Elon Musk continued selling Tesla shares last week, offloading a combined $6.9 billion worth of stock.
Since the Tesla CEO pledged in a Twitter poll to sell 10% of his holdings in the company (worth about $20 billion), it means he’s still a long way to reaching that threshold. So why isn’t he selling the shares more quickly then?
Apparently, his low basis share sale rate is designed to be closer to maximum taxation, as unusual as that may sound. Elon Musk himself confirmed this on Twitter after his strategy was observed by Tesla retail investor and YouTube host Dave Lee.
He raised the possibility that Musk is selling existing common shares to increase the taxes he’s giving to the government, noting that it “would be kind of crazy but something Elon might do.” Elon Musk replied to Lee’s tweet with the following explanation.
“A careful observer would note that my (low basis) share sale rate significantly exceeds my 10b (high basis) option exercise rate, thus closer to tax maximization than minimization.”
Why would Musk want to pay more in taxes when most billionaires go out of their way to do the opposite? That’s something only the Tesla CEO knows, but we can speculate that could be his response to allegations that he is trying to avoid paying taxes.
Musk has been criticized recently by the likes of Senator Bernie Sanders and former Secretary of Labor Robert Reich for allegedly avoiding paying income taxes despite his rising net worth. These critics seem to overlook the fact that Musk can only pay taxes if he sells Tesla stock—something he’s currently doing. Musk’s reply to one of Sanders’ tweets needs no further comment.
Last week, Musk sold a total of 6.36 million shares, around 37% of the 17 million he pledged to offload. Based on the current rate, he is expected to finalize the selling of his 10% stake in Tesla in about two weeks.
Source: Elon Musk (Twitter) via Teslarati
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