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Tesla's share price fell on Monday, wiping billions of dollars from the company's valuation in seconds after founder Elon Musk signalled he may sell a big stake.
Mr Musk polled Twitter users over the weekend to ask whether he should sell 10 per cent of his stake in Tesla. Some 3.5 million people responded, with 57.8 per cent voting in favour of selling.
The move came in response to proposals by US lawmakers to introduce a tax on “unrealised capital gains”, which would have hit the fortunes of wealthy people, including Mr Musk’s, whose stake in Tesla has helped make him the richest man in the world.
On Saturday afternoon, he posted the Twitter poll with the accompanying promise: “I will abide by the results of this poll, whichever way it goes.”
He added: “I do not take a cash salary or bonus from anywhere. I only have stock, thus the only way for me to pay taxes personally is to sell stock.”
After the opening bell in New York, Tesla’s shares dropped 6 per cent before regaining some of the lost ground to trade 3 per cent down at $1,186.
The value of Mr Musk’s stake has swelled as Tesla's share price has risen sharply in recent weeks, partly off the back of the announcement of a deal with car rental firm Hertz. Mr Musk later clarified that no deal had actually been signed, despite the fact that Tesla and Hertz had launched an advert about their partnership starring NFL star Tom Brady.
Tesla’s market capitalisation surged beyond $1 trillion for the first time last month. As of 30 June, Mr Musk held a 23 per cent stake in Tesla, or 170.5 million shares.
He has revealed that he takes no salary from Tesla and therefore doesn’t pay income tax; a fact that progressive US politicians say illustrates the need for higher taxes on wealth.
Treasury Secretary Janet Yellen has mooted the idea of taxing gains on assets such as share prices held by the wealthiest citizens.
CEOs of large corporations are frequently criticised for using similar loopholes to shield their wealth from US taxes. Companies such as Amazon also have faced criticism for not paying federal income taxes, which Amazon did in 2019 for the first time in years. The company has also deferred more than $900 million in income tax debt, according to CNBC.