James Kwak clears up some confusion about entrepreneurs’ taxes, specifically looking at the case of Mark Zuckerberg and Facebook’s IPO.
He’s responding to Robert Frank in the WSJ who says that Zuckerberg will have to pay the top rate of 35% on some exercised options plus the 10.3% California rate. Kwak points out that this is only for the additional options Zuckerberg was granted and not for his founding shares (on which he will pay 15% if he ever sells them).
It’s hard to figure out Frank’s normative position. Does he really think the rich pay too little in taxes in this country? The share of income going to the top 5% and the top 1% has risen much faster than their share of taxes. Does he think that’s ok?