Wednesday, April 10, 2013
CNN op-ed: Zuck Never Has to Pay Taxes Again, by Edward J. McCaffery (USC):
So, you think you have it bad this tax season. Have you heard that
Facebook founder Mark Zuckerberg will pay between $1 billion and $2
billion in taxes? That sounds like a tough pill for anyone to swallow.
But it is premature to
start a pity party for Zuckerberg. The twenty-something billionaire
reaped large financial gains from exercising the stock options that
triggered his tax bill, and he has benefited from favorable tax rules
along the way. Even better, Zuckerberg will survive his encounter with
the tax man in a position to never have to pay taxes again for the rest
of his life. ...
The truly rich do not
have to pay any tax once they have their fortunes in hand. They can
follow the simple tax planning advice to buy/borrow/die: Buy assets that
appreciate in value without producing cash (like shares of Internet
stocks), borrow to finance lifestyle, and die to pass on a "stepped up"
basis to heirs wherein the tax gain miraculously disappears.
Zuckerberg now has $11
billion or more with which to play this game. He can live off money
borrowed against that huge sum (rest assured, he can get good interest
rates), never having to sell any asset at a gain, and never having to
get an "ordinary" salary again.
(Hat Tip: Ann Murphy.) For more, see Edward J. McCaffery (USC), Distracted from Distraction by Distraction: Reimagining
Estate Tax Reform, 40 Pepp. L. Rev. ___ (2013).