If this is accurate and I'm inclined to believe it is, it makes arguments about lowering both income and capital gains tax rates even more pointless. Clearly the system is slanted heavily in favor of the wealthy no matter which way you look at it.
Reshared post from +Tim O’Reilly
This slashdot post puts a couple of important points together about how rich folks can avoid paying tax simply by borrowing against the value of their stock rather than selling it. For example, the post notes that since Jobs never sold his stock, simply borrowing against it, his widow now has to pay no tax at all, even if she sells the stock, since she inherits it at its current value free and clear of tax. (I'm not a tax lawyer, and can't attest that every detail here is correct, but I have heard this same story from tax accountants as well as from very rich friends.)
It would be really good to have a simple tax system with lower rates and fewer dodges, IMO. Of course, that's not possible with human nature, since whatever simplification occurs will soon be gamed, which is why we need a complete overhaul of the tax system every once in a while….
Nice to see that Zuck at least appears to be planning to pay some tax (but the story might have that wrong too. Unless he's doing this with the intention to pay tax, I can't imagine why he'd sell the shares he exercised (which would be subject to ordinary income unless they were held long enough to get capital gains) rather than simply selling some of his founders shares, which he's held since the beginning, and replace them with newly exercised shares, to get the clock ticking for capital gains rate on those shares too.
I guess what I'm saying is that from a tax accountant's point of view, this story probably is as full of holes as swiss cheese, but the notion that the rich do have some very easy ways to avoid paying any tax at all is quite sound, and the technique fairly common among those with large company shareholdings.
The Zuckerberg Tax – Slashdot
Hugh Pickens writes "David S. Miller writes that when Facebook goes public later this year, Mark Zuckerberg plans to exercise stock options worth $5 billion of the $28 billion that his ownership stake…
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