Facebook’s Zuckerberg Will Help Pay Down the U.S. Deficit

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At only 27, Facebook’s Mark Zuckerberg has had a wonderful life. In 2010, he was Time’s Person of the Year and, of course, he was the topic of the movie The Social Network.

Now, he’s about to be a government statistic.

By this summer — when Facebook comes public — Zuckerberg’s net worth is likely to be enough to put him in the Top 10 of the Forbes 400 List. The youngest in this elite group is Microsoft’s (NASDAQ:MSFT) Bill Gates, who is 55. Yet most of the others are in their 60s and 70s, like Oracle‘s (NASDAQ:ORCL) Larry Ellison (67) and the Las Vegas Sands’ (NYSE:LVS) Sheldon Adelson (78).

But not all’s great for Zuck. According to the Facebook S-1 filing, he plans to exercise and purchase 120,000,000 shares under a stock option he received in 2005 (the stock price was 6 cents per share). Depending on the valuation of the Facebook IPO, Mark could pay a federal tax bill of anywhere from $1.5 billion to $2 billion.

Unlike GOP Presidential candidate Mitt Romney, Mark does not meet the requirements for the 15% tax bracket (for this, you must run an investment fund). Rather, he will get socked with the top rate of 35%.

What does this mean? Zuckerberg will make at least a (relatively speaking) noticeable dent in the federal budget deficit. If the tax bill comes to $2 billion, that will reduce the deficit by about 0.167%.

Cash-strapped California will be thankful, too — Zuckerberg also will be subject to a state tax of 10.3%.

— Tom Taulli, InvestorPlace.com


Article printed from InvestorPlace Media, https://investorplace.com/2012/02/facebook-mark-zuckerberg-stock-options-taxes-us-deficit/.

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