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

Posted by samzenpus on from the pleasing-some-of-the-people-some-of-the-time dept.

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."

16 of 240 comments (clear)

  1. The real problem by Anonymous Coward · · Score: 5, Insightful

    ... welcome the new Silicon Valley overlords.

    It was land, then railway, then oil, then information technology. Now, it's cloud services; there will always be a 'job creator' to take the position of overlord. The problem is the recent habit of giving them multiple tax breaks means they create fewer and fewer jobs to feed the 'trickle-down' fallacy that Reagonomics invented.

    1. Re:The real problem by ShanghaiBill · · Score: 3, Insightful

      The problem is the recent habit of giving them multiple tax breaks ...

      The tax breaks are not a "problem". They are a benefit. Bill Gate's foundation has saved hundreds of thousands of lives, and may save millions in the future. Worldwide deaths from malaria have been cut in half since he statrted working on the problem ... and malaria is just one of many problems he is trying to fix. If instead, that money had gone to the government, the entire endowment would have funded two weeks of social security spending. These foundations are putting their money to far better use than the government would. They are doing the things that governments should be doing, but aren't.

    2. Re:The real problem by Anonymous Coward · · Score: 5, Insightful

      The tax breaks are a problem, as the idea you can move capital around without any consequences.
      Deregulation has brought in a society that is as inequal as the French ancien regime. Maybe it's time for a new revolution.

      Zuckerberg, Gates and Company are nothing more than 21st century robber barons. That is what they are, and it is disgusting to hear people praise them because every once in a while they throw some breadcrumbs our way. Marie Antoinette used to do that and hear head in the end was chopped off along with a lot of other aristocrats.

    3. Re:The real problem by jellomizer · · Score: 3, Insightful

      The reverse side is that not for profit organization have too many limitations on them.
      Such as the ability to lobby. Strict rules on what to do with any money collected and what not to do.
      LLC may be an easier way to get things done.
      Heck most liberal conspiracy theories center around how corporations are the ones pulling the strings. If that is the case it would make sense that if you want to perform altruistic acts and have the power to get them to work a corporation isn't a bad idea.

      --
      If something is so important that you feel the need to post it on the internet... It probably isn't that important.
    4. Re:The real problem by Anonymous Coward · · Score: 5, Insightful

      The problem is the recent habit of giving them multiple tax breaks ...

      The tax breaks are not a "problem". They are a benefit. Bill Gate's foundation has saved hundreds of thousands of lives, and may save millions in the future.

      This is a lie. Aside from the fact that before we started "helping" the third world there were millions of starving suffering people whereas now there are billions because the increased resources just mean less selection criteria - it is an effort to funnel money overseas - away from the people the money was taken from through bad business practices such as those of Microsoft and Facebook. Tax breaks for helping the nation that allowed them to make the money - sure that would make sense. Tax breaks for sucking the nation dry to "benefit" foreigners in a way that has good PR and actual negative consequences for everyone but those pissing away the money - no.

    5. Re:The real problem by dinfinity · · Score: 4, Insightful

      Bill Gate's foundation has saved hundreds of thousands of lives, and may save millions in the future.

      And without tax breaks this would have never happened, right?
      Yes, fuck intrinsic altruism and basic fucking humanity, we need to make everything about money and how to motivate people with it.

    6. Re:The real problem by Austerity+Empowers · · Score: 5, Insightful

      Anecdotal and cherry-picked evidence about what another rich guy has chosen to do, but does not entirely add up. If this is about private individuals being more capable of managing money than governments, why isn't Zuckerberg investing in another charity? Does he not even trust Bill Gates to run a good charity? Probably not, I sure don't. Why can't all these rich guys team up and sponsor the same charity? Why can't they sponsor one or more charities that they've vetted out as being "generally good"? Because, they want to retain control of their money for whatever reason at all.

      Bill Gates, largely retired from the CEOing business, is choosing to act, but under no obligation, nor is it clear that he alone has the bandwidth to efficiently handle $40B any more than a government would be, he does have the luxury of a pile of money that he can spend or not spend at his leisure on anything at all that suits his fancy. His efforts in education are meddling at best, destructive at worst. In my opinion he's using his fortune to cause harm. Unlike the government he has no oversight, and can do whatever he sees fit for the problem he wants to solve, even if that means breaking something that is largely working for a demographic he is not interested in, or producing educated citizens that aren't interested in working for his industry or style of company. I mean that's the thing with kids, they grow up and choose their own path. I'm not the doctor my mom and dad wanted, my son likely won't be the geek I want. We teach them a general set of things that will help them, help themselves. We don't put them on a railroad with only one destination and tell them to ride it to the end or jump off.

      He could do a lot worse, and he could abuse the system much more than he is, I won't argue that. But I'm not going to sing his praises and I would still like to see this mechanism shut off. He should realize his (unimaginably large, impossible to spend) gains, pay taxes to the country that made him successful and try to make it better with his still (unimaginably large, impossible to spend) fortune, or having paid his debt, run off to some island somewhere. If he feels the government is misguided, and it eternally is, he has the influence and connections to make changes much easier than any of us peons, and the mindshare and influence to ensure we all know what is broken. God knows they are running around like squirrels on cocaine right now, and there's an entire political party of people who seek to represent rich white guys who are clearly not being given anything like a coherent direction. Donald Trump is the best they got...Donald Born-Rich Trump, that's it. Bill Gates? He could probably tell them a thing or two about the working world, and obstacles to actual american business.

      Mostly we're reacting to the utter bullshit of it all. Zuckerberg is not giving away his money, he's sheltering it in a tax-free, obligation-free loop hole. He created a letter to his newborn daughter (unstated undertone: I'm hurting your future for the benefit of the world) that is hard to read with a straight face, that ignores the fact that he is keeping $450M of it for his family, she'll never want for anything in her life. That's fine, but let's cut the melodrama, he's not sentencing her even to middle class life in the suburbs. She's got her road paved, in whatever school she wants, with whatever lifestyle she wants. He's giving the better part of $45B to a charity that is under his control, with relatively few limitations on what he can choose to do with that money to the extent that he's effectively not giving it away at all. This is mostly politics and attention whoring.

      How many Americans write letters to their children or have articles written every time they make a contribution to their 401(k) or invest in an HSA/FSA, effectively sheltering their income from taxes while reducing a bit of control over how the funds can be spent? That's basically what he's doing, except he doesn't even have the same limitations that those structures have.

    7. Re:The real problem by Applehu+Akbar · · Score: 2, Insightful

      "Zuckerberg, Gates and Company are nothing more than 21st century robber barons. "

      Yes, and proudly so. Their 19th century counterparts built the industrial age. The Silicon Valley barons have built the information age.

    8. Re:The real problem by operagost · · Score: 3, Insightful

      The Gates Foundation's progress against malaria was just mentioned above. I guess you didn't read it. Saving hundred of thousands of lives PER YEAR is not "breadcrumbs". Your cartoon idea of Marie Antoinette is in no way analogous to what some of these modern philanthropists are doing. It's clear that your attitude is colored by your personal opinion of these people, and not their works. A great man once said that "whoever is not against us, is with us," and you would be well advised to adopt that ideology.

      Woe to those who call good, evil; and evil, good.

      --

      Gamingmuseum.com: Give your 3D accelerator a rest.
    9. Re:The real problem by Anonymous Coward · · Score: 2, Insightful

      Why do you think taxation is a complex problem?

      Because figuring out what should or shouldn't be taxed is a complex problem.

      What counts for a flat tax? Say I inherit a house, and live in it. What should I be taxed on? The value of the house? Nothing?

      What if I inherit a house and I sell it to my spouse for $1. What's taxed?

      What if my job, instead of paying me more, gives me a place to live? What is taxed?

      Start looking at a flat tax proposal with a critical eye on how to exploit it. Where are the edge and corner cases? What's considered income for the flat tax, what is not?

      Then have fun tweaking the parameters. Most flat taxes are actually a simplified progressive tax system - they exempt all income under a certain amount from being taxed. So what income should be exempted? $10k/year? $30k/year? $50k/year? $100k/year? If you are arguing that taxation isn't complex, you should try asking five different people how much they think should be exempted, and you'll get five different answers.

  2. Par for the course by Crashmarik · · Score: 3, Insightful

    You don't think the 1.5 billion dollar Clinton foundation exists to be charitable ? Or the Howard Hughes Medical institute was anything more than a way to keep control of the money all the while reducing the effective tax rate ?

    One of the best things we could ever do for the country is simplify and rationalize the tax code, so it wouldn't be worth it to risk dodging it, and it was obviously fair to all involved. The 1986 tax reform act was a great step in that direction. It is a crying shame we haven't done more.

  3. Re: Interesting. I took advantage of the same thin by WarJolt · · Score: 3, Insightful

    This is how crony capitalism works. Perverse incentives in the tax code are exploited, so that rich insiders can avoid paying fair shares in taxes. Not saying I agree with significantly increasing taxes on the rich, but it does make it harder to break past that glass ceiling if you don't know how to strategize around unnecessarily complex tax laws which actually impose unnecessarily economic costs of their own in the grand scheme of things.

    I mean some people's tax rates are just criminally low even after deducting charitable contributions from their income.

  4. Heh, Are People Just Getting It? by segedunum · · Score: 3, Insightful

    These foundations are one great big tax avoidance, fraud and wealth parking vehicle. Nothing whatsoever to do with charity or philanthropy at all which is merely a cover. After all, when you say the word charity you get the brainless idiots coming out to do your defending for you. It was amusing to see the bum shuffling from various anonymous cowards on the Gates Foundation article.

  5. Re:He's paying capital gains tax by segedunum · · Score: 3, Insightful

    He gets to 'invest' with it in whatever he chooses, so he will be making more than he will ever lose in some token gesture. Kind of like how Bill Gates has become the richest person in the world again.......somehow. Plus, if he gets the LLC to donate appreciated stocks then there is no capital gains tax. These things are accounting dodges and fraud vehicles, plain and simple.

  6. I would just like to shout out... by Simulant · · Score: 4, Insightful

    ....a "big "fuck you" to the American mainstream media who spun this in that prick's favor all week.

    We'd probably all be better off with no news at all than this click bait bullshit system we've ended up with.

  7. Re:Except he gave it to himself by Archangel+Michael · · Score: 1, Insightful

    I'm not sure why everyone is hung up on the tax structure of a billionaire's charitable doings

    Because of taxes, and government and such, people feel entitled to his money. Therefore when the money stays out of government's hands, people get upset, because they don't control another person's money (directly or indirectly via tax/spend policies).

    There is a very subtle evil here, that most people are unwilling to address. People are greedy, but when they spend other people's money, they don't feel they are greedy.

    --
    Agent K: A *person* is smart. People are dumb, stupid, panicky animals, and you know it.