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

nytimes.com

31–40 of 118 posts

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

#31
post #10
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…

>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 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.

We can debate over the legitimacy of particular governance mechanisms (NIMBYs in the Bay!) or political actors in given jurisdictions (State senators in NY!) but by and large in North America people have some sort of say in outcomes that affect them.

The problem is precisely that by

>following the law and organizing his affairs to retain control of the money he earned

his gift is a considerably less selfless act. It's one thing to "eradicate malaria". It's another completely to "try to make the world resemble what Chan Zuckerberg want".

You're allowed to do this with your own money, of course. But it's considerably less altruistic of you. If you were anywhere at all already suspicious of his intentions given the product his company has developed, the idea that he will be dedicating billions of dollars towards his own (political) agenda is not exactly heartwarming.

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

#32

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.

> pay lower taxes on their investments

On all three pence? God bless America.

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

#33
post #10
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…

Its not a problem. But its not a charity act either, which is how he has portrayed it. Its a PR act around charity but really a vehicle to exercise power in both private and charitable arenas.

Again that's fine, but call a spade a spade. It plays into the overall narrative on Mark as being slimy and doubletalking about everything.

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

#34
post #10
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…

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 amount and retain even a higher percentage of their income. The poor pay many direct and indirect taxes which equals a higher percentage of their income than rich.[1]

Not saying that the world needs to be fair for everybody, but it's disingenuous to take advantage of public services and resources and say it isn't your responsibility to pay for them in an equitable way. Warrent Buffet understands this and wants it changed. [2]

And no meaningful tax reform law has any chance of passing due to gridlock in Congress. People like Zuckerberg are flaunting this fact and daring somebody to close loopholes.

[1] http://www.itep.org/whopays/full_report.php [2] http://fee.org/freeman/5-warren-buffetts-federal-tax-rate-is...

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

#35
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…

This sort of mindset only works when rich people are not the ones making laws in the first place. The law is not independent of the rich - they can influence the laws they follow. That's why it is a problem.

If that is the case, then in order to be consistent, one would have to celebrate subverting the tax laws made by the rich (even if done by one of them).

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

#36
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…

That article is wrong on quite a few key points, and misleading on others. > Mark will deduct the fair value of his gift to his foundation from his taxable income in the year he makes the donation. No he won't. The new foundation is an LLC, not a charitable foundation, so he's not eligible to take a tax deduction on it. And even if he was - 1. Giving away 99% of your wealth to save tax on the income from the other 1%…

This is about legally being able to buy politicians via lobbying, not about diddling taxes.

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

#38
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…

This sort of mindset only works when rich people are not the ones making laws in the first place. The law is not independent of the rich - they can influence the laws they follow. That's why it is a problem.

and what happens when we let the "poor" make laws? Endless welfare, unaffordable backroom union deals, massive corruption, massive taxation to move money from the uppers to the lowers, etc. Just visit Chicago or Greece to see what happens when the power shifts to the unions instead of companies.

Also, 'rich' is often a placeholder for companies. Companies want to be successful. That means compromise in a million different ways as bold moves can lead to bankruptcy, boycotts, competitors coming in and taking your market share, etc. Companies have an incentive to play ball as they want to survive and be competitive. Government, on the other hand, survives by default and doesn't have to be efficient at all.

The reality is that good government works when we have all players mobilized and part of the process. Its incredibly cynical to just claim the rich make laws to benefit themselves, especially considering that the US runs on a popular democracy model to the point of directly electing the highest office, which is unheard of in parliamentary democracies. The rich are vastly outnumbered. Perhaps you should consider that a lot of regular people vote in policies that are pro-business because they want jobs and wealth in their area. Not everyone can become a silicon valley hotshot or NYC finance banker. Those 'red state' policies you hate so much bring in employers, jobs, create wealth, etc. We tried communism. Turns out it didnt work. In fact it led to the deaths of 50-100m people and created autocracies, war, political persecution, poverty, and misery on a level unimaginable before.

My friends here in Chicago are all looking for new jobs because a couple employers have already left and many are planning on leaving as the tax level and anti-business attitudes here are killing the economy. This is a city of 3m people with a $550b GDP and we have a junk credit rating and no one knows how to pay off these fatcat union pensions. So yeah, be careful what you wish for. When the average guy has political power, he just writes checks for his friends at the cost of the taxpayer and the local economy. Without the business owning class calling some of the shots, there's really no incentive to do anything right as you can just keep dipping into the public treasury and when that runs out just keep raising taxes per the Chicago model. Which inevitably culminates into a Detriot-like bankruptcy.

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

#39
post #12
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…

I don't want to be totally negative on Zuckerburg. Maybe he will do good with the money. However:

An estate would not be taxed on the value of the LLC, the same way one he is not taxed on the value of his stock. It is taxed when sold. If he assigns family members as owners there would not be additional taxes when he passes away if the LLC's money continues to grow.

>11. Limited Liability Company (LLC) and Family Limited Partnership (FLP) FLPs and LLCs let you reduce estate taxes by transferring assets like a family business, farm, real estate or stocks to your children now, and still keep some control. They can also protect the assets from future lawsuits and creditors.

>Here's how they work. You and your spouse can set up an LLC or FLP and transfer assets to it. In exchange, you receive ownership interests. Though you have a fiduciary obligation to other owners, you control the LLC (as manager) or FLP (as general partner). You can give ownership interests to your children, which removes value from your taxable estate. These interests cannot be sold or transferred without your approval, and because there is no market for these interests, their value is often discounted. This lets you transfer the underlying assets to your children at a reduced value, without losing control.

https://www.estateplanning.com/Understanding-Estate-Taxes/

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

#40

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.

In its majestic equality, the law forbids rich and poor alike to sleep under bridges, beg in the streets and steal loaves of bread. - Anatole France
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