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Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

nytimes.com

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Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#41

Post by jayess »

If anything, this transaction will actually result in more taxes being levied than if he had transferred it to a foundation. There still will be capital gains tax when the LLC sells Facebook shares. It will pay income tax on any dividends. Any investments it makes will similarly be treated. There will be no estate tax dodge. The LLC will be valued at the value of its assets at the death of the last spouse and estate tax will be levied at 40% on that value.

Please, someone, tell me how this is a tax dodge.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#42

Post by vezzy-fnord »

phillmv wrote: post #31
Nrsolis wrote: post #10

Earlier quoted context omitted.

I don't see how this is a problem. He's following the law and organizing his affairs to retain control of the money he earned. You aren't less of a citizen because you try to not pay more tax than you owe. The exemptions for certain types of income are put there because the legislature wants to promote certain activities as beneficial to the public good. Charitable Remainder Trusts are one of those things written int…

>If you think so, then donate 100% of your income to the government and live on public assistance. I've always found these arguments to be poor attempts at a reductio ad absurdum. While some people do take vows of poverty, by and large this is not what's meant by advocates of public institutions. The thing is that there is a large body of services and capital investments that are most efficiently - for both economic…

The thing is that there is a large body of services and capital investments that are most efficiently - for both economic and political reasons - conducted by accountable, democratic institutions. The canonical example are roads and firemen but also education and public transit and healthcare and some kinds of housing.

Extremely debatable.

That said, public education is such an evident failure that it's doing you a disservice to list it. Alternatives like Sudbury schools tend to be privately or cooperatively owned institutions.

(Also, most firefighters are volunteers, who need not be publicly funded.)

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#43

Post by hvalika »

jayess wrote: post #12
amalag wrote: post #6

Earlier quoted context omitted.

Not necessarily. He has just moved it around. He is ANNOUNCING he will do something good. He could use all the money to bankroll candidates or invest in for-profit companies. Nothing has changed yet except that he can avoid estate taxes. He however has said he will do something "good".

As far as I understand, he wouldn't avoid estate taxes. Whoever dies last would still own the LLC as an asset and the estate is taxed on the value of that asset. With their combined estate tax exemption, about $10.5 million, any value over that would be taxed at 40%. Unless he remains true to his word and he expects to spend it all before he dies. The only "avoidance" of taxes happening here is during the initial tra…

Just a slight clarification -- there is no "avoidance" going on here. This is merely "deferral." Transferring the shares of any company to another company is often a tax free transaction (provided some basic rules are met) under Section 351 of the tax code. (This is Tax 101).

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#44

Post by rmc »

Nrsolis wrote: post #10
amalag wrote: post #3

By putting money in the LLC he can avoid estate taxes and still give his family control if he wants. >To sum up, his money is not going to a charity, but to his own LLC, which will let him evade tax by moving his private assets into a foundation. >Unlike a charitable trust, which is compelled to spend its money on charity, Chan Zuckerberg Initiative, LLC will be able to spend its money on whatever it wants, including…

I don't see how this is a problem. He's following the law and organizing his affairs to retain control of the money he earned. You aren't less of a citizen because you try to not pay more tax than you owe. The exemptions for certain types of income are put there because the legislature wants to promote certain activities as beneficial to the public good. Charitable Remainder Trusts are one of those things written int…

> Seriously. does anyone reading this post think the government is a better steward of their income than they are? If you think so, then donate 100% of your income to the government and live on public assistance. That option is provided on the tax return you sign here in the USA.

Nonsense. I can support the idea of a democratic welfare state, and be opposed to the rich avoiding taxes, without having to give up all my money.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#45

Post by rmc »

encoderer wrote: post #14
6stringmerc wrote: post #7

Earlier quoted context omitted.

In some ways, yeah, but viewed in another light, it's sad to see the tax code so ridiculously complex and catering to the rich that a guy like Zuckerberg or Romney can effectively pay a lower tax rate on investments than a working-class citizen would pay on their direct wages. Sometimes there needs to be a 'poster child' to focus on as an example of when even doing something admirable leaves a bad taste in the mouths…

Regular working class citizens can also pay lower taxes on their investments than on their own labor.

The law, in it's great equality, forbids the poor and the rich from sleeping under bridges.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#46

Post by newjersey »

Nrsolis wrote: post #10
amalag wrote: post #3

By putting money in the LLC he can avoid estate taxes and still give his family control if he wants. >To sum up, his money is not going to a charity, but to his own LLC, which will let him evade tax by moving his private assets into a foundation. >Unlike a charitable trust, which is compelled to spend its money on charity, Chan Zuckerberg Initiative, LLC will be able to spend its money on whatever it wants, including…

I don't see how this is a problem. He's following the law and organizing his affairs to retain control of the money he earned. You aren't less of a citizen because you try to not pay more tax than you owe. The exemptions for certain types of income are put there because the legislature wants to promote certain activities as beneficial to the public good. Charitable Remainder Trusts are one of those things written int…

> Seriously. does anyone reading this post think the government is a better steward of their income than they are? If you think so, then donate 100% of your income to the government and live on public assistance. That option is provided on the tax return you sign here in the USA.

I suspect there might be a strawman in here somewhere. Yes, it is OK to do everything you can to try to limit the money you have to pay in taxes. However, so much wealth concentrated among so few people is not very desirable. (I understand that the American public disagrees with me on this.)

I think progressive income taxes and estate taxes are very important. I don't think I am arguing for anything outrageous. I guess a nice sound bite/tl;dr would be to say "I want to cap the income tax at half of total income, regardless of how high the income is". I just wish that people with money understood that their efforts to lower taxes for themselves to absurdly low rates is detrimental to stability. I wish they thought beyond this quarter's tax bill.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#47

Post by mikeash »

I don't think I've seen a single positive statement about Zuckerberg's foundation.

It would have been 100% fully within his right to simply keep it all, or blow his fortune on snorting Fabergé eggs, or buying classic cars and crashing them.

Instead, he's giving almost all of it away. He's choosing to retain control over how it's given away? Well so what! It's still way better than keeping it all.

I am no fan of Facebook, but man, the amount of vitriol coming out about this move just astounds me. Giving away 99% of your wealth is apparently not commendable unless you do it just right. Meanwhile, how much are the commenters themselves giving away? Oh, somewhat less than 99%? Yeah.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#48

Post by refurb »

blocktuw wrote: post #34
Nrsolis wrote: post #10

Earlier quoted context omitted.

I don't see how this is a problem. He's following the law and organizing his affairs to retain control of the money he earned. You aren't less of a citizen because you try to not pay more tax than you owe. The exemptions for certain types of income are put there because the legislature wants to promote certain activities as beneficial to the public good. Charitable Remainder Trusts are one of those things written int…

The trope that minimizing your taxes is good and should be encouraged is tired and political. The reasoning that one isn't breaking any rules is like saying it's ok to take the entire bowl of Halloween candy because there aren't any rules against it. It is against the spirit of taxes which pool resources for the greater good of everyone. Everybody has to pay taxes. Some people have the means to avoid paying a fair am…

Would you argue that taking advantage of your 401k deduction is unfair to everyone else? How about the mortgage interest tax deduction? Deduction for child care?

I'm just curious where you draw the line.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#49

Post by refurb »

matt-attack wrote: post #25

I thought it was impossible to donate money (in a tax deductible manner) if you the donor had any direct control of how the money was spent. This was supposed to prevent folks from, say, donating their money to a charity which then sends their own child to college.

My understanding is that you are correct. I'm assuming he setup the LLC in some way that he doesn't have direct control over the money. Or at least it appears that way.

Re: Mark Zuckerberg’s Philanthropy Uses L.L.C. For More Control

#50

Post by cmacpher »

DanielBMarkham wrote: post #22

I don't know Mark and can't comment on his essay or this article. I can, however, note that on at least 3 different occasions in the last year or so I've read a heartfelt essay on somebody making sacrifices for the common good -- only to later realize they were just setting up a tax dodge. I do not think these things are mutually exclusive. You can both work for the common good while trying to legally avoid paying ta…

what 3?
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