How Mark Zuckerberg's Altruism Helps Himself (nytimes.com)

HughPickens.com writes: Jesse Eisinger writes in the NYT that if you heard that Mark Zuckerberg donated $45 billion to charity, you are wrong. Here's what really happened: Zuckerberg did not set up a charitable foundation, which has nonprofit status. Instead Zuckerberg created an investment vehicle called a limited liability company (LLC) that can invest in for-profit companies, make political donations, and lobby for changes in the law. What's more an LLC can donate appreciated shares to charity, which will generate a deduction at fair market value of the stock without triggering any tax. "He remains completely free to do as he wishes with his money," writes Eisinger. "That's what America is all about. But as a society, we don't generally call these types of activities 'charity.'"

A charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg LLC won't be subject to those rules and won't have any transparency requirements. According to Eisinger what this means is that Zuckerberg has amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. "Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in," concludes Eisinger. "The point is that we are turning into a society of oligarchs. And I am not as excited as some to welcome the new Silicon Valley overlords."

Comments

Inheritance Tax

[mentil]

I imagine this move allows ownership of the LLC to be transferred to his children without invoking an inheritance tax. However, I suspect he intends to create something like the Bill & Melinda Gates Foundation; it's enough money it could be distributed to numerous semi-autonomous sub-organizations to figure out how to spend, and be directed towards thousands of different projects, many of which would fall outside the scope of a normal charity. For example, how many charities directly engage in R&D? At most they'd funnel money towards companies already doing desired research, but if none currently exists? It could do things like what Google X does.

Making shady donations to charity for tax writeoff purposes is nothing new. I remember in the late 90s Microsoft donated large amounts of software to charity, and used its retail value (which they are able to arbitrarily set!) to calculate the value of their charitable donation. Of course since it's an infinite good it costs them near nothing.

Re:I am shocked and surprised

[Opportunist]

By letting the money run some laps and never realize a profit. Duh.

Analysis Available on Snopes

[PantherShade]

The Snopes website did an analysis of the tax implications and control issues. They also elicited additional comments from a Facebook representative. http://www.snopes.com/2015/12/...

Re:The real problem

[Archangel Michael]

Stop giving politicians the means by which to control us.

If we realize that Taxes are regressive (all of them) then we can start to address the problem. Government (especially ours) aren't built on efficiency. In fact, I would postulate that large parts of government are designed to waste money to grow budgets to gain power to control more budget monies. Zero based budgeting would be a good step in reining in budgetary excesses that have been and are built into the system that requires ever increasing amounts of regressive taxes.