Facebook's CEO Mark Zuckerberg and his wife Priscilla Chan's announcement of giving up 99 percent of their personal shares of the company have stirred a lot of unwarranted criticism.
For the unfamiliar, on Tuesday, Dec. 1, Zuckerberg announced the birth of his daughter Max and also divulged plans of giving away 99 percent of his personal Facebook shares during the course of his life. These shares - currently valued at $45 billion - would be used to fund charitable causes via the initiative Chan Zuckerberg LLC.
The pledged money would be used to "advance human potential and promote equality for all children in the next generation." The announcement was made through a letter to Max, which Zuckerberg posted on Facebook. Coincidentally, he posted the pledge on #GivingTuesday - the national day of giving.
However, the pledge garnered an incredible amount of attention which was primarily owing to the CEO's net worth. Zuckerberg received both bouquets and brickbats for his generosity. While some like Bill Gates and Michael Bloomberg lauded his generosity, several others questioned his motives and even called it a tax evasion ploy.
Zuckerberg addressed the apprehensions regarding the Chan Zuckerberg Initiative through a post on Facebook on Thursday, Dec. 3, clarifying how the funds would be delineated and said that he was not evading taxes through this structuring.
"By using an LLC instead of a traditional foundation, we receive no tax benefit from transferring our shares to the Chan Zuckerberg Initiative, but we gain flexibility to execute our mission more effectively," wrote the Facebook CEO.
Zuckerberg further explained that transferring the shares to a regular foundation would have resulted in a tax benefit, but that's not the case if they use an LLC.
"Just like everyone else, we will pay capital gains taxes when our shares are sold by the LLC."
He also answered comments from Facebook users pertaining to paternity leave and the LLC. On being asked to enjoy the paternity leave he wrote "So far paternity leave is great! I love telling her stories and reading her books, even though she doesn't understand them yet."
Another user commented that the initiative was "Just a way to get your billions tax free ... Yeah well done," to which Zuckerberg responded by saying the information is not correct and politely asking the commenter not to spread false information.
