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Elon Musk recently ran a Twitter poll asking if he should flog $10 billion of his Tesla stock after he came under fire for paying so little tax.

He paid no federal income taxes in 2018, and in 2017 he paid only $65 000.

58% of respondents said yes, and earlier this week he began the sale of some stock.

Before he gets a round of applause, it’s worth noting that the first batch sold comes just months out from a deadline to exercise Tesla stock options he received years ago. When he does exercise those shares, he will be hit with a sizeable tax bill that could exceed $10 billion.

He has now sold about 4,5 million shares, raising over $5 billion, which amounts to roughly 3% of his stake in the company.

Spare a thought for those other Tesla co-founders. Billionaires they are not.

With an estimated net worth of $278 billion at present, access to funds isn’t that much of an issue.

As Forbes lays out, he actually doesn’t have to sell shares in order to get his hands on some dosh:

When the world’s richest man wants cash, he can simply borrow money by putting up—or pledging—some of his Tesla shares as collateral for lines of credit, instead of selling shares and paying capital gains taxes…

Musk is one of 32 billionaires identified in the Forbes 400 list of richest Americans to be pledging public stock of companies listed on the NYSE or Nasdaq exchanges as collateral for current or potential lines of credit, as disclosed in company filings. Other pledgers include fellow mega-pledger Oracle chairman Larry Ellison, Walmart heir Jim Walton, and private equity’s richest person, Stephen Schwarzman.

The world’s richest human talks often about downsizing his life and letting go of material possessions.

He still needs money. According to the report, he has pledged 88,3 million Tesla shares as of Wednesday, with a value exceeding $94 billion.

As financial advisory firm Institutional Investors Service (ISS) points out, “at current interest and tax rates, it is far cheaper to borrow against the value of one’s shares than to sell them and pay taxes on the gains”.

In total, across all the companies listed on the New York Stock Exchange and Nasdaq exchanges, the aggregate value of pledged shares is $239 billion.

Must be nice to have access to almost unlimited funds while being able to sidestep capital gains taxes.

You can read the full Forbes report here.

[source:forbes]