Moving to Texas, which has no state income tax, could help Musk save billions of dollars in state income tax over time.
The Income-tax department also submitted that the number of returns filed this year has already exceeded by about 6% to 5.95 crore as on January 10, 2021, compared with 5.62 crore as on August 31, 2019 (last date of return filing).
Tesla’s Elon Musk – the world’s second-richest person is planning to move Texas from California, which is often condemned by the wealthy for its high tax rates and stiff regulations, and has led to the exodus of prominent names in technology, as per a CNBC report. Moving to Texas, which has no state income tax, could help Musk save billions of dollars in state income tax over time based on Tesla shareholders’ approval in 2018 to a proposal to award him a massive multibillion-dollar stock grant.
Tesla’s stock has grown 782 per cent in the past year while as of October, Musk earned awards worth around $20 billion before taxes currently, as per Thursday’s close, a part of the potential total, the report said. Hewlett Packard was the latest California company that moved out of the region. In fact, 13,000 businesses had moved out from California over the past eight years, according to a study by Joe Vranich, President at business relocation expert Spectrum Location Solutions.
As per the 10-year proposal to Musk, he could earn over $50 billion in stock and awards in 12 tranches. He has already reached the fourth. Musk would have to pay taxes on the profits when he exercises the options. While the income tax rate in California is 13.3 per cent, it is zero in Texas. Tesla is already worth $567 billion. Each $50 billion jump in its market cap, up to $650 billion in total market value, would lead to another payout for Musk if met with a revenue or profitability target.
To attract Tesla’s new factory, Texas’ local officials granted it millions of dollars in property tax breaks. According to Tesla’s Q2 earnings call, Musk had confirmed that the Tesla plant would get around 2,000 acres to build the Cybertruck, its Semi, Model 3 and Model Y. Musk has been embroiled in a tussle with the state of California and Alameda County over his struggle to reopen Tesla’s factory. According to the Bloomberg Billionaires Index, Musk’s net worth stood at $145 billion following Jeff Bezos’ $185 billion as on December 6, 2020.