This just isn’t right

Zuckerberg will pay a hefty tax bill right off the bat if he follows through on his plan to sell $5 billion in Facebook stock options, as the New York Times noted, he may then never pay a dime of taxes on the rest of his Facebook wealth. “Instead, he can simply use his stock as collateral to borrow against his tremendous wealth and avoid all tax,” the Times reported.And, as Citizens for Tax Justice has noted, Facebook may use the issuance of stock options to avoid corporate income taxes, instead receiving hundreds of millions of taxpayer dollars in refunds:

The tax law says that if a corporation issues options for employees to buy the company’s stock in the future for its price when the option issued, then if the stock has gone up in value when employees exercise the options, the company gets to deduct the difference between what the employee bought it for and its market price.When, as Facebook expects, the 187 million stock options are cashed in this year, Facebook will get $7.5 billion in tax deductions (which will reduce the company’s federal and state taxes by $3 billion). According to Facebook, these tax deductions should exceed the company’s U.S. taxable 2012 income and result in a net operating loss (NOL) that can then be carried back to the preceding two years to offset its past taxes, resulting in a refund of up to $500 million.

“When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden,” said Sen. Carl Levin (D-MI). “It isn’t right, and we can’t afford it.” This tax preference for corporations costs the U.S. about $2 billion in revenue per year.

Zuckerberg himself is now reported to be worth almost 20 billion. That’s right, 20 billion. Maybe someone should ask him to kick in 500 million dollar refund so that children and old people can eat. .