> Yet most of last week’s sales were for a different reason. Rather than selling as part of an options exercise, Musk started selling from his existing shares. Accountants said it would be impractical for Musk to use those existing shares to pay the tax on his options, since they carry a much higher tax bill.
> Typically, executives sell the exercised shares immediately after they’re purchased to pay the taxes, in what’s known as a “cashless” exercise. Since the shares are sold immediately, there is no additional capital gains tax owed on the shares sold.
> Because Musk’s sales beginning Nov. 9 were straight stock sales with little or no cost basis, he would owe long-term capital gains taxes of up to $1.3 billion. Using those proceeds to pay the options tax would amount to paying taxes twice — once on the capital gains and once on the options.
> “It wouldn’t make sense from a tax perspective for him to use those proceeds for the options tax,” said Toby Johnston, partner in charge of the Silicon Valley office of Moss Adams, an accounting, consulting and wealth management firm.
TL;DR: he seems to be selling more shares than needed strictly to pay taxes or to exercise option, and he selling in a tax-inefficient manner, therefore seemingly increasing his tax bill (any CPA on HN could opine better)
Not sure if that quells the "billionaires should pay their fair dues" shouts that haunt him on every public discourse.
> Not sure if that quells the "billionaires should pay their fair dues" shouts that haunt him on every public discourse.
Probably not. I think there are calls for 90% taxes on all earnings over $100 million or so. Even with a 90% tax, there's still plenty of incentive to continue earning/building. I think the argument is that a person can reasonably be individually responsible for $10-100 million of value, but past that isn't realistic. Any excess value captured by one person is almost certainly actually being created by either their employees or by public infrastructure.
This 90% tax would really just be re-capturing that value by the entities which created the value (the taxpayers who work for the billionaire, and/or the government who built the infrastructure used).
I mean, if you were paid $600/hr since Christopher Columbus sailed to America and saved every penny, you still wouldn't have a billion dollars. It's really, really hard to say anyone has worked hard enough or created enough value on their own to justify a billion.
And a 90% tax over $100 million would still allow Bezos/Musk to have $30 billion each. Which is equivalent to a someone saving $1 million/year since the middle of the last ice age.
Very interesting. Will these incentives create "100 millionaire" clubs? If a person knows he will have 110 millons, and know he will be tax 90% on the last 10 he can choose between a million for himself or 10 million for a person of their choice.
Speaking as a tax attorney, when someone does something like this, it is motivated by liquidity concerns. Meaning, that the person has a lot of valuable assets but not in a form that can actually be spent, and they want cash they can actually spend on something.
While most similarly situated individuals normally would take out a loan against their assets, in some situations that may be impractical or not possible. For example, the banks may be unwilling to make further loans if the individual already has a large amount of such loans (as Elon does), or if the underlying asset (Tesla stock) is viewed as overvalued (which many analysts have argued).
If I may have a bit of your time, usually sales like this are pre-arranged.
Billionaire goes to a Bank (like GS or whatever) tells them I need to sell X number of Shares by Y date on Z price, the Bank gathers up the buyers, and then the the transaction is committed in one fell swoop, on market down, GS takes their commission and it's over by the time the markets open next Monday
What are the pros/cons of doing this bit by bit, over such a long period of time, on the public market? He is still not done and will be selling well into next week.
Now we will just have to endure months of crying on twitter about what a victim the perpetually fragile Elon Musk is. What cracks me up about this clown is that he seems to buy into the simulation theory but doesn't realize is that the reason for the simulation is to figure out how to stop people like the used-to-be-balding Musk.
No you don't have to endure it, why are you following Elon on twitter and posting about him? You are choosing to engage. Perhaps a better reason to simulate him would be to figure out why.
When Elon Musk first came into the public spotlight, he had a anywhere from a neutral to a mildly negative public perception due to being perceived as a nerd, and not being a good public speaker (due to autism?)
then he starts succeeding and the pendulum swings upwards, practically rocketing (heh!) upwards as nerds and geeks world over found thier messiah, the one who will fulfill all their sci/fi dreams from dusty paperbacks...
but then the pendulum reaches its peak and there is a saturation in adoration, the dick sucking was frankly getting a bit much, and people start to differentiate them self by being anti-Elon. The Thailand thing proves to be the trigger that swings the pendulum downwards and up again towards the other side.
But now I feel the sheer banal revulsion at the mere mention of his name means that the pendulum has peaked again, and it's about time people start bringing the discussion back to facts rather than emotions
You can see this when people start spouting random unrelated bullshit everytime Elon's name is mentioned. Like we get it, he is wealthy since the share price has skyrocketed (heh again!) because of all the pension funds and mutual funds and 401k and rando retail buyers are want a piece of his pie, but seriously, STFU, we are trying to have a discussion of facts regarding whatever, spew your rando ?-naire bile elsewhere.
What’s happening is that people are getting “into” billionaires in a way that tries to make them more than they are. Guys like Steve Jobs and Elon Musk are more similar to Charles Koch and Steve Cohen than they are to me or you. They are highly effective capitalists. People trying to become an Elon Musk fanboy are as guaranteed to be disappointed as a Charles Koch fanboy.
For context: Musk had some buy options coming due on Tesla stock at something ridiculous like $5. He was always going to take that deal and have to pay some taxes on it by selling stock.
The reason the tax bill is so high, however, is because he also decided to sell 10% of his total Tesla stock. He came to this decision via a Twitter poll titled "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock." Shockingly, only 57.9% of Twitter respondents voted in favor.
In any case, he was going to sell some stock no matter what, so this comes off as something of a PR move. I personally think the more effective use of that stock would have been as an endowment towards a charitable foundation.
Wrong, his sell timing and option execution timing occurred in a way that is grossly inefficient when it comes to taxes. He's paying significantly more in taxes than he would have otherwise.
Readit News
Not sure if that quells the "billionaires should pay their fair dues" shouts that haunt him on every public discourse.
Probably not. I think there are calls for 90% taxes on all earnings over $100 million or so. Even with a 90% tax, there's still plenty of incentive to continue earning/building. I think the argument is that a person can reasonably be individually responsible for $10-100 million of value, but past that isn't realistic. Any excess value captured by one person is almost certainly actually being created by either their employees or by public infrastructure.
This 90% tax would really just be re-capturing that value by the entities which created the value (the taxpayers who work for the billionaire, and/or the government who built the infrastructure used).
I mean, if you were paid $600/hr since Christopher Columbus sailed to America and saved every penny, you still wouldn't have a billion dollars. It's really, really hard to say anyone has worked hard enough or created enough value on their own to justify a billion.
And a 90% tax over $100 million would still allow Bezos/Musk to have $30 billion each. Which is equivalent to a someone saving $1 million/year since the middle of the last ice age.
Man those folks should start a co-op, since they don't need their employers and are capable of creating value outside of them.
While most similarly situated individuals normally would take out a loan against their assets, in some situations that may be impractical or not possible. For example, the banks may be unwilling to make further loans if the individual already has a large amount of such loans (as Elon does), or if the underlying asset (Tesla stock) is viewed as overvalued (which many analysts have argued).
Billionaire goes to a Bank (like GS or whatever) tells them I need to sell X number of Shares by Y date on Z price, the Bank gathers up the buyers, and then the the transaction is committed in one fell swoop, on market down, GS takes their commission and it's over by the time the markets open next Monday
What are the pros/cons of doing this bit by bit, over such a long period of time, on the public market? He is still not done and will be selling well into next week.
These reactions are totally bizarre to me.
When Elon Musk first came into the public spotlight, he had a anywhere from a neutral to a mildly negative public perception due to being perceived as a nerd, and not being a good public speaker (due to autism?)
then he starts succeeding and the pendulum swings upwards, practically rocketing (heh!) upwards as nerds and geeks world over found thier messiah, the one who will fulfill all their sci/fi dreams from dusty paperbacks...
but then the pendulum reaches its peak and there is a saturation in adoration, the dick sucking was frankly getting a bit much, and people start to differentiate them self by being anti-Elon. The Thailand thing proves to be the trigger that swings the pendulum downwards and up again towards the other side.
But now I feel the sheer banal revulsion at the mere mention of his name means that the pendulum has peaked again, and it's about time people start bringing the discussion back to facts rather than emotions
You can see this when people start spouting random unrelated bullshit everytime Elon's name is mentioned. Like we get it, he is wealthy since the share price has skyrocketed (heh again!) because of all the pension funds and mutual funds and 401k and rando retail buyers are want a piece of his pie, but seriously, STFU, we are trying to have a discussion of facts regarding whatever, spew your rando ?-naire bile elsewhere.
He's just an entitled, fragile man-baby. Money can buy hair but it can't buy class.
The reason the tax bill is so high, however, is because he also decided to sell 10% of his total Tesla stock. He came to this decision via a Twitter poll titled "Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock." Shockingly, only 57.9% of Twitter respondents voted in favor.
In any case, he was going to sell some stock no matter what, so this comes off as something of a PR move. I personally think the more effective use of that stock would have been as an endowment towards a charitable foundation.