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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsHow Mark Zuckerberg’s ‘Philanthropy’ Lets Him Stash His Billions Without Paying Taxes
by Jim Hightower
Let us now praise Lord Zuckerberg, The Magnificent!
Mark Zuckerberg, the wunderkind of Silicon Valley who co-founded Facebook and amassed roughly a gabillion dollars in personal wealth, is now being hailed as a new giant of American altruism.
This started after the tech titan and his wife Priscilla Chan announced the birth of their first child. While delivering what could have been routine news, they announced that in honor of baby Maximas birth, they intend to donate $45 billion 99 percent of their Facebook wealth to charity.
The Wall Street Journal, The New York Times, and other media outlets swooned at Zuckerbergs selfless act: Philanthropy Pledge Sets New Giving Standard, gushed Bloomberg. Lost in the fog of media adulation are two important facts: (1) the $45 billion didnt actually go to charity, and (2) it wasnt really a donation.
Instead, as reported by Jesse Eisinger at ProPublica, Zuckerberg slyly slipped his fortune into an investment vehicle that he created for himself. Far from being a charity, this vehicle is in essence a get-away car, letting him stash his billions in it and speed away without paying taxes. ..............(more)
http://www.truthdig.com/report/item/how_mark_zuckerbergs_philanthropy_lets_him_stash_his_billions_20160127
peacebird
(14,195 posts)PoliticAverse
(26,366 posts)for tax-free.
* Organizations such as PACs and charitable foundations.
hfojvt
(37,573 posts)The reporting is here
https://www.propublica.org/article/how-mark-zuckerbergs-altruism-helps-himself
The only way Z-boy avoids taxes is by donating his stock to charity. In that regard though, I would point out that the Heritage Foundation and Cato Institute and probably others of their ilk are officially designated as "charities". After all, they are "educational" dedicated to teaching the public that it is a bad idea to tax the rich and try to help the poor.
"He explained that if the LLC sold stock, Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing.
If the LLC donated to a charity, he would get a deduction just like anyone else. Thats a nice little bonus. But the LLC probably wont do that because it can do better. The savvier move, Professor Fleischer explained, would be to have the LLC donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax."
...
"But what this means is that he amassed one of the greatest fortunes in the world and is likely never to pay any taxes on it."
But nobody pays taxes on their wealth in our current system. I guess in some way, he can shelter his income. Say he wants to spend $1,000,000 on something. He sells that much FB stock in his LLC. That gives him a capital gain of, say $200,000 (or maybe the whole million, since I am not sure what his basis is - it's not like he bought the stock, is it?) To avoid taxes on that, he gives away another amount (whatever his gain was) to charity.
Let's say the capital gain was the whole $1,000,000. So instead of paying $200,000 in taxes, Z-boy gave away $1,000,000 in stock.
He has not actually gained all that much to me. Really it looks to me like he spent $800,000 more. Are we so in love with government that we'd rather see the government get $200,000 than we would see a homeless shelter get $1,000,000?
What am I missing?
I mean besides a knee-jerk hatred of Z-boy?
A HERETIC I AM
(24,368 posts)That's it. Hit the nail on the head.
As far as I can see, you aren't missing anything;
Tax rates;
http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New
Long term Cap Gains @ 20% for incomes over $415K filing single or $467K married filing jointly.
Unless Facebook is paying him a salary, his "income" has to be from the selling of shares he owns, as FB pays no dividends as yet.
http://finance.yahoo.com/q?s=FB&fr=uh3_finance_web&uhb=uhb2
But yes, many DU'ers seem to have an overwhelming hatred for anyone who is able to amass a fortune, even if it was by taking kitty and bunny pictures.
Zuckerberg was able to bring a product to market that people wanted. It made him rich. What he does with that money is up to him. Many want to simply take it away from him because, and this is VERY often said on DU, because "no one deserves that much money".
Edit here;
I reserve my hatred for the people that get rich working for companies whose primary line of business is US Government contracts. perfect example Jay L. Johnson If your business gets more than 75% of its revenue from government contracts, it should be illegal to pay the CEO or anyone else in the firm more than the President makes.
hfojvt
(37,573 posts)I mean, my own lifetime earnings will probably not even hit $500,000. Figure that on 30 years of work. He's not just rich, he is absurdly rich.
But even somebody like Art Garfunkel (who was discussed on DU recently (sort of) (at least some poo was flung around his name)) He is worth $45 million. Why? Why would any decent person amass that kind of money? Wouldn't it be better to have given away most of that and "only" be worth, say, $2 million? Wouldn't THAT be enough? Isn't it a little bit ridiculous to amass a fortune of even $45 million, to say nothing of $45 billion.
Who knows though, maybe he already has. Maybe he could be worth $200 million but he has already given away $155 million.
And then too, if you start looking at charities, well, the CEO of "America's 2nd harvest" makes (or made, I did this research years ago) upwards of $500,000 a year. And isn't THAT also a little bit ridiculous?
A HERETIC I AM
(24,368 posts)One website says he has 475 million shares of Facebook which is currently trading at $97.30 a share.
97.3 X 475,000,000 = $46,217,500,000
http://www.davemanuel.com/net-worth/mark-zuckerberg/
I suppose it depends on your perspective. 2 million invested in 30 year Treasuries gives around $60,000/year in interest payments. I'm a truck driver and do better than that these days, but I don't have a two million net worth and I likely never will. But I don't hold it against him for, as I said above, bringing a product to market that people wanted and then making a ton of money because of it.
hfojvt
(37,573 posts)off a Ponzi scheme.
Why the heck is FB selling for $97 a share? Who would buy such a stock? It pays NO dividend? Its P/E ratio is 97 for God's sake. And yet if I had bought 100 shares of it back in 2013 when I was instead buying things like Domino's pizza (on which I made some money) and Citibank (yeah, I know, the evil empire itself (on which I made a little money (eventually)) I could have made $7,000 in just two years. (Dammit, I told that kid to bring me a copy of USA Today from the future)
Z-boy's fortune has quadrupled in just two years. Mostly because people are betting on it, and so far seem to be winning the bets.
Why wouldn't (for example) Westar Energy be a much better buy? It pays a dividend of 3.45% and has a P/E ratio of 19.51. Yet 100 shares of that in 2013 would only have netted $1,200 (plus dividends, which for me are tax free).
The market does not seem very logical.
My perspective on $2 million is that Garfunkel is 74 now. If he is lucky he has 15 years to live. $2,000,000/15 is $133,000 a year. Does he want to leave money to his kids? Fine, over the next 15 years he can give them a certain amount tax free each year (I forget the amount) Put $5 million for each into a trust. That still leaves $33 million to give away. That would pay for a whole lot of bridges over troubled water.
A HERETIC I AM
(24,368 posts)LOL...The understatement of the year!
Stocks are bid up or down based on the speculation of future earnings. When the P/E ratio gets out of whack, it bears being more careful. On this I would think we agree.
People who think it will go higher still.
As my father would say, "If wishes were horses, beggars would ride.
I'm still kicking myself for not buying a few hundred shares of Yellow Roadway when it was $.75/share. Yes...seventy five cents, and Ford when it was below $1.50, both instances back in early '09. YRCW is trading at the $11 level and was as high as $21 in the last 12 months and Ford is at $12 and got as high as $30 a couple years ago
I don't agree with the characterization of FB being a "Ponzi Scheme", as it is anything but.
clarice
(5,504 posts)PersonNumber503602
(1,134 posts)I'll be outraged when some evidence comes forward that he is actually using the money he donated to buy himself new toys, is used for lobbying, or other questionable activities. I'm not saying that's not his plan, because it very well could be. But just because it's possible, it doesn't mean that's what he is doing.
Nye Bevan
(25,406 posts)It suggests that this is a vehicle that allows Zuckerberg to avoid all taxes but still be able to spend whatever he wants on himself and his family. Obviously this is not true (and has been debunked earlier in the thread) but if it was this easy to achieve such an outcome, wouldn't every rich person be doing it?
KelleyKramer
(8,961 posts)That's just off the top of my head.
Billionaires have been using tax dodges for over a hundred years.
Response to marmar (Original post)
1000words This message was self-deleted by its author.
polly7
(20,582 posts)nationalize the fed
(2,169 posts)That's exactly what this punk did.
Well, These New Zuckerberg IMs Won't Help Facebook's Privacy Problems
Business Insider May 13, 2010
According to SAI sources, the following exchange is between a 19-year-old Mark Zuckerberg and a friend shortly after Mark launched The Facebook in his dorm room:
Zuck: Yeah so if you ever need info about anyone at Harvard
Zuck: Just ask.
Zuck: I have over 4,000 emails, pictures, addresses, SNS
(Redacted Friend's Name): What? How'd you manage that one?
Zuck: People just submitted it.
Zuck: I don't know why.
Zuck: They "trust me"
Zuck: Dumb fucks.
http://www.businessinsider.com/well-these-new-zuckerberg-ims-wont-help-facebooks-privacy-problems-2010-5
Facebook is just another AOL. Why anyone bothers with it is a mystery.
hifiguy
(33,688 posts)Hey Markie, tumbrels and guillotines are very easy to build. You might want to remember that, dipshit.