Zuckerberg Defends $45bn Foundation Plans As Critics Snipe
Promising to give away billions is enough to make anybody skeptical, but Mark Zuckerberg has taken to Facebook to defend his charitable plans. The social network founder announced earlier this week that he and his wife would be giving away 99-percent of their shares in Facebook over the course of their lifetimes, in an announcement timed with the birth of their daughter Max.
While many praised the couple for the plan, others were convinced that there was an ulterior motive at work, whether a tax dodge or something else. The criticisms have been enough to bring Zuckerberg back to the keyboard to further explain how the donation will be managed.
Rather than a traditional charitable trust, the Chan Zuckerberg Initiative will be an LLC. That, he writes, means greater flexibility in how the money and influence can be used, whether donating to non-profit organizations, making private investments in companies and initiatives, or participating in policy debates.
As for claims that it's all a way to avoid paying taxes on the billions the Zuckerbergs are worth, that's something else the young founder takes critics to task on.
"By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively. In fact, if we transferred our shares to a traditional foundation, then we would have received an immediate tax benefit, but by using an LLC we do not. And just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC" Mark Zuckerberg
The flexibility to be both donor and investor is seemingly central to the Foundation. "The key is to be able to fund whoever is doing good work, regardless of how their organization is structured," Zuckerberg explains. "Many foundations can't do this, but because of our structure we can."
Perhaps unsurprisingly, some of the commentary quickly turned to Facebook's track record in paying taxes, with accusations that the company hasn't been coughing up in all the countries it operates in. Zuckerberg had a response to that, too, effectively arguing that it's the outdated way taxes are collected in a digital world that is the root of the confusion.
"A lot of the debate is about which countries get the tax revenue. For example, say we make $100 in France based off technology we built in the US, data centers in Sweden, and sales offices in both France and Italy. Even if we pay a high tax rate on that $100, it will still be split between many countries and any single country may feel like it's getting a small portion. And the countries constantly argue and negotiate amongst themselves to get a greater share of the revenue for themselves. Even if we paid all of our revenue in taxes, I still think some countries would feel like we weren't paying enough — and of course we couldn't do this while keeping Facebook running" Mark Zuckerberg
No matter what Zuckerberg says, mind, there'll always be some who doubt the sincerity of the Foundation. Still, the proof will undoubtedly be in its performance, something likely to be closely watched as investments and donations gather pace.
SOURCE Mark Zuckerberg