Editor's notes

Bow down to Zuckerberg, our lord and master

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tredmond@sfbg.com

Sometimes I love my Internet trolls. Not very often — mostly, the anonymous folks who call me a success-hating commie who's just jealous because he wasn't smart enough to start Facebook seem to come from somewhere far to the right of San Francisco. And they're rude. And they won't give their names. And fuck all of you, ya know?

But someone came along the other day and made a comment that so perfectly summarizes everything that's wrong with American political economics today that I just wanted to wave it around like a flag and tell everyone:

This is it. This is the problem we're facing. Wrapped up in two perfect sentences.

I had written a blog about how little tax Mark Zuckerberg will pay on his massive wealth when Facebook goes public.

According to the company's filings with the Securities and Exchange Commission, Zuckerberg intends to exercise $5 billion worth of stock options (out of $28 billion he will own). If he does that, he'll pay almost 40 percent in state and federal taxes — that's $2 billion — making him perhaps the single largest taxpayer in US history.

But he may never pay a penny of tax on the other $23 billion. So his actual effective tax rate is about 7 percent — far less than even low-income Americans typically pay.

Now, my trolls complain that I hate America and all that, and they say taxes are too high anyway. Then came this, from someone named DanO:

"I can't get too upset about a guy's tax rate when he has already dedicated the bulk of his fortune to worthwhile causes. In this case, I have more faith in Z getting his money into beneficial hands than I do the State of CA."

There — right there. That's the Republican mantra, going back to Ronald Reagan: American families know what to do with their money better than the government (that's gummint to you) does. Better to let the rich give their money to charity than to tax it and let the corrupt politicians give it away.

I feel as if I'm being transported back to the Middle Ages, when the noble king, the monarch of the realm, would upon occasion grant a boon to his loyal subjects — maybe free some peasant farmer of his debts, or hand out a few extra barrels of mead. Drink up, commoners, then kneel and bow to your lord.

Representative democracy sucks, and tax money is wasted and decisions by elected officials are often wrong. But it's still better than living under economic monarchy, no matter how bountiful is the grace of our masters.

Comments

Your commentary makes several good points, however there is one glaring error that needs to be corrected, or at least re-phrased. The statement "...But he may never pay a penny of tax on the other $23 billion. So his actual effective tax rate is about 7 percent " He does not actually "have" the other $23 billion. The shares of stock that are currently valued at $23 billion only represent the potential to collect this money. If, at some future date, he does cash out some, or all, of these shares it will then be taxed. If he donates them to some charity, he does not see the money, so in effect they are not his. Either way, if is false to claim an effective tax rate of 7%.

Posted by Guest on Feb. 15, 2012 @ 10:52 am

sweeping generalisations.

Just like he claims that somebody about to pay 1.5 billion in tax pays "less" tax than you or me.

Tim is just obsessed with the rich, and turns a blind eye to all the good, noble and virtous things they do and pay for.

Who helps the poor more - the Gates Foundation or a bunch of local politicians?

Posted by Guest on Feb. 15, 2012 @ 11:11 am

the most - but the point is charity will not compensate for an unjust or archaic tax system- why is there tax on a pair of baby shoes and not on online games, advertising, porno, theraputic massage or virtual 'goods'? Personally I think taxing individual wealth is secondary to instituting a VAT, and a tax on services. Why is there no luxury tax on the non medical use of medical technology and research to repay the massive public investments via tax breaks and public subsidies for this research and medical education. I cant get over congress tried to do this and because of lobbyists- succeeded in only taxing tanning salons. I also have a hard time with unions blocking the taxation of high value medical insurance plans. Yes, they may have had to pay a little more, but som many would have benefitted. So we keep digging the hole deeper and pretending something will bail us out - or not.

Posted by Guest on Feb. 15, 2012 @ 7:59 pm

income tax system was correspondigly scaled back so that the net change was revenue neutral.

Such a change would encourage working and saving and discourage mindless consumption.

Posted by Guest on Feb. 16, 2012 @ 5:07 pm

The Gates foundation -- funded with Microsoft stock that wasn't real money, according to your pal above -- does some great stuff. But it gives money to the folks that Gates and his hand-picked foundation staff (starting with his dad, who makes $1 million a year running that show) decide they want to fund.

For all the problems with politicians, I really don't want to live in a world where all decision about social funding come from unelected unaccountable people who happen to be rich. Sorry.

Posted by tim on Feb. 15, 2012 @ 3:03 pm

Ultimately, the original post correctly pointed out that you are confusing unrealized paper wealth with realized wealth and ignoring that our tax system generally taxes people only when they realize wealth (i.e. meaning when they receive cash or other property). In other words, Mr. Zuckerberg will not be taxed on the rest of his stock until he sells it, then he will be taxed on it. If he donates the stock, then he will get a tax benefit up to a certain percentage of his adjusted gross income for year for the amount of whatever the fair market value of the stock is at the time of his donation.

You could argue that the capital gains rate should be higher, or that we should do eliminate the charitable contribution deduction or impose stricter limits on it, and these would be reasonable arguments to make, even if others may not agree that such changes would make good public policy. But, your assertion that somehow Mr. Zuckerberg is currently subject to a 7% effective tax rate is complete malarkey.

Posted by Chris on Feb. 16, 2012 @ 4:39 pm

he is mainly concerned with City and County politics, and the City/County cannot levy an income tax, a capital gains tax or a wealth tax. State law prevents it. So his insanely envious desire to tax Zuck to the point where he needs food stamps is patently absurd because, even if Tim could achieve that, it STILL would not do SF any good.

But Zuck's wealth will benefit the city, both directly and indirectly. But Tim hates that because he cannot control it.

Posted by Guest on Feb. 16, 2012 @ 5:10 pm

You are no less predictable than your "Internet trolls".

Has there ever been an ounce of nonconformity ebbing from The Guardian? Does anybody over there not toe the Brucey Party Line?

Do you remember Matt Smith at the Weekly? He backed Matt Gonzalez for mayor, and also criticized Critical Mass. And Matt Gonzalez supported Adachi's pension reform measures while also working tirelessly to raise the minimum wage.

It is possible to be an independent thinker. A non-conformist. A contrarian.

Think about it.

Posted by Guest on Feb. 21, 2012 @ 4:14 pm

I don't know about Matt Smith, but Gonzalez is no independent thinker and hardly non-conformist. He saw that it was in his best interest to back Jeff Adachi, and was richly rewarded with the top job in the PD's office. In short, he is a politician with his finger to the wind...just like all the rest.

Posted by Guest on Feb. 21, 2012 @ 4:56 pm

Absolutely. Anybody who disagrees with the knee-jerk Guardian line must be a sell-out.

Wouldn't want to see anybody veer too far from orthodoxy.

Posted by Guest on Feb. 21, 2012 @ 5:59 pm

You sound just like him. Well, feel free.... Go right ahead and repeat this meme again and again and again. Perhaps if you say it enough times, people will begin to believe that there is some "orthodoxy" that progressives must toe the line to, or else! (what that "or else" is, is never quite clear.) Just don't fool yourself that we can't figure out who you are and what you are up to here. The irony is that the only ones swallowing the "orthodoxy" are right-wing trolls like you who waste your time sucking up to the 1% (who, incidentally, don't give a shit about you...sorry to break it to you). As Tim said, bow down to your masters, troll.

Posted by Guest on Feb. 21, 2012 @ 6:50 pm