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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[knock]

LOL @ these fools acting like Elon doesn't have to money to build such a building

[Floki_]

None of these guys could hold Elon’s socks - small minded people.

[RotimiOrimoloye]

1:23 - The state of California is on Tesla's side. So is The City of Fremont.
Please get your FACTS right before talking BS on TV!

[josiemoe]

Tesla has already made four other factories and is in the process of making a fifth. I think they know how to make them by now.

[theknave]

Musk doesn't make idle threats or empty promises.
He *always* follows through.
He'll temporarily reopen the Fremont facility, but search for a new site for an updated, more efficient facility in a business friendly state. Plus, Fremont is not as cost effective or efficient as the newer gigafactories. It's a repurposed facility, not a purpose designed facility.
(Hint: There's a reason why this guy no linger works for Musk.)
Losing 20, 000 jobs and billions of dollars in tax revenues in California is nothing to the state of California??? Idiots.

[SuperFredAZ]

I believe Musk was talking about Headquarters, not manufacturing.

[cuntpuncherino]

"Threat"??? Gotta love the spin...

[WeylandLabs]

Who said - all there Employees ? 🤣 They can be replaced EZ !

[SirGriefALot]

Not a huge fan of Musk, but it's great to see a big company give California the finger as they take their millions of tax dollars elsewhere.

[danbam]

HES not exactly talking about moving Fremont manufacturing away asap, he is talking about FUTURE manufacturing

[Wirmish]

IT'S NOT A THREAT. IT'S NOW A FACT. ELON IS ELON. NEVER BET AGAINST ELON MUSK.

[ArkyJane]

Old Chevy plant in Oklahoma City is still there. Move to Oklahoma. No, I'm not from Oklahoma.

[gj]

Making a 10 million square foot manufacturing facility is nothing in Texas. They got plenty of land. Plenty of energy. Plenty of labor.

[paulbeaumont]

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.

[rye]

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.

[joshshaw]

Thanks for standing against the tyrants Elon.

[atun]

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

[pete_roszell]

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.

[seccat]

Tesla used a prefab metal tent for an assembly line. It would take a week to assemble.

[angelmatos]

In 3 years Tesla is gone from California.