Punitive Liberalism Updated

Charles Schumer, rich man hunter

Last week in a post about “punitive liberalism” I offered the view that “it is possible that [Eduardo] Severin [the Facebook co-founder who renounced his citizenship] will actually pay more in taxes to the U.S. by leaving the country than if he’d stayed for a simple reason.  If he’d stayed, he’d only owe taxes on his Facebook wealth if he sold his Facebook stock.  If he never sold much of his stock, he’d never owe anything.  If he wants cash, he could borrow against his stock; ditto for investing in some other business (as he says he wants to do).  Heck, the interest might even be tax deductible if he used the borrowings for another investment.

Sure enough, CNBC has reported on the technique by which Mark Zuckerberg may never pay U.S. income taxes ever again.  He can use the very technique I speculated about in my post:

When you have the net worth of Zuckerberg, you can live for a very, very long time on tax-free debt that you can use as income. Let’s say that Zuckerberg needs $2 million of spending power per year and lives another 60 years. That’s $120 million of spending. If he gets an interest rate of 4 percent and just rolls it over as new debt, he’ll eventually accumulate around $520,919,997. Some of that interest, of course, may be deductible against other income.That might seem like a lot of debt. But for Zuckerberg—who will likely be worth around $25 billion when Facebook goes public—it’s a drop in the bucket. What’s more, if Facebook continues to grow, Zuckerberg’s worth will grow along with his debt. His debt burden will be negligible compared to his net worth. The unimaginably rich really are different from the rest of us.

It gets worse.  He could even quality for various low income assistance programs from the government.  Is this a great country or what?


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