that total corporate tax burden is too low. Left unchecked, a low government revenue can result in a decrease in government services and benefit programs, an increase in the national debt, and further widening of the income gap. So, it may be asked, should a man of Elon Musk’s wealth pay more in taxes than he does?
Other Factors
Musk is also cognizant of the fact that his income puts him in a unique position versus most employed individuals and businesses. On his podcast interview with Joe Rogan, Musk commented, “The stronger argument… is, if you’re being compensated in stock, you’re helping [the company] with long-term inflation, and that compensation should be not just related to short-term gains.” This is something that conservative politicians have been touting for many years now, but it has yet to become a reality. Overall, it seems that the tax situation provided to Musk is one that, for the common worker and businessman, is not available.
The Potential for a Change
Despite being known for his wealth, Musk has spoken out about the need for higher taxes on the wealthy. In 2020, he made comments that he’d be in favor of increasing individual taxes, such as the capital gains tax. While it’s uncertain if such a change would help close the wealth gap, it is clear that the current system favors the wealthy. How much money did Elon Musk pay in taxes 2020? It seems the answer may never be made public, but one thing is certain: his influence could help increase the tax burden of the wealthy.
Musk’s Philanthropic Efforts
In addition to tax avoidance strategies, Musk also donates to many charities. In 2018, he made public his plans to give away the majority of his assets, including $100 million towards the creation of a prize for Carbon Capture Technologies. Additionally, in 2019 he donated $10 million to a school for the deaf in Los Angeles and $1 million to the Young Scientist Lab. His donation of $50 million to the research and development of a neural-link technology was seen as one of the most generous in 2020.
Musk’s Impact on the Economy
The wealth and influence of Elon Musk have positioned him as an economic leader. His eye for innovation can spur others to act on their forward-thinking solutions, as well as make investments in projects for the greater good. His investment in Musk Solar Systems, an early solar-power provider in Southern California, helped spur growth in the renewable energy market. Moreover, his involvement in government-funded projects with the Department of Energy has resulted in increased efficiency and reduced costs.
Criticisms & Controversies
In recent years, Elon Musk has also become known for his controversial remarks. His battle with the SEC over potentially false information regarding Tesla’s stock price and his comments about the pandemic have resulted in much public criticism. While these remarks have undoubtedly drawn the ire of many people, it is unclear if these have impacted his bottom line.
Tesla’s Successful Market Debuts
Tesla continues to experience strong performance within the stock market and automotive industry. As of 2021, its total market capitalization is estimated at over $650 billion. Through a series of successful capital raises and strategic investments, Tesla has positioned itself as a long-term player in the automotive space and solidified the path of its stock price. In 2020, the company achieved its goal of producing 500,000 vehicles, a feat that many analysts did not think was achievable.
Conclusion
As we have seen, Elon Musk’s wealth and influence have risen significantly in recent years. His impressive performance has also made him a lightning rod for criticism from those who feel that he and other wealthy individuals should pay more taxes. Despite this criticism, it seems that Elon Musk’s tax burden remains relatively low, though the exact amount paid is unknown. Judging by his investments, philanthropic endeavors, and willingness to invest in a wide variety of projects, it seems that Musk is cognizant of the fact that his position of power gives him more than the average person.
