Elon Musk has stated that his income tax bill is on track to be the greatest in U.S. history - over $11 billion. Tesla, on the other hand, appears to be uninterested in paying anything.

Tesla may not plan to pay federal taxes in the near future, despite the fact that the business recently recorded its most profitable year ever. Tesla earned $5.5 billion in net income and $7.6 billion in adjusted income in 2021, per CNN.

However, Tesla's U.S. operations lost $130 million on a pre-tax basis last year, according to its most recent annual financial filing with the Securities and Exchange Commission. Even while U.S. sales accounted for 45 percent of its revenue, it says that all of its pre-tax profits, worth more than $6 billion, came from overseas operations.

Although Tesla indicates its foreign tax bill was $839 million, its state tax bill was only $9 million. It also owed no federal taxes.

Chief economist for Tax Analysts, Martin Sullivan, said that Tesla's taxes "defies common sense but it does not defy the U.S. tax code."

"U.S. Multinational Thing" - Says Sullivan

According to Sullivan, also a non-profit tax publisher and an expert on U.S. corporate tax practices, the $130 million loss on Tesla's U.S. operations is most likely due to a common practice among U.S. multinational corporations of arranging their operations so that income is reported by overseas subsidiaries, leaving the U.S. operation with little or no taxable income to declare.

A company can, for example, assign its intellectual property to one of its foreign entities and charge its U.S. unit a fee for using that property. As a result, the foreign operation is very profitable, whereas the U.S. company, which is burdened with "costs" to the company itself, declares a loss or very little income.

"It's a U.S. multinational thing," said Sullivan.

Sullivan added that it can be considered as "malpractice" for multinational corporations not to enforce such a practice.

According to a recent report from the U.S. Department of Treasury, 61% of U.S. multinational companies' foreign revenues are booked in seven small countries known as tax havens: the Cayman Islands, Ireland Bermuda, Luxembourg, Switzerland, the Netherlands, and Singapore.

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Elected Officials Vowed To Stop The Practice

Many elected officials, as well as the Biden administration, have vowed to crack down the practice.

Senator Elizabeth Warren, a frequent critic of Musk, said that giant corporations, including Tesla, have "long used scams and loopholes" to help them avoid paying taxes. She said it "has to stop."

According to Warren, the Democrats are trying to repeal Republican tax cuts for multinational corporations that are offshoring profits and jobs.

Last December 2021, Warren and Musk faced a full-scale Twitter war. Warren referred to the world's wealthiest person as a "freeloader" for paying $0 in income taxes in recent years. Musk retaliated with a series of personal attacks, referring to Warren as "Senator Karen" and saying that his income tax bill is about to be the largest in U.S. history.

However, Congress has so far failed to take action to stop it.

Tesla's financial filing, on the other hand, does not specify what it did. The company did not identify which country or countries it made a profit from while claiming a loss in the United States.

An inquiry about Tesla's filing received no response.

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This article is owned by Latin Post.

Written by: Jess Smith

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