There is something very troubling about the idea that the more successful/valuable your creation becomes, the less entitled you are to invest the fruit of your success into your next idea.
Mark, for example, was born, lived, grew up, went to school, started a business, etc, etc in the US and benefited from all of the things the US offers. You owe a lot to your government, and subsequently the 'tax payers', than you statement seems to suggest. Also the idea that Mark deserves all of his money because he earned it is also false. There are millions of people that have worked harder to succeed in life than Mark. Mark just got lucky. I don't mean to diminish his accomplishments, but luck plays a large role with any individuals success. That is one of the founding reasons for proper wealth redistribution.
When I was younger I had the naive opinion that my successes were my own doing. As I got older my opinion changed. Yes, I had something to do with it, absolutely. But a lot of it was being the right person in the right place at the right time.
There is a reason that I log in as luckydude.
Mark did receive extra benefits, he came from a family that was at the very least middle class or even at the very least American. This put him at a greater advantage then most of the rest of the country/world, an advantage he never earned from hard-work. It was just luck.
How is that "fair", well its not and the world is not "fair". That's why we have taxes, with the hopes they preform some for of wealth redistribution. Sadly wealth redistribution in the US is frowned upon and often not very well done.
Mark did receive extra benefits, he came from a family that was at the very least middle class or even at the very least American. This put him at a greater advantage then most of the rest of the country/world, an advantage he never earned from hard-work. It was just luck.
How is that "fair", well its not and the world is not "fair". That's why we have taxes, with the hopes they preform some for of wealth redistribution. Sadly wealth redistribution in the US is frowned upon and often not very well done.
And no experience in medicine, famine relief, climate science or any of a hundred other areas.
And let's remember that plenty of billionaires are climate change deniers, sitting at the center of dysfunctional corporate hierarchies full of infighting, posturing, and suspect expense accounts.
Sure, Bill Gates didn't start off with that experience. But from what I have seen of the foundation, I believe they are more effective in bettering the world, dollar for dollar, than the US Government.
This is a false statement. I applaud people who succeed in their businesses but accruation of lots of capital to a few people is not only due to them but due to the existing society around them. Infrastructure which facilitates logistics and enables a pool of workforce, stable civil society, etc. Not to talk about the economic system which makes financial transactions cheap and predictable.
If you don't like the idea of redistribution, let's think it like this: from the point of view of personal wealth, the economy is like a giant casino where the games are more complicated but most people actually win - and some people win a lot. Taxes can be thought as a fee for the right to participate in the fun and games.
Out of nothing? Would Zuckerburg been able to create Facebook if he was born and raised to subsistence farmers in Afghanistan, and lived his adult life in Sheberghan?
The fact is, people living in advanced nations have had huge investments made in them by their communities/nations in the form of clean water, schools, roads, rule of law and a thousand other things. Citizen's are morally obligated to pay a fair amount of tax, and because Zuckerburg has been widely successful, he should contribute much more that the average joe, even if he doesn't consume enough for it to be "fair".
A couple thought experiments:
1) If public sector spending was a good vehicle for increasing the public welfare, why don't people donate money to the USFG over other charities? Surely the Effective Altruism movement would be very interested if this were the case.
2) In 2015, the USFG spent $229 Billion on interest on all of the debts it owes, over 6% of its total budget. What makes you think paying off interest of the bad decisions of the legislative branch takes priority over any good-will private sector philanthropy, no matter how ego-fueled?
If you are an artist so good that your paintings are worth $1M each, should you get to have them? Or should someone walk in your door and say "whoa there, you have too much now, we're taking your paintings until you have the same amount of wealth as the $75k/year guy"?
If you paint million dollar paintings and leave them in your studio, I guarantee you the IRS will not knock on your door and say "you have too many paintings now, we're going to take them now".
If you sell those paintings, and make an INCOME, the IRS will expect you to pay INCOME TAX.
Seriously. How is the basic concept of taxes so hard to understand?
I'm not opposed to taxes but I am opposed to the idea that taxes should equalize everyone's wealth and that all big investment should come from the government.
Given that the US government wastes so much via corrupt deals, inefficiencies, insane surveillance, and absurd military spending- I would favor Zuckerberg directing the fund.
Wikipedia says the military is 17% of expenditures: https://en.wikipedia.org/wiki/Expenditures_in_the_United_Sta...
This may or may not constitute a lot, depending on who you are.
For example, iirc, a significant portion of NASA's budget is for military applications - spy satellites and such. Similarly, the DoD budget doesn't consider veteran's benefits owed to former soldiers, which is a large portion of the long-term obligations comprising the national debt. It also leaves out most of the national security complex (DHS, NSA, FBI), military applications in the Department of Energy, and so on.[1]
[1] https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
I'm cobbling together some more data points here. They aren't all for the same year, but are close to recent.
- Veterans Affairs: ~160B [0]
- DHS: ~65B [1]
- "non-military intelligence spending" (I assume including a solid chunk of NSA and CIA): ~55B [2]
- FBI: ~8B [3]
- retirement from Treasury (for service before 1984. The reference is interesting!) ~8B [4]
The Project On Government Oversight has a similar table [5] that includes some of my items, some additional items, and excludes some of mine. It reaches a $1 trillion "National Security" budget, which shakes out to about 28% of spending.
Thanks for the linking and push to keep digging! The "Military budget and total US federal spending" section of the article linked in the parent was a good jumping off point for me, as well.
[0]: https://en.wikipedia.org/wiki/United_States_Department_of_Ve... [1]: http://www.dhs.gov/sites/default/files/publications/FY_2016_... [2]: http://www.usnews.com/news/articles/2015/02/02/black-budget-... [3]: http://www.justice.gov/sites/default/files/jmd/legacy/2013/1... [4]: http://www.rand.org/pubs/research_briefs/RB3005/index1.html [5]: http://www.pogo.org/our-work/straus-military-reform-project/...
EDIT: formatting
A lot is an interesting question, especially given this (https://en.wikipedia.org/wiki/List_of_countries_by_military_...) which if you sort by percentage of GDP puts the US below Russia.
Is it that surprising that the country with far and away the highest GDP has the highest military spending in real dollars?
You can donate to military organizations that fund warfare directly?
The tax code works because it was written by people who had huge amounts of wealth and were pissed that the federal government (the People of the U.S.) created an income tax.
No other developed country has such crazy laws regarding charity donations as the U.S.
So, it's probably a better idea to approach it with a cynical perspective instead of an optimistic (naive?) one. It could turn out to not be estate-tax evasion... however it seems unlikely.
Wrong. France has the "Association Loi 1901" law and it's pretty much the same thing, a money laundering scheme for most of the organizations benefiting from it - most of the time politicians using public money to finance such organizations where they put their friends and families in charge.
This kind of things has no borders.
The estate planning part is more complex, I'm not qualified to answer that, but even in that article the linked option basically talks about how you can get a 40% discount on the value, but the estate tax basically kicks in regardless once you transfer LLC shares to your kids.
So it's not quite as cut-and-dried as saying, "Zuckerberg just robbed the treasury of $45b"
If any of the shares the LLC holds are liquidated by the LLC or granted to for-profits, situations where the "other reasons to create the LLC" are in effect, capital gains tax WILL be owed.
The LLC is as if he held the shares personally, when it comes to capital gains.
The estate situation is very different, not cut and dry, and that's what is being discussed in this article.
Also, more broadly, when you see a "sweeping end run around the taxation system", it may be instructive to consider why everyone else doesn't just do the same. Legal tax avoidance techniques are not secrets.
When your upside on doing fancy tax maneuvers is several billion, you can afford IRS lawsuits. And you can afford the initial time for a lawyer to set this all up.
Average people are using Turbo Tax for yearly taxes and relying on common law to handle their estate, because that's all they can afford.
The linked article seems to suggest that Zuckerberg is trying to take advantage of the system by gaining tax-exempt status while effectively _not_ making charitable gifts, that he is somehow trying to pass everything to the child while taking advantage of tax-exempt status of a charitable organization. I'm skeptical both that his intent is to try to do this, and that there is any scheme that could legally accomplish this.
On a different, but related, note, if I were a parent with $40Bn (or $30Bn, $20Bn, $10Bn, or even $1Bn) I would certainly avoid any plan where the bulk of my estate was to be left to my child. Having that much money is a big responsibility, and it's not something that's likely to add to a person's quality of life. Quite the contrary, it's likely a hindrance, not something I would want to saddle my child with. At most, leave them some large amount ($5M, $10M, $20M, $50M?), something basically guaranteed to make them a wealthy person who doesn't need to worry about money, but hopefully not enough to require that responsible management of their fortune be a main focus of their life. (I realize there are moral implications of having that much money for anyone who has even $10M -- perhaps even $1M -- but when the amounts get astronomical, say to hundreds of millions or more, the moral responsibility really does -- or should -- become almost overwhelming. Not a burden I'd want to put on my child.)
I might sound like a sucker, but that's just always been my thought on it. My mother once said something to me like that as a kid and I've applied it donating.
Also, notice that you're not somehow "getting something back" from other taxpayers in this scenario. You're just lowering your tax bill.
The historical reasons assume that many everyday community efforts (feeding the hungry, sheltering the homeless, abused women and children, planting trees, sheltering stray animals) is better done (and financed) at community level by community efforts rather than by central government and sending money to Washington D.C.
I don't understand how this is considered tax avoidance? It's not like you get more money this way, you just get to give slightly more to charity than you might otherwise, which is the point of the deduction.
With charitable giving you can avoid taxes but still retain exactly the same after-tax income (assuming that you were going to gift to charity regardless of whether you got deduction or not). That is, you can gift $100 to charity, deduct the gift, and so avoid (say) $30 in tax. In this case the gift to charity effectively results in you having $100 less than before. Or, for same net result to you (minus $100), you could gift (after-tax) dollars to charity, say $70, and pay the $30 in taxes that you avoided in previous scenario. Only in second case you ended up giving only $70 to charity, because $30 goes to government. In first case you gave all of the $100 outlay to charity, avoided the $30 tax.
http://www.nytimes.com/2015/12/04/business/dealbook/how-mark...
That's how property works, you know.
Hopefully this represents a step away from compulsory taxation as a society.
Briefly: if you pare Government back to core functions, you don't need much money. In New Zealand, we (meaning the Libertarianz) estimated it at around $2,500 / working adult / year. That (back at the turn of the 21st century) would get you courts, police, Parliament, defense, embassies and the glue to run it all.
Then you need a way of raising the money. Probably, most working people can afford $2,500 per year to keep civilisation running, especially if they're not paying any other taxes. Maybe a poll tax? Seems reasonable that those paying also do the voting. Could simply solicit donations, or maybe run a lottery.
But no: you couldn't run a socialist country that way. Which is sort of the point :)
No, what we need is to trim down the fat that your liberal arts degree decide to fluff in there for the sake of your ego.
One way to look at this is that Zuckerberg just robbed the treasury of $45B. Part of that would have come in through capital gains taxes and the rest through the estate tax.
What they do with that money is up to them, not the state. It's a pretty sweeping end run around the taxation system.
Maybe we'll get lucky and he'll use the money to good end like Gates is doing. And maybe not.
This is a heck of a tax code we've got, it's trickle down on a grand scale.
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