Menu Close

How Elon Musk is planning to save billions in tax

The Tesla and SpaceX founder has voiced his disdain with the state of California in the past and it could all be coming to a head for the second richest person in the world.

Elon Musk

Elon Musk made a statement this year when he moved up the ranks to become the world’s second richest person behind Jeff Bezos after a surge in his electric car company’s shares. If rumours are true though, there could be another move on the way for the SpaceX and Tesla founder: a relocation to a different state with lower taxes.

This dwelling move would make sense for Musk who saw his fortune jump to a staggering $US128 billion this year. The speculation comes via a CNBC report which claims to have information from several of Musk’s close friends and associates who detailed his plans on the condition of anonymity.

The undisclosed names say that Musk is planning ditch California entirely for Texas. This would make sense given that the 49-year-old placed his California houses on the market earlier this year after a public spat with state lawmakers regarding heavy-handed COVID-19 restrictions causing Tesla production delays.

Currently, Musk already spends time in Texas between Austin and the coastal village of Boca Chica near the Mexican border where his SpaceX facility is located. Austin is also home to some of Musk’s Tesla and Boring Company operations. Those who follow him on Twitter will notice he regularly posts photos and videos from the SpaceX launch site known as the Starship Production Complex.

The appeal for Musk moving to Texas is rather self explanatory. California currently boasts the country’s highest income tax at 13.3 percent. Texas meanwhile has no state income tax. This fact alone has seen the west coast state at odds with other super rich residents who condemn its high tax and stiff regulations. At the more dire end, it’s seen notable tech names leave the area during the pandemic in order to cut costs while realigning their business for a distributed workforce in the future.

Musk himself has had a go at the state before, comparing it to a champion sports team that’s become complacent and suffers from a “winning-for-too-long problem”.

To understand the magnitude of this issue in Musk’s perspective, in 2018 the Tesla board allowed a deal that could see the CEO take home more than $US50 billion. A 13.3 percent tax rate imposed on this figure would see almost $US6.65 billion in tax for the state if he hit performance targets that opened up his bonuses. California’s proposed “super taxes” on ultra-wealthy individuals will also likely affect him if it eventuates down the line. All these factors make the idea of moving interstate seem all the more viable.

Until the news becomes official though, Tesla will remain headquartered in Palo Alto along with other Silicon Valley giants like Apple. The Tesla factory will also remain in Fremont near San Francisco.

Leave a Reply