Zuckerberg Answers Critics of His Move To Give Away His Facebook Stock (facebook.com)

An anonymous reader writes: Mark Zuckerberg's announcement that he and his wife are giving away $45 billion worth of Facebook stock garnered a lot of praise and a fair bit of criticism. The Facebook CEO answered some of the apprehension in a post that reads in part: "By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. Just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."

Comments

Re:Haters gonna hate

[93 Escort Wagon]

Nothing any corporation does is altruistic.

who cares?

[ganjadude]

its his money its his right to do what he wants with it.

if he wanted to get all his money in a pile and burn it, that would be his right. I dont get why people care what others do with their own money

Re:who cares?

[Anonymous Coward]

Seriously? He announced he was giving this money away in a clear attempt to generate good will for himself and/or Facebook.

He wants people to care otherwise he wouldn't announce it. If he wants to announce it though he must accept it being scrutinized.

Of course it doesn't matter if he's trying to dodge taxes, no one that uses Facebook is giving it up any time soon. He could be selling aids tainted blood and he'd still be in business.

Re:who cares?

[rudy_wayne]

its his money its his right to do what he wants with it.

  if he wanted to get all his money in a pile and burn it, that would be his right. I dont get why people care what others do with their own money

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. 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. We don't generally call these types of activities 'charity.'

Contrary to what Zuckerberg claims, the creation of his LLC means he will probably pay no taxes on his $45 Billion.

He can do what he wants. No argument there. The problem is, he's being dishonest about what he's doing and why he's doing it.

Re:who cares?

[fluffernutter]

Some people still think dishonesty is a bad thing. I know a lot of people think if it's legal it should be allowed, but I personally don't like to see anyone being dishonest.

Re:who cares?

[kangsterizer]

ethics != legality
its legal to be a total asshole. its not ethical.

Re:who cares?

[KGIII]

You know, it's comments like yours that make me think about no longer donating and no longer do the right thing. I do the right thing, no because I have to but because it is the right thing to do. I don't owe you anything - except taxes, which I pay in full, to slightly more than is dictated as dictated by law and I pay someone pretty good money to ensure that every single tax is paid.

Yet, rough guess, I probably donated between 15 and 40 times your yearly income last year and wrote very little of it off because I'm kind of lazy like that and I prefer to make anonymous donations so that I'm not plagued by folks looking to have me support their various causes by intruding on my tranquility.

I don't owe you shit. Every single penny I have was earned legally and without any ethical concerns. I've paid every single obligation, ever. I owe nothing to anyone even if you facilitated my accumulation of wealth. You have no right to it. If you didn't want to then you shouldn't have helped. We've set up society to act like this. My obligation, what I owe, is in the form of taxation and that is paid in full, on time, and rounded to the highest dollar value (for State and Federal taxes).

I give because I want to. I give because I think I'm obligated to do so. I give because I can. I don't *have* to. I just feel like I have to. I don't owe you a damned thing. I don't have nearly as much accumulated wealth as this person but they don't owe you a damned thing beyond their mandated taxes. And before you chirp about taxes, tax avoidance is legal - some might even say ethical. The contract is clear - it is taxes. I pay every single obligated cent. I owe nothing beyond that in any sense of the word. I feel like I do but I am not.

Just because you lack the means to help others does not mean that someone else is obligated to do it in your stead. You do not have a right to my property. You do not have a right to dictate what I spent my money on other than taxes and, err, illegal goods and maybe a few things that I'm skipping. But no, you don't have a right to my money just as I don't have a right to yours. You are far more wealthy than the a very sizable number of others. Start by giving away your wealth but don't think you've got a right to mine. I share because I want to, not because I'm forced to. Pray I don't alter the deal any further.

How Mark Zuckerberg’s Altruism Helps Himself

[fahrbot-bot]

From this Dec 3, NY Times article How Mark Zuckerberg’s Altruism Helps Himself:

(Why an L.L.C.?)
An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law.

(Why not a charitable foundation?)
... a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements.

(Tax implications)
... if the L.L.C. sold stock, Mr. Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing. If the L.L.C. donated to a charity, he would get a deduction just like anyone else. That’s a nice little bonus. But the L.L.C. probably won’t do that because it can do better. The savvier move, Professor Fleischer explained, would be to have the L.L.C. donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax.

All legal. Don't hate the player, hate the game... (or so I'm told)

Re:How Mark Zuckerberg’s Altruism Helps Hims

[MikeKD]

All legal. Don't hate the player, hate the game... (or so I'm told)

Fuck that--I'll sure as hell hate the player for playing the damn game.

I think the grandparent's point

[rsilvergun]

is that this is all very likely a smokescreen for his political and lobbying activities. That's why he doesn't just run it as a real charity. Real charities aren't allowed to do the kinds of things Zuckerberg (probably) wants to do. He's going to use this as a very big stick to get things he wants. He's not doing this out of the kindness of his heart.

The only times I can think of when a Baron genuinely turned to charity are at the end of their lives when a few of them got the fear of God (and more importantly hell) in 'em.

Re:Regulation strikes again

[slew]

It's now so onerous to run an organization the IRS considers a "real" charity that lots of big money that actually cares about accomplishing something, will soon be taking similar steps.

It is not *onerous* to run a legal non-profit (e.g., "real" charity). The provisions in the law Mr. Z. probably doesn't like about legal charities is that they aren't allowed to *hoard* money and must spend most of their annual income on charitable pursuits every year (a $1B will throw off a bunch of imputed income at a minimum that will need to be distributed). If you want to *hoard* your money or not spend all of it on charitable pursuits, you might consider the legal provisions *onerous* and want an LLC.

In contrast, the Bill and Melinda Gates Foundation is an actual legal charity. What Mr. Z is doing is similar to a trust (e.g., the kind of legal structure that directs how your inheritance is distributed after you die). There's no requirement that a trust spend the money charitably (you may have heard of trials and tribulations of many trustfund babies) and there is no requirement to disclose how it is distributed.

I'll give Mr. Z the benefit of the doubt. Maybe he doesn't want a non-profit because he has no idea what charitable cause to spend his money on yet (he had so much luck with NJ schools donation) and doesn't want to be forced to spend the money right away until his has time to figure it out. On the other hand he could have just said that, so maybe he has an ulterior motive.

FWIW, as I recall being forced to distribute the imputed income annually was an issue with Warren Buffet donating his money to the B&M Gates foundation. He conditioned his donation on Mr Gates stepping down from MSFT and operating his foundation full time rather than leave it to foundation employees (and likely be pissed away).

Re:Regulation strikes again

[ultranova]

It's now so onerous to run an organization the IRS considers a "real" charity that lots of big money that actually cares about accomplishing something, will soon be taking similar steps.

Money that cares about accomplishing something can bloody well pay its taxes for it, whether someone thinks its cause is just or not. The whole concept of tax exemption is just asking for tax evasion, which in turn will of course result in regulation. The same goes for religious exemptions.