After Elon Musk decided to make use of his shares in the company, buying 1.6 million and selling another 934,090 for total value of $1 billion, now he must pay some of the highest taxes in the history of the system.

The stock options, which Musk acquired in 2012 as part of a remuneration package and were strengthened by various achievements of the company, were just exercised by the CEO of Tesla in November. So far, he had yet to pay taxes on them.

The cost of the shares, subtracting the nominal purchase price of $6.24 dollars per share, is valued at $23.5 million and will be classified as “ordinary income.” Also, for making use of the shares and taking into account a maximum rate of 40.8%, Musk also pay about $11 billion, a figure that he already predicted on Twitter on Dec. 19.

The financial movements of Tesla and SpaceX founder were not accidental. They made use of the options that expired in August, while the strategy also planned to sell 10.3 million of the acquired shares to cover the costs of withholding tax. It all follows a plan determined by the company that allows him to sell shares without being accused of insider trading.

15.7 million shares were those Musk sold during a year, movements that, although initially showed a downward trend for the price, have shown in recent weeks an increase of more than 50% in 2021.

The time to carry out the move for Musk was now. If he decided to wait until 2022, he could have faced a scenario in which a Build Back Better Act passed, and required him to pay 8% higher taxes.

Since Musk decided not to tax the sales as income, and the proceeds will be taxed at 20% — the lowest rate of long-term capital gains, increasing the Tesla CEO's taxes by $1.2 billion.

The sale of 10% of his shares in Tesla, to increase his taxable income, came as a result of a poll on Twitter, in which his millions of followers voted for him to do so.

Regardless of the sale of the shares, Musk has about 178 million of them, either through a trust or direct ownership. Likewise, he still has 59 million additional options that can be exercised at any time, part of a 2018 remuneration package, and which do not expire until 2028. It means no further movements will likely take place before then.

Tesla expects that between 25 and 34 million of the options in the 2018 package may be granted in the first months of next year, thanks to the company's high sales and profit projections.

Through a series of movements, which are legal, figures such as Musk, Jeff Bezos, and Michael Bloomberg paid little or no taxes in 2018, and it has prompted several lawmakers, mostly Democrats, to seek a permanent tax for the richest people in the country and that it does not depend solely on their declared income.