Codie Sanchez explains how Elon Musk avoids income tax by taking stock instead of salary, borrowing against appreciated shares to get cash, and relying on the step-up-in-basis rule that erases capital gains at death. These strategies are legal and built into how the tax system works.
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How does Elon Musk make billions of dollars as the CEO of Tesla and pay $0 in taxes? And can we steal his homework? I'm about to break it down. It all comes down to how he gets paid. You see, Elon, he doesn't actually take a salary. Instead, he gets paid in Tesla stock. So let's say he's given $10 billion in stock. If that stock doubles to $20 billion, does he pay taxes on the gain? The answer: no, because the stock isn't income. So Elon only pays if he sells it. So his wealth and most rich people's wealth actually grow year after year, untouched by the IRS with no taxes paid. But he still needs cash, right, to live. So instead of selling stock and triggering a huge tax bill, Elon goes to the bank. With $20 billion in stock, he can borrow $100 million and he uses his stock as a backing. This is called a securities loan. What's fascinating, he gets to live off of these loans while his stock keeps growing and appreciating. And the best part is when he dies, the IRS resets the value of his assets to that $20 billion. So those $10 billion in gains, well, that's actually gone for tax purposes. This is beautiful. It's like a $100 million loan paid by the estate. And the tax bill the IRS was waiting decades for vanished. Now, this isn't illegal. It's not a loophole. It's the system working exactly as designed for people who own things.
