Elon Musk, world’s richest person and the chief executive of Tesla Inc, donated Tesla shares worth $5.7 billion to a charity in November, securities filing with the US Securities and Exchange Commission showed. Musk donated a total of 5.04 million shares to an unnamed charity last year between November 19 and November 29. According to Bloomberg News, the $5.7 billion worth of charity, calculated by taking average prices of electric carmaker’s stock on the days he sold the stock, makes it one of the biggest in history.
Late last year Musk offloaded Tesla shares worth $16.4 billion or 10% of his stake in the company, after polling Twitterati if he should sell 10% of Tesla stock. Majority of the pollsters responded with a ‘Yes’. Musk had put out the poll after a debate on billionaires evading their tax duty over unrealized gains from earnings in stocks. Democrat senators in the United States, Bernie Sanders and Elizabeth Warren, have questioned billionaires such as Musk and Bezos on evading this responsibility.
Musk gave away his stock to charity days after the poll. The billionaire had said earlier he would be able to pay his tax shares only by selling his stock since he does not take cash salary or bonus from anywhere.
Capital gains tax on wealthy Americans
Musk, who is famous for responding with clever quips on Twitter, has sparred with Sanders on the US senator’s tweet about taxing the wealthy Americans. “We must demand that the extremely wealthy pay their fair share. Period,” Sanders had said on Twitter in November. Musk responded by taking a dig at the senator’s age saying “I keep forgetting that you’re still alive.” “Want me to sell more stock, Bernie? Just say the word,” he added.
The net worth of Musk, the founder of a Nasdaq listed company, stands at $227 billion, according to Bloomberg Billionaires Index, trailing his counterparts such as Amazon’s Jeff Bezos and Microsoft’s Bill Gates. Net-worth of Jezz Bezos is $180 billion, while for Bill Gates it is $127 billion.
Philanthropy to the rescue
Musk had also put out on Twitter about his willingness to sell Tesla stock to contribute to philanthropy efforts. Last year, responding to the head of United Nations’ World Food Programme David Beasley’s comment on how billionaires like Musk and Bezos can solve world hunger with $6 billion contribution, a meager amount of their wealth, Musk said he will do it right away if Beasley could tell him how. “If WFP can describe on this Twitter thread exactly how $6B will solve world hunger, I will sell Tesla stock right now and do it,” Musk had said in a tweet.
There is tax benefit for Musk potentially gifting Tesla stock as the shares donated to charity are not subject to capital gains tax, experts told Reuters. “His tax benefit would be huge. He’d save between 40% and 50% of the $5.7 billion in tax, depending on whether he could take the deduction against his California income and he’d avoid the gains tax he would have to pay if he sold the stock,” Bob Lord, an associate fellow at the Institute for Policy Studies who studies tax policy, told the news agency.
In terms of philanthropy efforts, Musk and Bezos had given away less than 1% of their wealth to charity, according to Forbes Philanthropy score for 2021. Facebook co-founder Mark Zuckerberg had given away less than 5% of his wealth and billionaire investors Warren Buffett and George Soros had given up over 20% of their wealth, as of September 2021.