Elon Musk's threat on getting a few more manufacturing days in: Fmr. Tesla board member


Steve Westly, former Tesla Board member and California state controller, and Tim Higgins, WSJ, joins ‘Power Lunch’ to discuss Elon Musk’s threats to move his Tesla factory from California if the state’s coronavirus restrictions continue to keep it closed.

Elon Musk could save billions of dollars in taxes over time if he moves his company and his home to Nevada or Texas, according to tax accountants.

Musk, who is embroiled in a battle with the state of California and Alameda County over his efforts to reopen Tesla’s factory, tweeted threats over the weekend to move the company to Nevada or Texas.

“This is the final straw,” Musk tweeted. “Tesla will move its HQ and future programs to Texas/Nevada immediately.”

If Musk moved his primary residence from California, which has the highest income tax rate in the country, he could save hundreds of millions of dollars, if not billions, in income taxes in the coming years. Texas and Nevada have no income tax.

There are no signs that personal taxes factor in to Musk’s decisions regarding the best future location for the electric car maker. Tesla didn’t immediately respond to a request for comment about Musk’s plans.

But accountants for California’s rich say that Musk would join a growing list of wealthy residents moving to Nevada and Texas to avoid California’s famously high income taxes.

“If I were a betting man, I would say the odds are the taxes are a consideration,” said Daniel Morris, a certified public accountant and senior partner at Morris + D’Angelo in San Jose, California, who works with a number of wealthy tech executives. “How could it not be?”

Musk’s tax rates have taken on new importance because of his latest compensation program. The package, awarded in 2018, gives him tranches of stock options based on the company hitting certain operating and market-value goals.

According to Tesla’s filings, the package could net him a total of more than $55 billion over time if the company meets a series of targets. The first tranche was triggered last week, but not yet officially awarded, and would be worth more than $780 million in profits for Musk. He would pay income taxes on the profits from stock options when he exercises the options.

California imposes an income tax rate of 13.3% on its highest earners. So if Musk exercised the options while he was a California resident, he would pay $104 million in taxes. If he waits until he moves to Texas or Nevada, he would owe no state income taxes on the sale — effectively saving $104 million.

If Tesla meets all the targets set out in the compensation plan, and Musk moves to Nevada or Texas, he would save more than $7 billion in state taxes on the $55 billion in estimated compensation.

Some of the targets Musk must meet in the plan are tied to the company’s market capitalization. Tesla shares have soared nearly 240% over the past year, and 94% since the start of the year, to put the stock’s market value above $150 billion. Other milestones are tied to revenue and profitability benchmarks.

Morris said the beauty of stock option pay is that the wealthy can choose when to exercise those grants. So even though Musk received the options grant this year while he was a resident of California, he could wait until be establishes residency in Nevada or Texas before exercising them.

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  1. I am continually amazed at do nothing "talking heads" who actually seem to believe they are smarter than someone like Elon Musk who creates tens of thousands of high paying new jobs yearly — worldwide. In their wildest dreams these people are not qualified to say what Elon should or should not be doing.

  2. What if “ what if “ the sky falls “ what if gov sends each million “ what if he moves to Michigan ! What if we are free to choose “

  3. Shows how the rich care less for their slaves and want them to serve them.
    He's clearly the most wicked man amid the crisis, wanting to making money while walking over dead bodies.
    It's unbelievable that he said that he'd provide as many ventilators as needed but be allowed to get his workers to get into manufacturing for his companies. (Meaning that he cares the least for his life).

  4. He wants to Publicize about this company. He just want to sell more car. There is no way he can move his Tesla factory. Think about people he is BUSINESS man. He puts LOTS of money on this factory. He wants to make money. Not want to see lost money.

  5. just to let ebry one know musk said he will fire all employes in california to hire in texas 🙂 i think he will be better off in texas they are europe oriented

  6. This is a health issue , not really the expertise of musk , he should just follow the state orders like everyone else !

  7. After oil, Texas has zero to offer..I'm sure one of the red welfare states.. Better stay in cali, there is no Texan that's buying a electric car.. just saying.

  8. I love these guys, even though they have no clue about what they’re reporting. They are willing to go on TV and show the world how dumb they are on a daily basis. Good for you. I hope you keep shorting Tesla because we love seeing you loss.

  9. Did no one tell these guys that Elon was already looking to build a plant in Texas? Did they not hear that Tesla built an entirely new facility from dirt to vehicle production in a few months last year? This is why tesla stock keeps going up. It is obvious the media doesnt want you to know the full story.

  10. One more failure notch on the belt of California. We will gladly leave California with tesla. We love life..not oppression.

  11. It’s not if Tesla moves, it’s just another nail in the coffin for California. Nobody with any brains would start an asset or labor intensive business in California. Elon opened there because he got a free auto plant (Toyota’s Fremont Plant), he traded Tesla stock for it back when he 1st started Tesla. (I think Toyota even invested cash into Tesla when he did that, I know Mercedes did). Elon is such a bad ass !

    (Space X is in Cali because that’s where the aerospace talent was when he started the company. He could probably move that now as well since he draws the top talent and they will go where he is). Texas is looking super strong.

  12. Must be nice having a chushy gov job where you still get paid. Not needing to worry must be nice but two weeks till going to work is like going bankrupt for a large portion of the counrty

  13. The county has been dragging their feet with no end in sight. CNBC has no idea! Tesla has built a whole model 3 assembly line, from scratch, in a tent, in a few weeks. You think he is going to drag this out? NO! HE WILL MOVE.

  14. The Communists of California are trying very hard to collapse the economy,……time for real, normal people to take back Commiefornia.

  15. Such dumbasses. READ the tweet. Tesla HQ is in relatively small office building… NOT the "10 million sq ft" manufacturing building. <sigh> Anyone else remember when "news" organizations actually did some research before opening their mouths???

  16. Hey Tim Higgins, are you stupid, why wouldn’t he move it over to Nevada which is right here, and already has battery, and part manufacturing, it would be ignorant to thing they’d go to Texas? The gigafactory was build rather quickly so you know

  17. California's economy is going downwords every yr and these commie clown is boasting how bit iys economy is.i two decades commie ruled cali will become africa.

  18. What a dummy Steve Westly is, Tesla doesn’t have to move all of its factory at once. It can start a migration over a number of years and leave California with nothing, which is what this socialist state deserves!


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