Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes • Hacker News Board

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

#331

Post by awb » Wed, Feb 06, 2019, 7:02 PM UTC

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.

> Don't get mad at companies that follow the law.

I think people are outraged because the laws themselves are unfair and special tax breaks are doled out.

> If you don't like the law elect different politicians.

In our form of government it's possible for a presidential candidate with fewer total votes to win (Trump & Bush). If we had a popular vote for President this argument would make more sense.

Also, on a ballot we're often given 2 (maybe 3) choices for representation. These representatives often need to raise money and they raise money from the companies and wealthy individuals that benefit from the tax breaks and exemptions.

Unfortunately, it's a cycle of influence (aka - light bribery) that keeps these unequal laws going.

A flat tax without exemptions seems like the fair and simple way to address this, but there's so much money to be made by making taxes complicated that it's hard to imagine well funded politicians actually passing something like that.

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

#332

Post by int_19h » Wed, Feb 06, 2019, 7:04 PM UTC

saosebastiao wrote: post #313

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 big problem is the corporate tax itself. It's incredibly hard to tax corporations fairly and efficiently, and as a result the corporate tax code is way more complex than any practical citizen could ever understand. It's hard enough for tax accountants and lawyers that have dedicated their entire profession to understanding it. The whole reason we have a corporate tax is because we feel rich people need to be taxe…

Firstly, capital gains and dividends are income. They're not taxed as personal income because of how our tax law is worded, but that law is not set in stone, and the way it is right now is, shall we say, intentionally favorable to certain people.

Your better option doesn't actually work, though, because the really rich can dodge it by borrowing money against their wealth as collateral, and because once stock (and other capital) is inherited, the new owner doesn't pay taxes on its appreciation before acquiring it - so most of it is essentially untaxed entirely.

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

#333

Post by pathseeker » Wed, Feb 06, 2019, 7:05 PM UTC

otachack wrote: post #46

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.

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.

>>If you don't like the law elect different politicians. Don't get mad at companies that follow the law.

>I believe one way is to actually be involved in politics and get into the seats that govern and make the laws.

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

#334

Post by chongli » Wed, Feb 06, 2019, 7:06 PM UTC

deeviant wrote: post #292

chongli wrote: post #283

Earlier quoted context omitted.

Why is it so naturally assumed to be acceptable for a business to do it? Because a business isn't a person. Taxing a business is taking real money away from payrolls, money that would get taxed again anyway once it was paid out. Corporate income tax only makes sense when you look at it as a barrier to entry for competition in the marketplace. Big companies like Netflix know how to avoid taxes. Small companies don't.…

Except a large portion of revenue does not go to workers, but to shareholders, who pay far less taxes then those who strain their backs in creating said revenue.

Lots of people love to throw around the word "shareholders" like it's a pejorative. The word seems to carry connotations of greedy old Uncle Scrooge, Uncle Pennybags, or some spoiled Saudi Prince. That's a highly distorted view.

Lots of "shareholders" are people's retirement funds, pensions, and the like. When those funds finally pay out, they get taxed as income just like for everybody else.

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

#335

Post by scott00 » Wed, Feb 06, 2019, 7:06 PM UTC

ivalm wrote: post #246

airstrike wrote: post #209

Earlier quoted context omitted.

That's not how this works. You pay taxes on what you earn, not on your cash balance. The company will always pay taxes on the $10 million, regardless of when it spends the $9. Also GAAP taxes are different from cash taxes paid to the IRS.

Business expenses are deductible. For example, if you are a reseller, you can spend before the end of the year to increase your inventory (and decrease your profits for that year).

What you describe only works for cash basis taxpayers. Public companies are all accrual basis taxpayers. Under accrual accounting increasing your inventory affects the financial statements as follows: * Balance sheet: decreases cash/cash equivalents entry and increases the inventory balance sheet entry (in equal amounts), resulting in no change to net assets or equity * Income statement: no effect * Cash flow statement: will show up as a change to inventory, reducing operating cash flow and total cash flow

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

#336

Post by usaar333 » Wed, Feb 06, 2019, 7:07 PM UTC

beat wrote: post #180

This seems to be a good place for my own take on taxes... 1. Abolish corporate income tax. 2. Tax capital gains (and dividends) as ordinary income. The corporate income tax is absurd. It doesn't generate a lot of revenue, but it has a bazillion highly specific loopholes, supporting a whole cottage industry of lobbyists and accountants. It's an unfair advantage to large corporations that can afford the tax-cutting pow…

> The capital gains rate is the source of our most gruesome wealth inequality. It's absurd that Mitt Romney pays half my effective tax rate on 200 times my income. The justification for low capital gains rates is "double taxation" due to corporate income tax. Abolishing corporate income tax eliminates that.

The lower capital gains tax rate leads to income tax inequality, but I doubt it significantly changes wealth inequality. In CA, top long term bracket is 37%, top ordinary is 54%. That 17% jump will reduce dividend compounding a bit (by 17 bp or so) and require withdrawing 20% more portfolio [if at zero basis] to cover expenses -- but when you have $1B, neither change fundamentally changes your lifestyle.

And don't forget that cap gains tax can be avoided or lowered in all sorts of ways (step-up on death, donations, gifts, tax advantaged accounts, etc.) You also have business owners subject to QSBS getting no federal cap gains taxes.

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

#337

Post by beat » Wed, Feb 06, 2019, 7:09 PM UTC

CharlesColeman wrote: post #291

beat wrote: post #180

This seems to be a good place for my own take on taxes... 1. Abolish corporate income tax. 2. Tax capital gains (and dividends) as ordinary income. The corporate income tax is absurd. It doesn't generate a lot of revenue, but it has a bazillion highly specific loopholes, supporting a whole cottage industry of lobbyists and accountants. It's an unfair advantage to large corporations that can afford the tax-cutting pow…

I agree with you on #2, but not on #1. I think the correct reform of the corporate income tax is to abolish the "bazillion highly specific loopholes." If it was abolished entirely, I think you'd very quickly see corporations being set up and used purely to evade individual income tax, especially among the extremely wealthy. That said, I do think it makes sense to not tax money at the corporate level that's remitted a…

No one pays dividends these days anyway. It's all shifted to capital gains, to pumping the stock price rather than delivering profits.

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

#338

Post by dragonwriter » Wed, Feb 06, 2019, 7:09 PM UTC

saosebastiao wrote: post #313

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 big problem is the corporate tax itself. It's incredibly hard to tax corporations fairly and efficiently, and as a result the corporate tax code is way more complex than any practical citizen could ever understand. It's hard enough for tax accountants and lawyers that have dedicated their entire profession to understanding it. The whole reason we have a corporate tax is because we feel rich people need to be taxe…

> The whole reason we have a corporate tax is because we feel rich people need to be taxed more

No, it's because without either having it or treating all corps as pass-through entities (which becomes problematic when you've got layers of ownership before tracing back to individual taxpayers) corporations become abusable as tax shelters.

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

#339

Post by isostatic » Wed, Feb 06, 2019, 7:10 PM UTC

AlexTWithBeard wrote: post #315

pbhjpbhj wrote: post #293

Earlier quoted context omitted.

A lot of workers need a vehicle (or season pass on public transport), need a different location for their dwelling - both of these amount to a pretty hefty addition to a workers costs.

Commuting is deductible - up to a certain extent: https://www.theharrisongrouponline.com/services/section-132-...

In the UK it's determined that people commute not to get to work, but instead so they can live at a location that isn't near work.

I suspect that a change to this rule would cost the Exchequer a good £20b a year plus. As a home worker I wouldn't be impressed by that.

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

#340

Post by beat » Wed, Feb 06, 2019, 7:10 PM UTC

sabalaba wrote: post #211

beat wrote: post #180

This seems to be a good place for my own take on taxes... 1. Abolish corporate income tax. 2. Tax capital gains (and dividends) as ordinary income. The corporate income tax is absurd. It doesn't generate a lot of revenue, but it has a bazillion highly specific loopholes, supporting a whole cottage industry of lobbyists and accountants. It's an unfair advantage to large corporations that can afford the tax-cutting pow…

"Double taxation" refers to taxation at the corporate income tax level and then again at the personal income tax level when dividends are paid out to shareholders. "Double taxation" and capital gains don't have anything to do with each other.

About a million internet commenters would disagree with you. Double taxation has been a stock justification for the lower capital gains rate as long as I can remember.