Mark Zuckerberg Taxes: A New Facebook Tax Law?
Facebook's founder Mark Zuckerberg may face over a billion dollars in taxes if he opts to purchase the 120 million shares he earned rights to in 2005.
The social network company is currently discussing a $5 billion stock market launch, the value of the company has been estimated to be anywhere from $75 to $100 billion. If Zuckerberg chooses to buy the 120 million shares that he has earned rights to, he could stand to be one of the richest men in the world.
"At the high end of that range, assuming roughly 2.51 billion Facebook shares outstanding, each share may be worth about $39.79," Bloomberg reported. "Assuming Zuckerberg buys all 120 million shares at that price, his gains would total about $4.77 billion."
Get Our Latest News for FREE
Unfortunately for Zuckerberg, of that $4.77 billion, he would owe an estimated $1.67 billion in taxes. The $1.67 billion reflects a 35 percent tax rate.
SEE VIDEO OF FACEBOOK CEO MARK ZUCKERBURG SPEAKING WITH PRESIDENT OBAMA
However, Zuckerberg may likely never sell his share of stocks. "If Mr. Zuckerberg never sells his shares, he can avoid all income tax and then, on his death, pass on his shares to his heirs. When they sell them, they will be taxed only on any appreciation in value since his death," the New York Times reported.
Because this can occur when others have to pay a significant amount in taxes, David Miller of the New York Times has suggested a new " Zuckerberg Tax." He explains that the current tax system ignores unrealized wealth, such as stock held by businessmen like Zuckerberg and Steven Jobs, which are valued at billions of dollars.
Thus, he has proposed a new tax. "We could call this tax the "Zuckerberg tax." Under it, Mr. Zuckerberg would owe an additional $3.45 billion when Facebook went public (that's 15 percent of the value of the roughly $23 billion of stock he owns). He could sell some shares to pay the tax (and would be left with over $20 billion of Facebook stock after tax), or borrow to pay the tax," Miller suggested.
His selling points are that such a tax would not affect middle class Americans or small business owners.
