Netflix paid just 1.1 percent in Federal Tax

https://itep.org/netflix-posts-record-profits-federal-tax-rate-of-just-1-percent/

by ushakov • 4 years ago

70 39 4 years ago

Kranar• 4 years ago

Don't see the issue, looks like they saved on taxes due to depreciation, the use of stock options to compensate employees, and an R&D tax credit. None of this is remotely sophisticated or fishy.

franga20002• 4 years ago

No matter how legal it is, they are paying 1.1% instead of 21%. This is a problem.

EricE2• 4 years ago

Why is it a problem?

Why isn't government overspending ever a problem?

tonyedgecombe• 4 years ago

The only problem I have with it is big companies find it easy to avoid corporation tax, smaller companies find it much harder. It tilts the balance in favour of the larger businesses.

patentatt7• 4 years ago

Why do I as an individual not get any of these benefits? Why can't I deduct the depreciation of my assets on my personal taxes? Why can't I change the way I pay for goods to avoid paying taxes? More importantly, why do I not only get these benefits, but I have to make up for all of these corporations getting these benefits by paying higher taxes. The money has to come from somewhere, why are all of the policies in favor of large businesses and in opposition to me as an individual? That's the issue.

belval• 4 years ago

As a serious answer:

Because you don't employ people. From a taxation perspective it's much better to have companies running on quite low margins that allows them to keep existing. It's why some companies get subsidies so even though they are barely profitable, their employees, the voters, can stay happy.

Netflix will have X engineers at +$300k/year paying taxes, injects money in the TV/movie industry with their productions and is overall a positive for the economy.

Additionally:

Why do I as an individual not get any of these benefits? Why can't I deduct the depreciation of my assets on my personal taxes? Why can't I change the way I pay for goods to avoid paying taxes?

While I don't know where you live or your financial situation, there are probably a ton of benefits/tax credits that you do in fact get to incentivize a specific behaviour (think retirement account, tax-free saving accounts, etc...)

twox2• 4 years ago

You can play the same game if you wanted to, it's an LLC away.

Arnt2• 4 years ago

Can't you get that? I can. In a different jurisdiction, but I bought tools that I need for my work, and write them off. The taxman hasn't protested.

BTW, that Netflix writes off things "more quickly than the equipment wears out and loses value" is probably at least incorrect. That equipment has to be servers, routers and switches, and replacing that well before seven years is conventional wisdom, even in places where the tax code suggests that seven years is appropriate.

rkk3• 4 years ago

If you have a significant amount of cash flow you can find all sorts of tax benefits no one is forcing you to take the standard deduction when you file.

why do I not only get these benefits, but I have to make up for all of these corporations getting these benefits by paying higher taxes. The money has to come from somewhere

Big-tech comp is so high in part of because the company can write off the equity grants. So perhaps you have been directly benefiting from it.

csomar• 4 years ago

Technically, corporations pay taxes. Practically, only individuals pay taxes.

The Tax system is built on the foundation of maximizing profit (ie: squeeze as much from the population as it can). Theoretically, we should only have a single tax: The income tax. At the end of the year, each citizen reports his income and pays his due.

In reality, people will probably won't pay much in such a system and will protest their "high taxes". It is much easier, then, to tax the big, evil, rich corporation. It makes it look like people are paying less taxes when they are paying all the taxes.

In more modern and developed systems, taxes are mainly used to control the economy rather than raise funding. The government giving solar producers a tax break is the equivalent of the communist system deploying a program to produce solar panels.

ergocoder2• 4 years ago

Because they employ people that pay taxes.

In a tax convo, I wonder why we never talk about the tax their employees pay.

It seems dishonest.

Isthatablackgsd• 4 years ago

Then you should hire CPA/taxperson to help you with it. Been filing taxes on my own until I got my own CPA few years ago and realized how much money I saved. Normally I spent 3k in taxes since I am 1099 (independent contractor for those non-USAian. I only paid less than 1k in taxes after using my CPA. I don't mean Johnson Hewitt, HR Block, or any chain tax preparation companies. Go with a LOCAL tax preparation professionals. The local is best because they know the city, county and state level of taxes than those chain companies that tries to keep your tax return minimal as possible.

To Deaf Americans, avoid using DeafTax at all cost. They screwed with my taxes by giving me the wrong information to file in a wrong state. They primary focus on the corporate taxes than individuals and they only have a few tax professionals serving the entire country which should tell you enough about their knowledge and use of their preparation. I am not the only Deaf person with an issues with DeafTax.

jonas212• 4 years ago

As an individual, you certainly can deduct depreciation, as long as you're using the asset for business purposes (as defined here [1]). You also can choose how you pay for goods (buy vs. lease, for example) to minimize your tax liability. In addition, there are certain tax deductions that are available to you as a small business that would not be available to large corporations like Netflix.

[1] https://www.irs.gov/pub/irs-pdf/p535.pdf

Supermancho2• 4 years ago

saved on taxes due to depreciation

This is regressive tax policy and the crux of the issue of fairness. The less money you have, the more liability you carry. The more money a corporation has, the more they can avoid taxes without actually offsetting (paying back to the public) from depreciation accounted by nature of their assets. Some of these assets may not even be fully owned, which is a separate gaming of the system.

If the balance is to be theoretically paid through the economics of purchasing more goods, it's the same regressive trickle-down economics that has never been shown equivalent to tax revenue...by passing on the tax liability to smaller and smaller entities, who end up effectively paying the larger entity's tax burden.

EricE2• 4 years ago

You mean netflix customers just paid 1.1 percent in federal tax.

patentatt7• 4 years ago

And yet they just raised prices again. I'm not feeling it as a customer.

wbsss4412• 4 years ago

By that logic, does my employer pay my income taxes? Or I guess it’s their customers. Then again their customers are paying for the service through their income which comes from their employer… etc

jokoon• 4 years ago

Yeah I'm sure the 15% tax floor announced by Biden will just be one funny joke that will never happen.

andrewlgood• 4 years ago

Not sure what the fuss is. Any company publicly registered in the US has to provide a reconciliation of its income taxes. Netflix 2021 1.0-k can Be found here: https://www.sec.gov/Archives/edgar/data/1065280/000106528018...

The relevant section is Note 10 Income Taxes which starts at the bottom of page 57.

The biggest drivers of the reduced taxes were stock options and the Tax Cuts and Job Act (TCJA). Stock options are just timing while I presume the TCJA are true credits.

This is not a mystery.

Netflix paid just 1.1 percent in Federal Tax

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