I too initially thought the criticisms of Mark Zuckerberg’s new philanthropic foundation were in bad taste. Perhaps a little bit of sour grapes. Overly cynical.
But then I took the time to read some of the criticisms and realised that they had some really good points. So I was interested to see Quartz’s ‘Debunking’ of those criticisms.
I was, unfortunately, disappointed.
Here is my paraphrased summary of their “debunking”:
Mark rightfully wants to have the biggest impact possible with his philanthropy. Therefore he is right to found his own corporation so that he can avoid paying taxes on his capital gains, and retain control of everything. Who are we to question him? And besides, you’re just jealous.
My natural inclination is actually to give the benefit of the doubt to Mark. I do believe he has good intentions. But that doesn’t make the criticisms of his move any less valid.
In a move advertised to “make the world a better place”, his first step is to avoid paying a fair amount of tax on his massive profits. That really does not inspire a lot of confidence.
Everyone not in the Billionaire class seems to be stuck paying all of their tax bill every year – but for the mega wealthy, they are special. They get to make all of their money, and keep it to!
Oh I know, he doesn’t actually get to “keep it”. It goes into the LLC.
….which he controls.
Just stop and think about this for a moment. What does a multi-billionaire do with the extra billions he has in his bank account anyway? He certainly doesn’t need it for ‘cost of living’ expenses.
Once you get past the first billion or two, everything else is just waiting to be allocated to things you think are worthwhile. Like putting it into chosen charities, or investing it into startups and companies you think will make a difference, or potentially using it for political campaigning. ie: Exactly what Mark’s LLC will be free to do.
So the reality here is perfectly clear. Mark has simply arranged things so that he can move all of his capital gains out of the company, into his control (not ownership), without paying any tax on it. It’s brilliant. He, and his family, get everything, in perpetuity, without ever paying any tax on it. Not even estate taxes!
This means his entire lineage will be in the control of many billions of dollars of wealth without ever needing to worry about earning anything. Not that they get to spend it on their own cost of living – it isn’t *their* money. Sure. But they can definitely choose to hire themselves if they need a job…
Better still, when you control vast quantities of capital (which can be invested into companies and political campaigns), it is amazing how many other wealthy people (but not nearly as wealthy as your LLC) are willing to go out of their way to wine and dine you in the most extravagant ways possible in order to secure your support.
Being in control of a lot of money has many significant benefits which go along with it.
So basically, this is a great way to lock in your profits without paying capital gains tax, and also guarantee that your dynasty remains for many generations to come, never needing to pay estate tax either.
A great big F you to the government. And a call to the population to “Praise me!”
In my opinion, the criticisms against Mark and his “Philanthropy” stand. Nothing has been debunked.
Now we have no choice but to let him carry out his business as he sees fit. Hopefully he will actually live up to the ideals he has set forth for himself. Hopefully he will actually make a difference. Hopefully he will make the world a significantly better place.
You’re in charge now Mark.