Learn How The Wealthy Stay Wealthy And Avoid Taxes
Zuckerberg created the Chan Zuckerberg Initiative — not a non-profit organization, but, rather, a limited liability company. Zuckerberg and his wife would donate 99 percent (worth approximately $45 billion) of their Facebook shares to the Chan Zuckerberg Initiative — not a non-profit organization, but, rather, a limited liability company.
This move has already reaped enormous benefits, return-on-investment dwarfs that of his Facebook stock. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.
An LLC 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 LLC 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.
By going the LLC rather than the charity route, Zuckerberg and Chan avoid the rules and transparency requirements that a non-profit is required to follow. For instance, a charitable foundation must distribute a certain percentage of its assets annually, also by establishing an LLC will mean more favorable taxes for the Zuckerbergs.
University of San Diego School of Law professor Victor Fleischer, a tax specialist, said if the LLC sold stock, Zuckerberg would be hard hit but, if the company instead donated shares to a charity, he would get a deduction. But an even smarter move, Fleischer said, would be to have the LLC donate the appreciated shares to charity, producing a deduction at fair market value of the stock, which means no tax.
What this means is that he amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. Any time 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.