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Monday, August 6, 2012

Will Mark Zuckerberg Ever Pay Taxes Again?

FacebookCNBC:  Will Mark Zuckerberg Ever Pay Taxes Again?, by John Carney:

Next year Mark Zuckerberg’s base salary will receive a dramatic pay cut—going from a base salary of $600,000 to just one dollar.

Which raises the question: will he ever pay taxes again? ...

Zuckerberg’s pay cut could reduce his income tax burden to nothing. It’s possible that he might even be eligible for certain types of government aid for those with low-income -- although it’s unlikely that he would collect them.

In order to reduce his tax burden to zero, Zuckerberg would have to forego any future cash bonuses or additional stock awards. He would also have to stop employing certain Facebook services for personal use. Last year, for example, he had imputed income from the use of aircraft for personal use of about $692,679. He also received $90,850 in estate and financial planning from Facebook.

Can Zuckerberg really live without income? ... When you have the net worth of Zuckerberg, you can live for a very, very long time on tax-free debt that you can use as income. Let’s say that Zuckerberg needs $2 million of spending power per year and lives another 60 years. That’s $120 million of spending. If he gets an interest rate of 4 percent and just rolls it.

I have no idea what kind of plans Zuckerberg has for his future income and taxes. He may not want to accumulate debt for his entire life. Perhaps he has plans to become a big spender and will need to derive income beyond what he can get from muni bonds. But it’s very likely that at least some of the $90,850 worth of financial advice Zuckerberg received went to minimizing tax exposure.

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