Mark Zuckerberg Will Give Away More Than You Think

5 Dec 2015 | Author: | No comments yet »

Critics say Mark Zuckerberg isn’t quite ‘giving’ away his wealth.

Ever since Mark Zuckerberg announced on Tuesday that he and wife Priscilla Chan will give away 99% of their Facebook shares, there has been all types of analysis and commentary. Mark Zuckerberg’s gift horse is facing scrutiny, with the Facebook chief executive drawing criticism for creating a company, not a foundation, for the 99% of his Facebook shares that he plans to “give” away during his lifetime. Though the charitable act would have several tax benefits, as The New York Times pointed out, the power couple said they hope to use that money to “advance human potential and promote equality for all children in the next generation,” according to a long post by Zuckerberg on his Facebook page. And there can’t be many people on planet Facebook who don’t know that the Zuckerberg-Chans have marked the moment of their new parenthood with an astonishingly generous gift.

Zuckerberg responded to the criticism in a Facebook post Thursday, saying donating to charities is great, but it’s not the only way to cure disease, educate the poor and generally improve the world. Some has been critical, with particular emphasis on how the “Chan Zuckerberg Initiative” will be structured in a way that could reduce the couple’s tax bill (something Zuckerberg yesterday fought back against).

In focusing on philanthropy, the duo joins other high-profile billionaires, such as Warren Buffett and Bill Gates, who have committed vast sums of money in an effort to reduce poverty and improve conditions around the world. [5 Facts About the Wealthiest 1 Percent] Right now, the couple’s wealth amounts to an estimated $45 billion — equivalent to the entire economic output of Turkmenistan or Tanzania, and about enough to send each of the more than 117 million households in the United States a check for $380, with still a little bit left over. From funding the entire National Science Foundation for almost six years, to buying dozens of private islands, here are some of the things their enormous wealth could buy. But he also qualified it with the word “currently.” As in, those Facebook FB 1.69% shares were worth around $45 billion at the time of his blog post. Zuckerberg and Chan’s wealth could fund a significant portion of the federally supported scientific research in the country for a year: NASA’s 2014 budget was $17.8 billion, while the National Institutes of Health’s 2015 budget was $30.4 billion. Seriously, how can anyone else post to Facebook about their newborn child when you’ve set the bar at GIVING AWAY 45 BILLION DOLLARS IN FACEBOOK SHARES TO CURE DEATH or whatever crazy world salvation and tax evasion was in that long essay?

The tax evasion comment is an argument raised by a lot of people – essentially that if Facebook wants to help people, they could just pay their taxes properly. An LLC’s fewer restrictions mean his money can go to “the organizations that will do the best work — regardless of how they’re structured,” he said.

If Zuckerberg and Chan were to follow the example of other billionaires, a host of outlandish luxuries could be theirs, from a floating magnetic bed ($1.2 million), a gold-plated sports car ($10 million), the world-famous Burmese ruby ($30 million) and the most expensive painting ever sold at auction (A Paul Gauguin work that sold for nearly $300 million in February). Besides nonprofits, an LLC lets him invest in for-profit companies, such as ones developing energy technologies — an undertaking that a foundation is unlikely to take on.

I would imagine my local corner shop selling old heritage media (as Facebook types like to call newspapers) pays quite a bit more than that in corporation tax. While the feature was first accessible to some in September, it’s not a stretch to presume Zuckerberg had access a month earlier, including the option to add life events. He doesn’t have to report to a board of directors like he would with a nonprofit; in an LLC, he and any other owners are in control. “Essentially, Zuckerberg can do everything with the LLC’s money that he can do with his own money,” James Kwak, associate professor at the University of Connecticut Law School wrote in a blog post Thursday. He, of course, started work on the social network before then, but February 4, 2004 is the day the service officially launched, and so that’s what Zuckerberg set for his life event.

It also means that Zuckerberg’s firm is depriving our NHS, our schools, our police, our dinner ladies, our disabled people and our elderly of desperately needed funds. I’m going to be rich for the rest of my life with nothing to worry about (other than the fact I will be the most observed person on the planet with literally everyone being aware of every move I make for the rest of my life), but come on dudes!

As long as a given Facebook user has his work status published on Facebook, you can mess with it — but keep in mind that only backdated life events will get you a significantly different result. Every time I see that picture of the Zuckerberg Chans and read that they want to use the money to “provide everyone with basic healthcare,” I find myself wanting to take them to my local maternity ward, which is overstretched and over-stressed and really could do with their taxes – and asking them whether they are interested in those babies’ “human potential”. He expressed concern that others would follow, refusing to irrevocably relinquish control of the wealth and instead maintain “complete control” to “spend it on their own pet projects and political issues.” Other experts suggested that depending on how exactly the LLC is structured, the Zuckerberg-Chan family could save on income taxes by storing cash overseas or get a discount on estate taxes someday.

Indeed, the couple’s recent donations include millions given to the new acute care and trauma center at San Francisco General Hospital, where she works. So while it is indisputable that the first tranche of “causes” Chan Zuckerberg Initiative has helped – including undocumented migrants – are excellent choices, there are still questions to be answered. What’s interesting here is that CZI is not being set up as a charity or charitable foundation, but as a limited liability company owned and controlled by Zuckerberg. Forbes, the American business magazine that lists Zuckerberg as the 7th richest ‘Real Time Billionaire’, suggests it’s because “donating appreciated stock is a much better tax move than selling it and donating the sales proceeds”.

But at the moment some of Zuckerberg’s firm’s money seems to be morally ours – and, in this bitter winter of austerity we need it even more than usual.

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