Almost everyone complains about taxes and there are even more complaints if someone does not pay them. This criticism often concerns wealthy people and companies based in tax havens. Criticism for non – payment of taxes also fell on Elona Muska |, which in Tesla basically does not receive a standard salary. In his case, he is in shares and options. Income taxes are paid on shares when they are sold (and there may be exceptions, such as a time test). Although Musk intends to exercise options that could mean considerable taxes for him, he has taken another step. However, in order to meet all critics and US President Joe Biden, he launched a poll on Twitter to see if he has sell 10% of its Tesla sharesto generate income at all from which he could pay taxes. Biden is proposing to impose taxes on the assets of billionaires, from which he wants to finance the fight for a greener tomorrow.
In total, over 3.5 million people voted on Twitter and 57.9% of people voted for the sale of shares, 42.1% against. Elon Musk promised to follow this decision. It should sell about 17 million Tesla shares, which at today’s prices of over $ 1,220 per share should mean a sale of almost $ 21 billion. The question, however, is how it will tangle the market, what will happen to Tesla’s value, and also whether it will not invite it back to the SEC’s rug for stock market manipulation.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?— Elon Musk (@elonmusk) November 6, 2021
But let’s take a simpler look at the issue of paying share taxes (we will omit the options due to their complexity). It is very easy to say that Biden is right, billionaires should pay taxes on their property, that is, that Musk should also pay taxes, and convict him of “non-payment.” But how is the value of these taxes to be determined? If you own shares, their value changes over time and the profit or loss does not arise until they are sold. As long as you have them and they are not sold, you have nothing. That today you have a Tesla share with a value of 1220 USD and theoretically, for example, a 100% increase in the value from which you “should” pay tax, means nothing. Do you have to pay tax on this 100% increase in value today? And if it drops to $ 305 tomorrow and you have a 50% loss in value, will yesterday’s tax be refunded for a different value today?
You can still imagine that you have a house. Its value is CZK 3 million. Thanks to the situation on the real estate market, its value will, for example, double to CZK 6 million. Your wealth has doubled in this way, but if you still live in the house and own it, should you pay income tax just because its price has increased? Musk is simply “paid in these houses”. Should he pay taxes when he receives it with a current value of CZK 3 million, or only when he sells it for CZK 6 million? Should he pay a tax of 3 million when he had actual income of 6 million? That’s not very fair, it would come out pretty cheaply.
But he is also the problem. So what if he sells it when its value is only CZK 1.5 million? Why should he pay a tax of 3 million when he sold it for only 1.5 million? Just because you have stocks or anything of value “at a profit” at some point doesn’t mean it will be at a profit tomorrow when you sell them. That is why taxes are paid only when the profit is realized, and that is why it is somewhat unfair to blame people for not paying taxes on property ownership. Simply because at a given moment you have no idea how much the person will actually earn, that is, for how much he will sell it when he sells it. Musk thus receives shares as a salary, he has something extra, that is true, but until he sells it, it is not possible to determine what its value will be when the sale takes place. That is, not how much he earned, and what the tax should actually be.
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Source: Svět hardware by www.svethardware.cz.
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