Tesla will likely owe $0 this year in federal income tax, despite reporting billions in profits to shareholders for 2021. to recent Securities and Exchange Commission (SEC) filings.
As first reported by CNN, Tesla has said that its U.S. operations lost $130 million pre-taxes – meaning that the company will likely be able to avoid paying federal income taxes on its record profits of $5.5 billionIt reported to shareholders for 2021.
The company is valued at over $900 billion, claimed that its profits were coming from overseas, even if 45 percent of its revenue came from the U.S.
It’s unclear whether the vast majority of the company’s profits actually came from overseas, as the company reported. Matt Gardner, a senior fellow with the Institute on Taxation and Economic Policy(ITEP), believes that Tesla is too young. hasn’t turned a profit for long enoughTo be able to determine if the company’s structure allows it to function. exploit offshore tax loopholesAs many corporations do.
However, parts of the company’s structure – like its three subsidiaries in the Cayman Islands – are “a definite eyebrow raiser from a tax avoidance perspective,” Gardner toldTruthout. “It suggests to me that the company might be trying to shift its income offshore.”
It’s possible that the reason why the company is claiming that overseas profits are much more of a boon than U.S. profits is because it’s true; the company did indeedLast year, a large percentage of its profits came from China. Tesla could also be lying about this claim, since it gives Tesla the ability to move those profits overseas, where they may face lower tax rates.
“That’s a completely plausible alternative reason why they’d say, ‘we’ll never turn a profit in the U.S.’” Gardner said. “But the quiet part of that statement – ‘we’ll never turn a profit in the U.S.’ – is ‘because we know we’re always going to shift our profits somewhere else.’”
Purposefully structuring its finances and corporation in this way would make Tesla’s filings similar to that of the “dozens of other companies that I’ve seen making similar disclosures with a similarly suspicious allocation of income between the US and every other nation,” Gardner said. However, Gardner also emphasized that there’s no way to know whether Tesla is doing this for sure without getting further confirmation from its tax filings or other details.
To dodge taxes, you can use tax loopholes overseas is an incredibly common practiceAmong U.S. companies According toThese loopholes are the reason that the U.S. income tax loss is $90 billion per year, according to a 2014 report.
Progressive lawmakers claim that the fact that Tesla and other corporate giants can avoid paying federal tax domestically is a reason for the U.S. to reform its tax code. “Tesla and other giant corporations have long used scams and loopholes to help them get out of paying taxes — that has to stop,” Sen. Elizabeth Warren (D-Massachusetts) told CNN. “Democrats are working to end Republican tax cuts for corporations shifting profits and jobs overseas.”
Tesla joins There are many other large corporations.This year, they will be able avoid taxes despite posting high profits. A report published last week said that: Gardner wroteAmazon will pay a 6.1 percent effective tax rate for 2021. This is effectively to avoid $5.2 billion in federal income tax.
Tesla’s filings come as the company is facing a California filed a lawsuit. The state alleges that workers at the company’s California manufacturing plant face rampant racism at work.
