Elon Musk, the chief executive of Tesla and world’s richest person, asked his 62.8 million Twitter followers over the weekend whether he should sell $21bn (£15.5bn) worth of shares in the electric car company in order to pay tax. Tweeting he would “abide by the results of this poll, whichever way it goes”, 58% of those who responded said “yes”, he should sell the shares, sending Tesla’s share price down 5% in pre-market trading on Monday. Why did he do it? Musk, who is sitting on a paper fortune of more than $338bn in Tesla and Space-X shares, proposed selling 10% of his Tesla shares in order to generate enough money to pay a proposed “billionaires tax” on “unrealised capital gains”. He said that as he did not “take a cash salary or bonus from anywhere” the only way for him to “pay taxes personally” was to sell stock. However, he has made billions through a bonus scheme that granted him share options based on Telsa’s share price performance. What is the billionaires tax and what are unrealised capital gains? Democrats in Congress have proposed tackling the yawning gap between the wealthiest Americans and everyone else by introducing a tax that billionaires would pay on the annual increase in the value of stocks and shares they own. At the moment, tax is only due when gains are “realised”, which means the holder only pays when they sell the stock and book the profit. Ron Wyden, the Democratic senator from Oregon who chairs of the Senate finance committee, said the proposed tax, which would affect the 700 wealthiest people in the US, would “ensure billionaires pay tax every year, just like working Americans”. “Whether or not the world’s wealthiest man pays any taxes at all shouldn’t depend on the results of a Twitter poll,” he said of Musk’s poll. Why did the Tesla shares fall after the poll result? Almost 58% of the 3.5 million people who voted said Musk should sell the stake. The result was revealed on Sunday night (while the market was closed), however Tesla’s shares fell by 7% pre-market trading on Monday, before recovering to about 5% down. Michael Hewson, the chief market analyst at CMC Markets, said: “Early indications suggest that the shares could fall sharply on the open [9:30am New York time 14:30 in London], however it’s not as if Musk will now go and dump them on the open market. He could well drip feed them into the market over time. “The fact that he’s got buy-in from his fans on social media will also dilute the impact of the sale and while we may see some early weakness, the shares are due a bit of a pullback anyway.” Does Musk have to stand by the vote, and sell the shares? Musk tweeted he would abide by the result said was “prepared to accept either outcome”. He owns about 17% of Tesla’s shares, which are worth about $208bn based on Friday’s closing price. If he went ahead and sold a tenth of them in one go it could well depress the price. But this is unlikely, company bosses often use so-called blind brokering where the shares are sold on their behalf in small batches over a period of time. This means they can avoid claims they benefited from insider information in the timing of the sale. Musk could find himself in trouble with regulators if he does not follow through and sell the shares, because announcing his intention to sell has affected the share price. Doesn’t he already have form for getting into trouble with regulators over his tweets? Yes. Musk and Tesla were fined $20m each in 2018 for misleading investors with tweets saying he was considering taking the company private at $420 a share and had “funding secured”. The US Securities and Exchange Commission said the tweet, which sent the share price up by as much as 13.3%, violated securities laws. Musk’s privatisation plan was at best in an early stage and financing was not in place. He also agreed to resign as chair of Tesla, and have the company’s lawyers pre-approve written communications, including tweets. But didn’t Musk carry on tweeting anyway? Yes. After the SEC’s 2018 action, he tweeted that the $20m fines were “worth it”. The regulator later said Tesla had twice violated the settlement requiring Musk’s tweets to be signed off by its lawyers. “Tesla has abdicated the duties required of it by the court’s order,” the SEC told the carmaker in May 2020.