Tesla Inc. reported a zero-dollar federal tax bill for 2025, and a review of corporate filings found the automaker's subsidiaries in the Netherlands and Singapore reported roughly $18 billion in untaxed profits. The numbers, first reported by Reuters and detailed by Benzinga, have handed progressive lawmakers fresh ammunition for wealth-tax proposals, though the underlying tax strategies appear to be entirely legal.
The real story here is not that a major corporation used lawful deductions and international structures to minimize its tax burden. Corporations do that every quarter. The real story is who gets to define the outrage, and what they plan to do with it.
Reuters reported that over the past two decades, Tesla has reported little to no U.S. federal tax liability in most years. The company's 2025 filing showed zero federal taxes owed. The savings stemmed largely from deductions tied to prior-year losses and clean energy tax credits, incentives Congress itself wrote into law to encourage the exact kind of electric vehicle manufacturing Tesla does.
Then there is the overseas structure. Two subsidiaries, TM International, registered in the Netherlands, and Tesla Motors Singapore Holdings, together reported $18 billion in profits that went untaxed. TM International, according to Dutch registry records, has no employees and is not required to file financial statements or pay Dutch taxes. Singapore filings show Tesla Motors Singapore Holdings is not taxed in Singapore on related income.
Reuters concluded that absent this profit shifting, a financial strategy that reallocates earnings across jurisdictions, Tesla could have paid over $400 million more in U.S. taxes. But Reuters also noted the practices are not unlawful. Benzinga requested comment from Tesla and received no response.
None of this is unusual for a multinational with global operations. Apple, Google, and scores of other companies have used similar structures for years. The tax code permits it. Congress could change the law. It has chosen not to, a point the politicians now complaining might want to explain.
Sen. Bernie Sanders wasted no time. In March, the Vermont independent accused Elon Musk of paying an effective tax rate of less than 3.3%, less, Sanders claimed, than the average rate paid by a truck driver, nurse, or teacher. He called for the wealthy and corporations to "pay their fair share."
In April, Rep. Pramila Jayapal and Sen. Elizabeth Warren proposed the Ultra-Millionaire Tax Act. The legislation would apply a 2% annual tax and a 1% surcharge to fortunes above $50 million. Warren and Jayapal framed the bill as a way "to rectify the situation."
The timing is convenient. With IRS staffing cuts raising questions about enforcement capacity, progressives see an opening to shift the conversation from agency dysfunction to billionaire-bashing. It is a familiar playbook: find a headline number, attach it to a name the public knows, and build a legislative proposal around the outrage.
But Sanders's 3.3% figure deserves scrutiny. An "effective tax rate" for someone like Musk, whose wealth is overwhelmingly tied to stock holdings, not salary, is a fundamentally different calculation than the rate on a nurse's W-2 wages. Comparing the two without context is misleading at best. Sanders knows this. He does it anyway.
At an October 2024 town hall in Pennsylvania, Musk addressed the topic directly. He said he is often offered aggressive legal tax-avoidance strategies but tends to reject them when they seem questionable. He described certain approaches as relying on "loopholes" and called some of them "pretty shady."
That is a notable admission, and a useful one for his critics. But it also suggests Musk draws a line between what the law permits and what he considers appropriate. Whether Tesla's Netherlands and Singapore structures fall on the acceptable side of that line is a question Musk has not publicly answered. And given the scale of his compensation arrangements, the scrutiny is unlikely to fade.
The distinction between tax avoidance and tax evasion matters. Tax evasion is a crime. Tax avoidance, using deductions, credits, and legal structures to reduce what you owe, is what every taxpayer in America does when they file a return. The mortgage interest deduction, the child tax credit, the standard deduction itself: all are forms of tax avoidance.
When a corporation uses clean energy credits that Congress designed to incentivize electric vehicle production, it is doing exactly what the law intended. When it carries forward prior-year losses against current income, it is following the same rules available to every business in the country. The fact that Tesla's numbers are large does not make the practice illegitimate.
Profit shifting is a harder case. Routing earnings through entities with no employees and no local tax obligations, as TM International's Dutch registry records suggest, raises legitimate questions about whether the tax code adequately captures economic activity where it actually occurs. Tesla's broader business strategy involves billions in capital deployment, and the gap between where value is created and where profits are booked is a real policy problem.
But the solution to that problem is not a wealth tax on unrealized gains. It is not a surcharge designed to punish success. It is a serious rewrite of international tax rules, the kind of work that requires bipartisan effort and technical expertise, not press conferences.
Here is what progressives never want to discuss: they have had decades to close the loopholes they complain about. Democrats controlled the White House and both chambers of Congress as recently as 2021, 2022. They passed the Inflation Reduction Act, which expanded the very clean energy credits Tesla now uses to zero out its tax bill. They chose those incentives. They wrote those provisions. And now they want credit for being outraged at the result.
Meanwhile, ordinary taxpayers, the truck drivers and nurses Sanders invokes, face a tax system that grows more complex every year. Accountability questions swirl around Tesla on multiple fronts, from tax structures to product claims. But the average small business owner cannot afford a team of international tax lawyers. The average family cannot set up a Dutch partnership with no employees. The system's unfairness is real, but the fix is not to demonize the people who navigate it legally. The fix is to simplify the code and close the gaps.
Sanders, Warren, and Jayapal are not proposing simplification. They are proposing a new tax on wealth itself, a constitutional minefield that would likely face immediate legal challenge and would do nothing to address the structural incentives that make profit shifting attractive in the first place.
The Ultra-Millionaire Tax Act's 2% annual levy on fortunes above $50 million sounds populist. In practice, it would hit family farms, closely held businesses, and anyone whose assets are illiquid. It would create a massive new valuation bureaucracy. And it would drive capital offshore faster than any profit-shifting subsidiary ever could. California's experience with tax-driven population loss offers a preview of what happens when jurisdictions decide to punish wealth rather than reform their systems.
Several important details remain unclear. The exact timeframe over which the $18 billion in untaxed profits accumulated has not been specified. The breakdown between the Netherlands and Singapore subsidiaries is not public. Reuters's methodology for calculating the $400 million in additional U.S. taxes Tesla could have paid has not been fully disclosed.
These gaps matter. Without them, the headline number, $18 billion, floats free of context, available for anyone to weaponize. And weaponize it they will.
Tesla's zero-dollar tax bill is a product of the tax code Congress wrote. If lawmakers want a different outcome, they should write a different code, not stage press conferences pretending the problem is one man rather than the system they built.