Facebook’s CEO, Mark Zuckerberg, has become one of the world’s most famous billionaires and is a household name in nearly every country. As with any other successful business figure, he has been subject to debate about whether or not he pays his fair share of taxes. While there is some dispute about the amount of taxes Zuckerberg does or does not pay, there is substantial evidence that he does pay taxes and has done so for many years.
In 2011, it was revealed that Zuckerberg had generated $1.1 billion in estimated income taxes as he shifted company shares to pay the tax. Also, most of his income is in the form of capital gains, which can be taxed as high as 20%. According to the IRS, capital gains are “the profits made on the sale of stocks, bonds, and other investments” and are taxed according to their rates.
In the fall of 2018, the New York Times reported that the new tax law passed under President Trump in December 2017 had cost Zuckerberg nearly $400 million in taxes on his holdings. Like many wealthy taxpayers, Zuckerberg was able to benefit from the new law and improved his net worth. He also previously gave $45 million to the Bill & Melinda Gates Foundation that was used to help fund healthcare in Africa.
Most recently, in 2019, Zuckerberg had to pay more than $2.3 million in taxes to California and other states, as reported by Bloomberg. This was largely a result of “due to higher taxes on wealthy Californians as well as increased taxes on corporations and trusts.”
In light of these facts, it seems that Mark Zuckerberg does pay a substantial amount in taxes, while also finding ways to minimize the tax burden on himself and his companies. He may not always be in compliance with the tax laws, but it appears that he is making an effort to pay his fair share.
Impacts of Tax on Zuckerberg’s Fortune
Zuckerberg’s net worth is still well over $60 billion, meaning that he continues to accumulate wealth despite taxes. In fact, some experts argue that the amount of taxes Zuckerberg (& other billionaires) pay have a minimal impact on their overall wealth. According to a report from the OECD, taxes paid by the wealthy do not have much of an impact on their overall impression of their wealth because “the top 1 percent of earners pay only a small share of their income in taxes.”
Also, billionaires pay fewer taxes on their income overall than average taxpayers. A report by Unruly Citizens in 2018 found that “in the US, the wealthiest 0.1 percent of taxpayers are taxed at an effective rate of 23.2 percent while the bottom half incur an effective rate of 24.2 percent.” Therefore, it would seem that even though Zuckerberg pays taxes, his net worth is not affected substantially because of it.
However, even if billionaires are not paying their fair share in taxes, the public does have a right to know where their money is going and whether wealthy individuals such as Mark Zuckerberg are paying their taxes in full. Therefore, it is important to consider the effects of tax avoidance and other methods of avoiding paying taxes.
Tax Policy and Zuckerberg’s Donations
Some have argued that Zuckerberg is unduly benefitting from the tax policy in the United States and other countries, as many wealthy individuals continue to receive tax breaks and money from social welfare programs, while not fully complying with their tax obligations. Others argue that Zuckerberg’s philanthropic donations are a form of tax avoidance, as his name is associated with these causes but he is not the one paying out of pocket. Although it is difficult to determine exactly how much of Zuckerberg’s wealth is going to charitable causes, there is still a debate over whether or not his donations are enough.
In 2016, Zuckerberg and his wife, Priscilla Chan, established the Chan-Zuckerberg Initiative, which donates to various causes including education, health, and science. The Initiative has also donated more than $400 million to needy causes in the United States. In addition, Zuckerberg has spent millions on business ventures and philanthropic causes, such as donating $150 million to San Francisco public schools, which have received mixed reactions.
Ultimately, though it is difficult to determine exactly how much Mark Zuckerberg pays in taxes, it is clear that he pays some amount every year and has taken some steps to assist financially in causes he believes in. As more information about his taxes come to light, it will be interesting to see if and how his tax obligations will be impacted.
Breakdown of Taxes by Zuckerberg
Though it can be difficult to estimate the exact amount of taxes paid by Zuckerberg, it is easy to see the breakdown of how different types of taxes affect him. According to IRS reports, Zuckerberg has paid capital gains, dividends and payroll taxes. Most of these taxes are paid at the federal level, although some state taxes are also taken out of his income.
Capital gains are the most common type of taxes paid by Zuckerberg, as his company, Facebook, has seen a sharp increase in share price over the last several years. Even though his wealth has been growing, he is still paying capital gains taxes on his shares, which can be as high as 20%. Dividend taxes are also applicable for Zuckerberg, as he receives income from dividends from shares of stocks held in his name.
In addition to capital gains and dividends taxes, Zuckerberg also pays payroll taxes as an employee of Facebook. Social security and medicare taxes also taken out of his income, along with other state taxes. As of 2018, he has reportedly paid millions in payroll taxes, and will continue to pay them as long as he remains an employee of Facebook.
Increased Taxes in Enacted in U.S.
In recent years, the U.S. government has enacted several new policies that could help to ensure that wealthy individuals such as Mark Zuckerberg are paying their fair share in taxes. The most recent example is the 2017 Tax Cuts and Jobs Act, which increased the standard deduction and lowered the tax rate for the highest earners. This act was designed to make sure that wealthy individuals such as Mark Zuckerberg pay their fair share in taxes.
In addition to the 2017 Tax Cuts and Jobs Act, the U.S. government has also enacted new rules in an effort to ensure that wealthy individuals are paying their fair share in taxes. This includes the “Buffett Rule,” which was established to help ensure that “millionaires and billionaires do not end up paying a lower rate of tax than typical households.” The rule requires a minimum 30 percent rate of marginal income tax on those earning over one million dollars.
Mark Zuckerberg is one of many billionaires who are affected by the new rules. Although it can be difficult to determine exactly how much of his income is taxed, it is clear that he does pay some amount of taxes each year. It is also evident that the U.S. government has taken some steps to try to make sure that the wealthy are paying their fair share in taxes.
Concerns About Tax Evasion
Despite the steps taken by the U.S. government to ensure that wealthy individuals are paying their fair share, there are still some concerns about tax evasion. Individuals such as Mark Zuckerberg are subject to tax avoidance schemes, allowing them to pay fewer taxes than they should be. This has been an issue for a long time, and even though the U.S. government has taken steps to combat tax evasion, it is still a concern among lawmakers and the public.
Tax avoidance schemes can be hard to detect as they often involve complex financial instruments and legal maneuvers. In addition, it is difficult to know if Zuckerberg and other billionaires are using any of these schemes, as they often use companies and other financial entities to manage and hide their assets. As a result, it can be difficult to determine the true amount of taxes that are being paid by wealthy individuals such as Mark Zuckerberg.
Despite the concerns about tax evasion, it appears that Mark Zuckerberg does pay his fair share in taxes. He may not always be in compliance with the tax laws, but he seems to be making an effort to pay what’s due. In addition, the U.S. government is taking steps to ensure that the wealthy are paying their fair share in taxes, though there is still room for improvement.
