Quote of the Day: Mark Zuckerberg's "Charity" as Tax Shield

Like any parent, they want their child to grow up in a better world.

And they outlined their vision to make this happen, including taking risks and making long-term investments, building technology, and backing strong, independent leaders and visionaries.

This sounds conspicuously like the mission statement for any number of high-end Silicon Valley venture capital firms.

In a way, this is what the Zuckerbergs have created.

At the end of the letter, they pledge to contribute 99% of their Facebook shares, currently worth about $45 billion, to “advance this mission”.

The New York Times jumped on this immediately: “Mark Zuckerberg vows to donate 99% of his Facebook shares for charity.”

Incorrect. This isn’t charity.

The Zuckerbergs formed a limited liability company (LLC). It’s not a non-profit or charitable trust.

The Chan Zuckerberg Initiative is a for-profit, privately held vehicle that’s intended to make investments that will advance their vision.

Over the course of their lives, they’ll transfer Facebook shares to the LLC.

But as that transfer is considered a donation, the Zuckerbergs will be able to completely eliminate capital gains tax from their Facebook shares.

Plus they’ll be able to shield billions of dollars of other income from tax by writing off the donation as a charitable contribution.

Perhaps the biggest benefit is that the Facebook shares could now entirely avoid US federal estate tax.

At the end of the day, Mr. Zuckerberg gets to retain -control- of his fortune and shares, directing funds as he sees fit into for-profit, private investments, while drastically reducing his tax bill.

This is no surprise. Zuckerberg has already proven tremendously adept at minimizing taxes.

Facebook paid $178 million in net tax on pre-tax profit of $4.91 billion in 2014, an effective tax rate of 3.6%.

And there is no shortage of critics who have a major problem with this.

These hopelessly delusional and misguided people still actually believe that the way to make the world a better place is to give incompetent, corrupt politicians more money.

And in a height of arrogance, they think they are entitled to some claim on Mark Zuckerberg’s wealth.

Sorry, but this is complete lunacy.

This excerpt is from Sovereign Man founder Simon Black's latest article at his website.

The establishment of the Chan-Zuckerberg Initiative charitable trust represents a deft and an ingenious move: conversion of the Zuchkerberg's Facebook assets to a tax shield which was publicized as charity. It's like hitting two birds with one stone: The move, through PR means, reduce the populist politically incorrect rap on them, as well as, to starve ever esurient Leviathan beast