Elon Musk Claimed He Owed $11 Billion in Taxes in 2021 — Did He Pay Up?

Tesla’s CEO and soon-to-be Twitter owner Elon Musk claimed that he would pay $11 billion in taxes in 2021, which would have been the highest ever tax paid in a year by any individual.

It has been two weeks since the April 18 deadline to file the tax returns ended. Many people are wondering whether Musk really paid $11 billion in taxes in 2021.

Many people and politicians have accused billionaires of not paying taxes. Bernie Sanders has been at the forefront in calling out billionaires for not paying their share of taxes. In 2021, Sanders tweeted that the wealthy should pay their fair share of taxes.

Musk took exception to the tweet and taunted Sanders with an offer to sell more Tesla shares. At the time, Musk was in the process of selling Tesla shares. Musk made the decision after most of his followers voted in a Twitter poll in favor of him selling Tesla shares. In reality, he would have to sell the shares anyway to meet his tax bill.

Musk isn't among the highest taxpayers for the simple reason that he doesn't take any salary or bonus from Tesla or even SpaceX. All his compensation is tied to stock options. He has unlocked billions of dollars of these stock options over the last two years as Tesla’s profits soared and its market cap surpassed $1 trillion.

In December 2021, Musk tweeted that he would pay $11 billion in taxes that year. Many people wonder whether Musk really paid that much in taxes. While we don’t know for sure whether the world’s richest person paid so much in taxes, we do know that he has been trying to lower his tax outgo.

Musk transferred over $5 billion to charities in what looks like a bid to lower his taxes. While Musk has also signed the Giving Pledge, his track record on donations doesn't leave much to talk about, of course leaving out the most recent announcement. Musk even linked his charities to Bill Gates shorting Tesla stock, according to a leaked chat between the two billionaires.

Even Tesla has been frugal when it comes to paying taxes and didn't pay any federal taxes in the U.S. in 2021. Not paying taxes is partially due to the accumulated losses at the electric vehicle company. Before the third quarter of 2019 when Tesla turned sustainably profitable, the company was profitable barely in a handful of quarters.

Tesla’s international operations are paying taxes though. We see the gap in several other companies that pay a higher tax overseas than in the U.S. where they are domiciled. Tesla said in its annual report that the company lost $130 million in 2021 in the U.S., the world’s most profitable automotive market.

Sanders recently tweeted that in the U.S., CEOs make 351 times more than the average worker while the metric is only 11x in Norway. He has also been working for a tax on the super-rich. Many people lament the fact that CEOs and the super-rich don't pay their fair share of taxes.