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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Comments

  • did that fool just say 10,000 sq ft, WTF. more like 10,000,000 sq ft

    John Wick May 13, 2020 5:51 pm Reply
  • 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 “

    GASPARE E GRIMALDI May 13, 2020 5:51 pm Reply
  • 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).

    xxx xxx May 13, 2020 5:51 pm Reply
  • 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.

    1 May 13, 2020 5:51 pm Reply
  • 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

    junio ag May 13, 2020 5:51 pm Reply
  • This is a health issue , not really the expertise of musk , he should just follow the state orders like everyone else !

    Slim May 13, 2020 5:51 pm Reply
  • Tesla used a prefab metal tent for an assembly line. It would take a week to assemble.

    seccat May 13, 2020 5:51 pm Reply
  • 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.

    Pablo TrowDaddy May 13, 2020 5:51 pm Reply
  • None of these guys could hold Elon’s socks – small minded people.

    atombond May 13, 2020 5:51 pm Reply
  • 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.

    Howard Stratton May 13, 2020 5:51 pm Reply
  • Unused brain has a good price in the second hand market

    Kelvin Yang May 13, 2020 5:51 pm Reply
  • 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.

    Bozack Dakilla May 13, 2020 5:51 pm Reply
  • It’s called principle. California deserves to rot.

    Andy May 13, 2020 5:51 pm Reply
  • One more failure notch on the belt of California. We will gladly leave California with tesla. We love life..not oppression.

    joe momma May 13, 2020 5:51 pm Reply
  • Move it to Mexico

    Kosmonooit May 13, 2020 5:51 pm Reply
  • 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.

    Peter Roszell May 13, 2020 5:51 pm Reply
  • Ypeng taking over brazil, as part of the undermining the usa trade deal, brazil gets cheap Ypengs

    Victor Hugo May 13, 2020 5:51 pm Reply
  • Ypeng G3 has arrived, at just 20k, along with murder hornets, so no wonder tesla is in a tizzle

    Victor Hugo May 13, 2020 5:51 pm Reply
  • 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

    Asasino21 May 13, 2020 5:51 pm Reply
  • 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.

    Paul Beaumont May 13, 2020 5:51 pm Reply
  • The Communists of California are trying very hard to collapse the economy,……time for real, normal people to take back Commiefornia.

    Gabriel Arch May 13, 2020 5:51 pm Reply
  • Three stooges

    Anthony May 13, 2020 5:51 pm Reply
  • 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???

    Benjamin Jones May 13, 2020 5:51 pm Reply
  • He just say I’m closing the plant an to hell with you all and put all his efforts into space x.

    Daniel Mccabe May 13, 2020 5:51 pm Reply
  • 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

    King0fDepravity May 13, 2020 5:51 pm Reply
  • Where does CNBC find these clowns?

    Nigel May 13, 2020 5:51 pm Reply
  • 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.

    Retheesh chandran May 13, 2020 5:51 pm Reply
  • 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!

    Steve Perreira May 13, 2020 5:51 pm Reply
  • Mr Musk just flipped the bird at the numbskull California politicians and started up production anyway. Good for Tesla!

    calpilot7 May 13, 2020 5:51 pm Reply
  • Texas doesn't need more Californians!

    America First May 13, 2020 5:51 pm Reply
  • It is for him. I wonder if these people that are reporting this have half the brain he does?

    Mic Mcbane May 13, 2020 5:51 pm Reply
  • The guy in the middle seems to be so happy that Tesla may run into trouble. Besides, building a new large factory appears to be unthinkable to some of them. to be fair, it is indeed unthinkable, as they don't know how to build. Elon does 🙂

    better world May 13, 2020 5:51 pm Reply
  • This news channel is confusing. The state of California agrees with Elon. Its the county itself fighting Tesla. Also, its only the Headquarters, not the entire manufacturing facility.

    Jose Ledesma May 13, 2020 5:51 pm Reply
  • spoiled brat needs to grow up and fix his horrible customer service

    antonio volpe May 13, 2020 5:51 pm Reply
  • These clowns lol

    RabbiFPV May 13, 2020 5:51 pm Reply
  • California is broke… Tesla doesn't need California.

    Eric T May 13, 2020 5:51 pm Reply
  • Thanks for the negative end of this interview. China Tesla is doing incredible. They are 25% of all EV sales in China and will continue to rise in EV and overall sales. The Model Y is coming at the end of this year and they will sell 250k Model Y's by the end next year and 120k Model 3's as well. Just some ideas!!!

    Tesla Dude May 13, 2020 5:51 pm Reply
  • There isn't a 10,000,000 sq ft building in Texas…. uhh… have you heard of building? He wouldn't buy an existing building anyway. Shanghai was built in a year. Good riddance Cali.

    Rye May 13, 2020 5:51 pm Reply
  • Steve is an idiot.

    iakona23 May 13, 2020 5:51 pm Reply
  • Elon, not Mr Musk

    Tesla Dude May 13, 2020 5:51 pm Reply
  • Can Elon move, yes, how long will it take? They will move the company support staff as soon as everyone says they can move or they find another job and they hire people in Texas. After China is done with their current buildings, in 1120 or earlier, Berlin is finished June 2021 and start building Texas out by August 2020. January 2021 start building NV, Terafactory for the Fremont gigafactory move. This will be on the same battery gigafactory already partially built out in NV. The Terafactory will be a huge, brand new state of the art factory. When they are done, you can move over what you keep from Fremont, and put those pieces with the new Paint Shop and all other needed upgrades. Sell the Fremont Factory to a EV startup company that Elon is helping to bring heavy equipment, armored cars, delivery vans and more to the US market. It could be a Tesla company, subsidiary!!!! Or just get rid of it and say FU to CA!!!

    Tesla Dude May 13, 2020 5:51 pm Reply
  • These three combined have a lower IQ than Elon.

    Josh Shaw May 13, 2020 5:51 pm Reply

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