Facebook paid no taxes

[leahjade]

CNBC reports Facebook didn't pay any federal or state income taxes last year and will receive a hefty tax refund, according to a recent report.

How did the social network manage to swing such a nice tax break?

Well, according to the Citizen for Tax Justice report the company benefited from the tax deductability of executive stock options, which reduced all of its income taxes by $1.03 billion in 2012.

The company also has another $2.17 billion in extra tax-option breaks to carry forward in the future, according to the report, which means Facebook gets to deduct a total of more than $3 billion in current and future taxes, according to the report.

We're always hearing about oil companies and Wall Street firms getting away with this but how come some companies don't get the wrath that others do?
Doesn't seem fair that we middle class families are paying out the nose but billion dollar corporations are protected by legal loopholes. I think if EVERY person and corporation paid 10% straight tax, we'd all come out ahead!

 

[Jeff_G]

Perhaps you should check out this article:
http://www.businessinsider.com/why-facebook-gets-an-income-tax-refund-2013-2

"While the report is accurate, it is massively misleading. Facebook actually did pay taxes in 2012—just not income taxes.

In fact, its effective tax rate was 89 percent."

 

[deserrai]

We're always hearing about oil companies and Wall Street firms getting away with this but how come some companies don't get the wrath that others do?
Doesn't seem fair that we middle class families are paying out the nose but billion dollar corporations are protected by legal loopholes. I think if EVERY person and corporation paid 10% straight tax, we'd all come out ahead!

Income taxes are factored into the cost of business for corporations. If their taxes go up, their prices go up. Taxes always trickle down to the individual in one way or another.

 

[midwestdee]

well, personally overall we need to go back to the 1950's - those happy days, when after the first million dollars earned (which was tax free) - you were then taxed at an up to 91 or 92% tax rate (few of course paid that high a percent- but you didn't have billionaires paying 13% of their income, while a truck driver pays a 30% rate). I'm certainly not in favor of corporate give a ways, but let's look at the % tax rate Zuckerberg is paying an the % rate you are paying. By Nixon's years, the tax rate on the rich went to 72 or 74% - then Reagan came in and it was a free fall down to about 28%, which after writeoffs brings them down to the average millionaire paying 15 -21 % depending on how good their accountant is. When tax rate on the upper crust are high - they keep that money in their businesses and expand their business operations. That giant whoosh you heard in the 1980's was money and jobs flying out of the country.

 

[baboo800]

does anybody have the number of their accountants


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[Jeff_G]

but you didn't have billionaires paying 13% of their income, while a truck driver pays a 30% rate).

Do you understand that the "billionaires" pay 13% vs 30% because their income is from capital gains on investments. So they first go out and earn a dollar, pay taxes on that, invest that back into the economy then pay taxes on the interest or gain on that investment.

Realize if you have a 401K or any other retirement account you will pay those capital gains once you begin to withdraw that money. So I would be careful what you wish for.

Also realize that by decreasing the taxes paid on capital gains you are encouraging people to invest in stocks ie companies which in turn hire more people or produce more products.

However by raising capital gains taxes, and corporate taxes you only encourage more companies to send their work over seas.

But lets go head and blame the rich, how dare they become successful!

 

[Colleen27]

We're always hearing about oil companies and Wall Street firms getting away with this but how come some companies don't get the wrath that others do?
Doesn't seem fair that we middle class families are paying out the nose but billion dollar corporations are protected by legal loopholes. I think if EVERY person and corporation paid 10% straight tax, we'd all come out ahead!

Actually, all the math I've seen on that idea puts the number around 23%, which really only benefits the upper middle class and the wealthy who don't employ tax avoidance strategies. Meanwhile, the vast majority of American consumers would see themselves taxed out of the lifestyles they're just barely affording as-is.

I agree that something needs to be done about the gap in "paper" and effective tax rates for corporations. According to a Fox Business segment I saw a few days ago, the Forbes 500 are collectively sitting on trillions, not hiring or expanding (and many still cutting jobs, benefits, and wages), just "hording". A functional progressive tax system discourages that practice and encourage reinvestment and development, but the fishing net of a tax code we have now actually encourages some of the business practices that are the biggest drag on our economy as a whole.

 

[bengalfreak]

Income taxes are factored into the cost of business for corporations. If their taxes go up, their prices go up. Taxes always trickle down to the individual in one way or another.

Not at all. That's something that corporations would like you to believe, but the fact of the matter is that free market competition keeps companies from passing on all of a tax increase to their customers.

 

[bengalfreak]

Perhaps you should check out this article:
http://www.businessinsider.com/why-facebook-gets-an-income-tax-refund-2013-2

"While the report is accurate, it is massively misleading. Facebook actually did pay taxes in 2012—just not income taxes.

In fact, its effective tax rate was 89 percent."

My fat patootie. I have no problem with Facebook not paying any income tax this year since it seems that the reason is they had a massive tax bill previously, triggered by taking the company public.

But to say that any companie's effective tax rate in this country is 89 percent is baloney. No company is paying 89 cents of every dollar they take in in taxes period.

 

[MrRomance]

Let me say before I start that I don't wholeheartedly agree with the tax practices that corporations and rich people employ, but the truth is, they have a different financial mindset. For an interesting read on this, take a look at the books by Robert Kiyosaki.

When you're talking about corporations, what you're actually talking about is individuals (or groups of individuals) because corporations only exist as legal entities. The whole mindset is to keep and use as much of the money they make as they can by learning the tax code or by employing an expert who does know the tax code. You'd be amazed how easy it is to do a lot of the things they do and anyone can do it.

It's really easy to be angry about these things, but if we're all honest and we could legally pay less tax, we'd all do it!

 

[ForMyBoys]

We're always hearing about oil companies and Wall Street firms getting away with this but how come some companies don't get the wrath that others do?
Doesn't seem fair that we middle class families are paying out the nose but billion dollar corporations are protected by legal loopholes. I think if EVERY person and corporation paid 10% straight tax, we'd all come out ahead!

I'm an international tax CPA and I wish it were that easy. It just isn't. First even if we had a straight 10% tax you still have to define what makes up net income and businesses would be allowed deductions for certain expenses. So you could still have a large company paying 0 tax if they operated at a net loss. Keep in mind too that corporations pay people and then those people are taxed... so its a double tax system.

There is also the very complex issue of figuring out what income to tax. If you have a worldwide organization how do you determine the percentage of their income that is earned in the US vs. other countries. It may sound simple, but its not. And if you tax US based companies that operate globally on all their income regardless of where they earned it many of them would be forced to move their home base to other countries just to keep costs competitive.

Oh, and also I agree with a PP that states that income tax is not the only tax paid. Companies pay payroll taxes and transactional (VAT and sales/use) tax. Plus state and local taxes in the US and around the world.

 

[deserrai]

Not at all. That's something that corporations would like you to believe, but the fact of the matter is that free market competition keeps companies from passing on all of a tax increase to their customers.

Raising corporate income taxes would raise taxes on all the competitors; therefore, the free market would adjust accordingly.