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Comment by tim333 | Hacker News Reader

I think the critics are mostly, maybe at a subconscious level annoyed by the unfairness of Zuckerberg first having a fortunate upbringing / IQ, then making $45bn before turning 30 and then doing saint like stuff. So they try to knock him down which I guess is understandable, and rationalise it in various not totally logical ways which I guess is human nature.

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I'm glad you're making an effort to understand the criticism, but unfortunately you need to spend more time doing so.

His company, Facebook, is infamous for not paying taxes. (On profits of three billion last year, it paid six thousand dollars in corporate taxes.)

Now, instead of paying taxes on his personal capital gains, he's placing them in an LLC, which he controls, ostensibly to do philanthropic work.

He could avoid all criticism by simply paying his taxes.

Well, I'd argue that the problem is not that companies make use of legal loopholes, which after all is perfectly legal, but that the system still hasn't been fixed to stop them from doing that.

It's not like I don't try to pay the least amount of taxes I can every year.

that is LOL bad reasoning: take a look at human history and see the lengthy list of atrocious things that have been legal at some point in time.

This is naive. Incentives matter. No matter how much you try to ethically spin it, actors generally perceive taxation as adversarial. Any country implementing a tax policy is fully aware of the risks they take from noncompliance and avoidance.

(Avoiding or resisting taxes is also not always a purely self-interested endeavor. It's a tried and true political protest technique.)

its naive to think that a bullet proof tax code can be written, at least based on history. at some point people need to be accountable for their actions, and not given a pass just because they can avoid breaking the law. its fine if you disagree about where that point is.

You have the causal chain backwards. It is the initiator of an action who must plan their decisions to reach an optimal end. It is not the fault of a consumer for refusing to engage in a given exchange with a producer. It is the producer who must make their offers palatable. In the same way, the government, being the one levying the tax, is the entity which ultimately bears the burden of structuring its tax policy to achieve the highest return.

that sounds like ignoring practice in favor of theory. when your boss asks you to build them something, you dont ask finer and more detailed questions until you have gotten them to write the code. i think its bad to let the lowest common denominator dictate our legislative policy- the lowest common denominator is going to fuck you over regardless.

I can see Eric Schmidt's point when he was CEO at Google which was being criticised for not paying tax in the UK. Basically that Google paid the exact amount stipulated in UK law and it that was too low it was up to the governments to change the law. I kind of agree - the situation is not good and should be fixed by the governments not the CEOs. After all the CEOs main duty is to serve the shareholder which they are doing in this case. The governments main duty should be to serve the people which they are being slack at.

I've got my own idea how to fix the situation. Could almost be done as a start up - feel free to use the idea - we need some sort of (ideally official) global accounting body that estimates how much profit each large international company makes globally and what percentage of their sales are in each country. So for Facebook that might be $4bn global profits, 42% US, 5% UK, SomeRandomTaxHaven 0.01% etc. Then all the politicians in any country have to do is say companies have to pay tax on the larger of either their local tax return or the international pro rata figure, so in this example the UK would tell Facebook to pay corporate tax on 4000*.05 = $200m or they'll ban them.

My understanding is that the founding of the Chan Zuckerberg Initiative has no tax implications at all. The only way that tax would be avoided is if the foundation sells some Facebook stock and donates the proceeds to accredited non-profits in the same year. But the exact same deductions would apply if the Chan-Zuckerberg family donated directly.

That's opaque; of course it's the same as if he had donated directly.

I'm not accusing him of illegal tax evasion. I'm accusing him, and Facebook, of legally not paying taxes. That it's legal, though, is of little consolation. Remember that it was legal to send Rosa Parks to the back of the bus, at the time. The criticism is directly that its legality is a poor veil and its morality open to debate.

I don't think Facebook is different from any other publicly traded company in that regard. No publicly traded for-profit company is going to pay more taxes than it is legally obligated to. Also, Facebook's taxes are not the same as his personal taxes, and the LLC will still be taxed, since it is not listed as a non-profit.

The complaints are largely that he is talking about doing benevolent dictatorial stuff in the future, not that he is *doing saint like stuff now".

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