Elon Musk has recently stated that he has decided to move to Texas due to him being fed up with California's own COVID-19 response and also to become closer to both the Tesla and SpaceX facilities located in the Lone Star State. There could be another reason for Elon Musk's relocation and this would be to avoid California's high capital gains taxes.
Is Elon Musk moving to Texas?
According to an article by Chron, Tesla and SpaceX CEO Elon Musk has reportedly become the second richest man in the world due to his net worth of up to $157 billion. This is mostly from his personal 20% ownership in Tesla.
The automaker's personal stock has increased to a massive 700% over the course of the last year up to $608 per share. This is a huge increase from the previous price of $67 per share just a year ago. Tesla's own market value on Wednesday morning was able to hit a record of $653 billion. This increased Elon Musk's stock option from his previous 2018 compensation package that is now reportedly worth around $18 billion.
Why is Elon Musk moving to Texas?
It is estimated that if Elon Musk sold his own Tesla shares as a resident of California, he would then become a subject to the high Golden State's known capital gains tax of a whopping 13.3%. This is on top of the federal capital gains tax which is 20%. With this estimation, the capital gains tax on his whopping $18 billion of Tesla stock options would then amount to a huge charge of about $2.4 billion.
However, if Elon Musk moved to Texas, the CEO can save billions of dollars just in capital gains taxes if he then decides to sell a portion of his own Tesla stock. Texas is said to be one of the nine different states that does not charge capital gains tax. Musk has reportedly not taken any salary from Tesla. This means he was reportedly not responsible for paying any given California state income tax, which is reported to be as high as a whopping 10%. Tesla did not give an immediate response to a recent request for comment.
Read Also: Elon Musk Charms Germany for Tesla Gigafactory Berlin but Things Heat Up with Labor Union
Is Elon Musk leaving California?
According to an article by BBC news, back in May, Elon Musk threatened to move the Tesla facility to Texas after the local officials reportedly refused to allow the car company to open its factory one again during the oncoming coronavirus pandemic. Elon Musk then Tweeted that this was the "final straw."
Elon Musk then stated in a Tweet that Tesla will move its own HQ as well as its future programs over to Texas/Nevada immediately. He then stated that even if they retain the Fremont manufacturing activity at all, everything will become dependent on just how Tesla will be treated later on in the future.
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This article is owned by Tech Times
Written by Urian Buenconsejo
