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Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

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Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#101

Post by Charlaxy »

chanandler_bong wrote: post #79
otachack wrote: post #46

Earlier quoted context omitted.

It's not that simple. Companies lobby to keep, even coerce, laws that benefit them and allow these sorts of things to happen. What is the common person, or collection of persons, supposed to do when they are against that kind of force? I believe one way is to actually be involved in politics and get into the seats that govern and make the laws. But it's easier said than done.

The answer is to outlaw lobbyists, it would fix a lot of problems. That, and enact term limits for Congress. That will fix even more.

Or we could elect people who can't be bought by lobbyists because they have principles. I was taught in poli-sci classes that the single biggest issue wasn't so much the principles of law makers as it was their capabilities and their staff. Most law-makers are incapable of doing the (sometimes overwhelming amount of) work, and rely on hiring professionals to work as a team to review law and then tell the law-makers how to vote. If none of them are savvy about lobbyists, they can easily be fooled by groups that come to them to push an agenda. We need smart congresspeople who can do the work and also can hire a competent and principled staff.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#102

Post by sakisv »

d--b wrote: post #35

Now here's a problem whose fixing would truly make the world a better place! Why is there no YC/SV initiative to help make tech companies freaking pay their goddamn taxes? Sounds easier than basic income experiments, robocars and going to Mars.

Because both basic income and robocars and going to Mars are either directly or indirectly targeting to increase the profits of tech company X.

This combined with the lobbying power that the said company X has, takes away any incentive someone might have to do something.

Limiting the lobbying should probably be the first step.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#103

Post by EpicEng »

cpursley wrote: post #87

Meh, corporations don't pay income taxes anyways even when they do; their consumers pay the tax (it's just another expense). A national sales tax is a better way to collect.

A consumption tax would all of a suddenly increase prices by a large margin for the poorest among us.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#104

Post by standerman »

rayiner wrote: post #83
elcomet wrote: post #72

Earlier quoted context omitted.

Big companies lobby every law for their benefits. They hire full time lobyists. Big companies can pay million $ a year for lobbying. Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.

I think your last point is precisely backwards. Total annual lobbying spending is just $3.7 billion a year, in a $19 trillion economy. It's a tiny amount of money compared to the stakes. If lobbying was so effective companies would spend way more money on it. It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large con…

Maybe most companies can get the results that they want with small, strategic lobbying. It could be both effective and efficient, from an economic standpoint. Why else would organizations like ALEC exist? https://en.wikipedia.org/wiki/American_Legislative_Exchange_...

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#105

Post by close04 »

rayiner wrote: post #83
elcomet wrote: post #72

Earlier quoted context omitted.

Big companies lobby every law for their benefits. They hire full time lobyists. Big companies can pay million $ a year for lobbying. Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.

I think your last point is precisely backwards. Total annual lobbying spending is just $3.7 billion a year, in a $19 trillion economy. It's a tiny amount of money compared to the stakes. If lobbying was so effective companies would spend way more money on it. It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large con…

What you're willing to pay to get something and you actually pay to get something are 2 completely different things. You will pay as little as you can to get to the result but you may be willing to pay a lot more.

It's also a matter of perception. Keeping the lobbying sums low(ish) also helps keep a lower profile. You don't want to draw too much attention to the fact that you're paying to get something done your way.

Plus, how much can you reasonably spend? In the end you're still trying to influence the same (relatively few) people, spending a considerable percentage of that "$19 trillion economy" is hard to make look legitimate.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#106

Post by zaroth »

The “profit” Netflix is reporting on the one hand is an entirely different number than the taxable net income that Netflix reports to the IRS.

Take a look at Netflix’s free cash flow for a better understanding of what a SaaS-type business experiencing hyper-growth looks like.

Their customer acquisition cost in this case is spending on content. That content will be consumed (and hence “paid for”) by subscribers primarily over the next 1-3 years.

So as they ramp up their subscriber count, and likewise ramp up their production spending, they are constantly outspending “Year 0” (today) to create content which will earn back that money, and then some, over the next 1-3 years.

Netflix is able to report financial metrics which show “Net Income” I think (and I haven’t dug into their statements to confirm this) because they spread/amortize the cost of licensing the content over the timeframes they expect it to be used.

Whereas for tax purposes, the money they are spending on content can be deducted fully in the year it is spent against income for that year.

As long as Netflix grows the amount they spend on content each year, they will have negative free cash flow and pay little to no taxes.

If they grow their subscribe base at 20-30% YoY it means they can spend 20-30% more on content this year than they would typically be able to spend based on their current subscription revenue. E.g. if they spend 60% of revenue on content, and content is consumed over 3 years, they can spend closer to 80% of this year’s subscription revenue on content, and in theory over the next 3 years they earn it back. By doing this, as far as the IRS is concerned their cash flow and net income is truly negative.

Eventually a company will flatten out its growth curve and the weight of servicing all that debt will require spending on content to fall below the subscriber revenue, and in the long run cash flow must be positive for a company to survive.

Keep in mind income taxes are just one for of tax revenue that is generated by a company like Netflix. There is a tremendous amount of tax revenue generated overall by Netflix, everything from taxes on the internet connectivity people are buying to use Netflix, to sales taxes and employment taxes.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#107

Post by ionised »

driverdan wrote: post #34

Rather than being outraged at the headline, what are the actual details? Why were they able to pay no taxes? Was it due to carried losses or something like that? Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law.

Companies lobby to create favourable laws. They are as much to blame.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#108

Post by macintux »

throw_away2 wrote: post #97
macintux wrote: post #93

Earlier quoted context omitted.

The world is a crazy complex place. Like them or not, lobbyists are useful for helping lawmakers understand the implications of laws, and eliminating lobbyists (setting aside the impracticality of such a task) and imposing term limits (thus reducing the level of institutional knowledge in Congress) would mean that lawmakers would often be flying completely blind.

So let them get bought off instead? I refuse to believe that the only two options are widespread graft or poor ignorant lawmakers who have no other way of obtaining information.

We could also elect people with integrity, as unlikely as that seems in our current environment.

My point is that hard problems rarely have simple solutions, as much as populist politicians might like to pretend otherwise. “Ban lobbyists” is a great soundbite but would introduce all sorts of negative consequences (like driving them underground and introducing more potential for corruption).

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#109

Post by manux »

rayiner wrote: post #83
elcomet wrote: post #72

Earlier quoted context omitted.

Big companies lobby every law for their benefits. They hire full time lobyists. Big companies can pay million $ a year for lobbying. Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.

I think your last point is precisely backwards. Total annual lobbying spending is just $3.7 billion a year, in a $19 trillion economy. It's a tiny amount of money compared to the stakes. If lobbying was so effective companies would spend way more money on it. It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large con…

$3.7 billion a year is a lot. There aren't that many politicians to bribe.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#110

Post by markovbot »

theevilsharpie wrote: post #91
otachack wrote: post #46

Earlier quoted context omitted.

It's not that simple. Companies lobby to keep, even coerce, laws that benefit them and allow these sorts of things to happen. What is the common person, or collection of persons, supposed to do when they are against that kind of force? I believe one way is to actually be involved in politics and get into the seats that govern and make the laws. But it's easier said than done.

> What is the common person, or collection of persons, supposed to do when they are against that kind of force? Vote. All sorts of interests lobby, all the time. These include consumer-focused interest groups, as well as corporations. But, at the end of the day, politicians gain (and keep) office based on the votes of their constituents. These politicians are (generally) not going to vote on bills that they think mig…

I've voted in every election I since I turned 18 and nothing seems to have been done about this and many other things. But issues that megacorps care about happen right away.

Voting isn't a real solution to unchecked corporate lobbying.

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