Earlier this month, it was announced that Facebook would be offering stock, and that the initial amount raised would be somewhere in the $10 billion dollar mark or maybe even more. Now it has been reported that Mark Zuckerberg, will be exercising some of his shares and making a cool $5 Billion dollars, with a bill to the IRS for $2 billion. But he doesn't have to pay tax for the rest of the stock he owns, because he's not selling it.

Zuckerberg owns about $28 Billion in stock of the company, and since he's not selling more stock, he doesn't have to pay taxes on it. But he will be one of the biggest tax payers in the United States. The reason he doesn't need to pay taxes on the rest of the stock he owns is because in the United States the tax system is based on the concept of “realization.” Until you sell it and you make money off it, it's only then that you know how much it's really worth. In the mean time, Zuckerberg could simply borrow against his stock's worth and not pay any taxes at all! And then, when he dies, pass the shares to his heirs and they would only pay taxes on the amount of money made from the time they got them to the time of sale. So if the value of the stock only goes up 1%, they only pay taxes on that 1%.

The New York Times does a much better job of breaking it down. But to me, it seems a little unfair. Yes, he deserves his money because he did find a way to make money with our personal info, but as long as he pays his fair share in taxes, I will have nothing to write about. Which would make for some very boring posts on this website from me.

Now there is talk of a Zuckerberg tax that would be a little more inline with these "mega wealthy" people making billions and billions of dollars. The idea being that Zuckerberg would pay something like 15% , which is about $3.45 Billion, and sell some shares to pay the tax, or borrow the money using his wealth as collateral. If the stocks lose value, he gets a refund. While it's all on paper, the money he would get back if he takes a loss, is real. While I am not a billionaire, I know that if I take out all the zeros, that the math seems pretty fair.