Why Zuckerberg Plans to Pay His Tax Bill

As the much-ballyhooed Facebook IPO approaches, there’s a mountain being made out of a molehill. Turns out 27-year-old founder and CEO Mark Zuckerberg may have a $2 billion tax bill that, according to a variety of sources, he intends to pay in full.

He seems like a regular guy…or is he?

To say I’m skeptical of his intentions would be an insult to actual skeptics. I think Zuckerberg is a great guy, but a regular guy? No way. He didn’t build from scratch a business that has 845 million customers by being a regular guy.

Zuckerberg goes to great lengths to project an “aw-shucks” kind of image. But this move is about as down to earth as Kim Kardashian’s wedding. It’s every bit as sophisticated a play as I would have expected from Google�s (NASDAQ:GOOG) Larry Page or the late Steve Jobs of Apple (NASDAQ:AAPL).

The CEO (and presumably his advisers) know that the stakes couldn’t be higher than they are right now, which is why Zuckerberg wants to pay this tax bill in full to reinforce the illusion that Facebook is part of Middle America — not something built on its back. He knows that doing so will help him monetize your information when Facebook goes public.

I say this because it’s important to remember that the only reason Facebook is worth anything is because users — people like you — have voluntarily, with no compensation whatsoever, assembled the greatest single collection of marketing data in recorded history. That’s right — your data, given freely, is going to make Zuckerberg rich. Where are all the privacy advocates now?

I’d love to see what Facebook’s proposed valuation would be if 845 million people suddenly decided they really don’t want to share their most intimate moments with hundreds or thousands of “friends” or decide they don’t really want to “like” anything. Why hasn’t the Occupy Wall Street crowd or the �tax the rich� bunch latched on to this? Many of them are probably too busy updating their Facebook status to pay attention.

A Zuckerberg Tax?

There should be a huge amount of backlash against Facebook’s business model, but there isn’t — unless you count proposals such as the “Zuckerberg Tax” advanced last Tuesday in a New York Times Op-Ed piece by tax lawyer David Miller.

Miller advocates allowing the government to claw back money from the ultra-wealthy. He believes that individuals earning more than $2.2 million in income or having more than $5.7 million in securities should have their stocks marked to market and taxed even if they haven’t sold their investments.

That’s asinine.

This is like students earning �Cs� and �Ds� asking the dean of a university to redistribute the grades of those earning �As� because those students are too successful in their studies.

I don’t know what’s scarier — the fact that something like the Zuckerberg tax is being considered in Washington or that things are so bad we have to use somebody’s name as a euphemism for saying the government is so broke it’s looking to sink its hooks into those who have built real wealth in this country.

We already have a dysfunctional tax code that’s so convoluted that an estimated 80% of Americans have to use tax preparation help. It’s so complex that nobody is really sure how many lines of tax code there are; estimates range from 5.5 million to 7 million words on more than 9,000 pages. By comparison, War and Peace is “only” 1,444 pages.

Zuckerberg’s stunt aside, our tax code is smothering industry, killing the incentive to work harder and completely removing the one thing that makes America different from anyplace else on the planet — the ability to make our dreams a reality.

According to the government, we are the problem.

Evidently U.S. leaders on both sides of the aisle don’t recall the words of President Abraham Lincoln, who noted: �That some should be rich shows that others may become rich, and hence is just encouragement to industry and enterprise. Let not him who is houseless pull down the house of another; but let him labor diligently and build one for himself, thus by example assuring that his own shall be safe from violence built.�

President Calvin Coolidge opined: �The wise and correct course to follow in taxation and all other economic legislation is not to destroy those who have already secured success but to create conditions under which every one will have a better chance to be successful.�

Somehow, sacrifice, hard work and entrepreneurial spirit is what’s wrong with America, according to the Beltway Bunch. Worse, somehow, only the government can save us.

Zuckerberg’s True Intentions

The way to save this country is for the government to get out of the way. As New York Times best-selling author Tommy Newberry said in his aptly titled book, The War on Success, the U.S. was founded to establish “freedom from government, not freedom through government.”

Much of our current tax regulation is designed to rein in risk-takers. It’s written by men and women who, as lifelong career government employees, have never really known risk their entire lives.

The way I see it, the government is lucky that Zuckerberg is such a calculating and clever businessman. He could easily have borrowed against his stock and effectively created an income stream against which he never pays taxes.

Instead he’s made a calculated decision that creating a media circus around what could be the single largest tax payment in history will benefit Facebook and ultimately create more wealth when the stock debuts.

Zuckerberg couldn’t give a rip about making a $2 billion tax payment — he’s making a $2 billion investment in his own future at a time when the markets are likely to maximize his efforts.

Way to go, Mark!