Mark Zuckerberg announced he will be giving 99% of his money to charity.
Mark Zuckerberg is full of sh*t.
He is taking this move straight out of the Billionaires handbook. He is doing it to get you ( and everyone else) to not hate him so much. But it is all just an illusion, as it always is.
Billionaires know they are despised and the little people want all their money taxed. In order to get the little people to f*ck off the Billionaires tell everyone they are giving it all away. No need to tax it because it will all be used for the common good anyway.
Then Everyone claps and slaps Mark on the back for being such a great guy.
But when you take a magnifying glass and look at what Mark is actually doing you see it is a lot less amazing then he pretends.
Mark Zuckerberg did not donate $45 billion to charity. You may have heard that, but that was wrong.
Here’s what happened instead: Mr. Zuckerberg created an investment vehicle. Sorry for the slightly less sexy headline.
Mr. Zuckerberg and Ms. Chan did not set up a charitable foundation, which has nonprofit status.
He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His P.R. return-on-investment dwarfs that of his Facebook stock. Mr. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.
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. He remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities “charity.”
What’s more, 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.
In covering the event, many commentators praised the size and percentage of the gift and pointed out that Mr. Zuckerberg is relatively young to be planning to give his wealth away.
So what are the tax implications? They are quite generous to Mr. Zuckerberg.
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.
Anytime a superwealthy plutocrat makes a charitable donation, the public ought to be reminded that this is how our tax system works. The superwealthy buy great public relations and adulation for donations that minimize their taxes.