It’s America Last for Tesla when it comes to taxation

The carmaker enjoyed incredible advantages when it made losses, so why does it pay such little US tax now it’s in profit?

- JAMES MOORE

I agree with Elon Musk: the US tax system does need reform. Hell, the global tax system is in need of reform because the job of funding infrastructure, vital public services and everything else society relies upon shouldn’t just fall on individuals. Corporations should pay their fair share too.

I suspect that’s where Elon and I part company, not least because Tesla, the company he is arguably best known for, pays a pittance. Especially when it comes to the US. America First? Um…

Over to Robert Reich, Bill Clinton’s former labor secretary and now a professor in California, who tweeted: “Tesla earned $2.3bn [£1.9bn] in the United States in 2024. You’d think it paid a lot in taxes, right? Well, it paid precisely $0 in federal income taxes last year. You want waste and fraud? Look at what some big corporations and the rich are getting away with.”

The latter is a reference to the Department of Government Efficiency (Doge), the US agency aimed at slashing and burning the US federal government, which Musk heads up.

Reich drew a swift response from Sendil Palani, Tesla’s vice-president of finance, who rebutted the allegation of fraud. And I confess, I think Reich went too far with that because it implies criminality. Palani stated that Tesla “complies with all tax regulations in all of the regions of the world in which we operate”.

He went on to explain that Tesla paid zero US tax on its income because of the many years during which Tesla was loss-making. The carmaker has been in the red for most of its 20-plus-year history.