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How dare that 1%er Mark Zuckerberg make so much money, only pay his peasant workers $67,000 a year AND only pay an effective tax rate of 7%!!

If things go as planned, Zuckerberg will exercise $5 billion in Facebook options, and pay federal and state taxes of nearly $2 billion -- making him the largest single taxpayer in history. Sounds like he's a hell of a guy, doing his part to help the cash-strapped public sector.

But in reality, he'll be paying an actual tax rate of about 7 percent -- less than nearly all Americans.

Zuckerberg's stock will be worth around $28 billion. But he won't have to pay any tax at all on most of it. As tax lawyer David S. Miller notes in the New York Times:

Instead, he can simply use his stock as collateral to borrow against his tremendous wealth and avoid all tax. That’s what Lawrence J. Ellison, the chief executive of Oracle, did. He reportedly borrowed more than a billion dollars against his Oracle shares and bought one of the most expensive yachts in the world. ... If Mr. Zuckerberg never sells his shares, he can avoid all income tax and then, on his death, pass on his shares to his heirs. When they sell them, they will be taxed only on any appreciation in value since his death.


Consider the case of Steven P. Jobs. After rejoining Apple in 1997, Mr. Jobs never sold a single Apple share for the rest of his life, and therefore never paid a penny of tax on the over $2 billion of Apple stock he held at his death. Now his widow can sell those shares without paying any income tax on the appreciation before his death. She would have to pay taxes only on the increase in value from the time of his death to the time of the sale.

Mark Zuckerberg will pay less tax than you
4 posted on 12/13/2012 9:49:42 AM PST by Eagle of Liberty (Be the Enemy Within the Enemy Within...)
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To: Eagle of Liberty
And its funny how places like CNN only get pissed at tax rates in states like California when they harm one of their own:

Either way, the windfall lines him up for a whopping tax bill. The top U.S. marginal tax rate this year is 35%. Zuckerberg's home state of California also carves off a big slice, hitting those with incomes of $1 million or more with a 10.3% income tax.

Stock options are a tax swampland, and it's hard to estimate precisely what Zuckerberg will end up paying. But tax analysts are ballparking the total at somewhere in the $1.5 billion to $2 billion range -- a nearly unprecedented sum.

The IRS doesn't comment on individual tax bills (no, but they will leak it if told to), but an analysis of the top 400 U.S. taxpayers with the highest reported incomes for 2009 (the most recent year available) shows that the average tax bill for a member of the ultra-1% club was $49 million. The top 400 collectively paid income taxes totaling $19.6 billion.

Zuckerberg could single-handedly boost that stat significantly in 2012.

Still, accountants said Zuckerberg's tax plan is the right move.

The 27-year-old entrepreneur is famously loathe to give up any ownership control over his company, and he plans to sell only enough stock to cover his tax bill, Facebook said in its regulatory paperwork.

That means that the rest of Zuckerberg's billions will remain hypothetical paper wealth, and his financial fortunes will stay closely entangled with Facebook's.

Facebook's Zuckerberg may face $2 billion tax bill
6 posted on 12/13/2012 9:56:41 AM PST by Eagle of Liberty (Be the Enemy Within the Enemy Within...)
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