Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

itep.org

Post reply on HN
Print view View original

121–130 of 404 posts

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#121

Post by macspoofing »

varispeed wrote: post #12

This is crazy how economy is tilted in favour of these big corporations. If you are a worker, it is not uncommon to pay over 40% of tax and if you work on your own small business you can pay even more and have very little left to reinvest. Then you have progressive tax that is preventing you from saving much - if you want to save for a deposit to buy a house, spend time on education and getting a better job, you'll g…

> If you are a worker, it is not uncommon to pay over 40% of tax and if you work on your own small business you can pay even more and have very little left to reinvest.

First: "if you work on your own small business you can pay even more" ... huh? If you own a small business, you're getting the corporate tax rate, and chances are you're not paying much of taxes anyway because your net revenues probably are $0 or close to $0. What are you talking about here?

Anyway, it's weird to state it as corporation vs worker with respect to tax rate. Those are different kinds of things. Every worker in a corporation pays personal income tax. Shareholders also pay taxes on capital gains and dividends. A corporations also pay plethora of other taxes (like payroll taxes). So let's not pretend there is no tax benefit to having corporations do business in your nation. The vast majority of corporations also have a profit margin in the range of 5%-10% - so it's not like you see crazy profits all over the place.

And given the nature of a corporation and the role it plays, increasing taxes (to say, the level of personal income taxes) to fulfil the fantasies of anti-capitalists, will have disastrous effects on the wider economy of a nation because increasing cost of doing business will be passed down to consumers and workers and possibly lead to large-scale dissolution or abandonment of your region. The vaunted nordic countries opted for a model where personal income is taxed very high, but corporate income is taxed competitively (until the Trump tax cuts, Nordic corporate tax rates were universally lower than those of US).

Finally, tax policy is an area replete with potential 'unintended consequences'. Most people (myself included and you as well - after reading your comment) don't really understand why everything is the way it is (and there are good reasons for many tax regulations), so I would be careful with advocating for restructuring the entire system - you're going to screw it up worse than you think it is now.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#122

Post by swebs »

throwaway2a02 wrote: post #47
varispeed wrote: post #12

This is crazy how economy is tilted in favour of these big corporations. If you are a worker, it is not uncommon to pay over 40% of tax and if you work on your own small business you can pay even more and have very little left to reinvest. Then you have progressive tax that is preventing you from saving much - if you want to save for a deposit to buy a house, spend time on education and getting a better job, you'll g…

> tax progression will be removed, so that people will have a chance of levelling up Progressive taxation has the exact opposite function to what you're suggesting. It's a mechanism designed to reduce economic inequality and the poverty among the low income workers. Your comment sounds like a rationalization from a middle/upper income person. > it is not uncommon to pay over 40% of tax That figure is misleading, beca…

It sounds like both of you want Fair Tax

https://en.wikipedia.org/wiki/FairTax

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#123

Post by FpUser »

varispeed wrote: post #12

This is crazy how economy is tilted in favour of these big corporations. If you are a worker, it is not uncommon to pay over 40% of tax and if you work on your own small business you can pay even more and have very little left to reinvest. Then you have progressive tax that is preventing you from saving much - if you want to save for a deposit to buy a house, spend time on education and getting a better job, you'll g…

>"This is crazy how economy is tilted in favor of these big corporations."

Corporations are allowed to bribe (sorry lobby) the government and many politicians end up on board of directors of the same corps after their marriage with the government is done away with. Do you really expect any different outcome in such conditions? In combination with this 2 major political parties ping pong I think the system is pretty much has reached an equilibrium point and nothing short of major turmoil is going to change anything.

On top of that Covid 19 pretty much played to the advantage of big corporations annihilating many small businesses. Some big ones (hotel chains, aviation) got hit as well but they'll come back after a while. Small businesses however may not.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#124

Post by PragmaticPulp »

bradleyjg wrote: post #110
hnmullany wrote: post #52

Netflix recorded a worldwide income tax accounting expense of about 13.7% last year ($438M on $3.2B of Net Income). It also paid cash taxes of $292M (cash taxes differ from accounting taxes because of timing issues - just like revenue is not the same as cash-in). A lot of growing companies have US taxes that are quite low because they lose money for a long time while they're investing in growth. When they finally bec…

> A lot of growing companies have US taxes that are quite low because they lose money for a long time while they're investing in growth. When they finally become profitable, they're allowed to roll forward those losses (within limits) to offset their profits. Human beings cannot do the equivalent. Spend the entirety of your 20s making very little money because you are investing in growth and then make $800k as an ort…

> Human beings cannot do the equivalent. Spend the entirety of your 20s making very little money because you are investing in growth

That’s not really an equivalent, though.

These companies aren’t simply giving up opportunity cost. They’re spending real money on real R&D expenditures. In software, that R&D expenditure is largely wages for developers like us.

The tax code gives companies benefits for spending this R&D money because we want to encourage them to make the R&D investment even if it comes at a loss (to the company, the employees still gain wages) for several years. We need to think long and hard about changing incentive structures in ways that reduce incentives for companies to invest in R&D and spend money on paying people.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#125

Post by frankbreetz »

pessimizer wrote: post #108
tenaciousDaniel wrote: post #25

Earlier quoted context omitted.

Yep. I just got an equity payout from an acquisition. It’s a lot of money, though it isn’t going to allow me to retire early. Would be enough for a house down payment, which is good enough for me! However, I am paying literally 40% in taxes due to how it was paid out. As someone who desperately needs this money, it’s devastating. To hear that large corps can weasel their way out of paying is extremely infuriating.

Needing the equity payment from your acquisition, untaxed, to put a down payment down on a house is not what the vast majority of people would think of as desperation. You're going to get enough tax breaks and subsidy for buying the house anyway.

What kind of tax breaks and subsidies are available for home buying?

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#126

Post by Ceezy »

hnmullany wrote: post #52

Netflix recorded a worldwide income tax accounting expense of about 13.7% last year ($438M on $3.2B of Net Income). It also paid cash taxes of $292M (cash taxes differ from accounting taxes because of timing issues - just like revenue is not the same as cash-in). A lot of growing companies have US taxes that are quite low because they lose money for a long time while they're investing in growth. When they finally bec…

So Amazon is loosing money is the US? Starbucks is loosing money in UK and Disneyland is loosing money in France? Please shifting profit is not normal there is no reason a company can do it and average people can't.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#127

Post by varispeed »

Guthur wrote: post #81
mjthompson wrote: post #69

Earlier quoted context omitted.

Corporations enjoy signficant benefits of being in the state, including, for example, a police force that protects them from attack, and a legal system that will resolve disputes they have both internally and with others. They should pay reasonable (not low) taxes in any event, not subject to the caveat you identify.

Everyone they employ already pays tax. Everyone that gets a dividend pays tax. Everyone that enjoys capital growth pays tax. Just looking at the direct corporate tax rate is grossly myopic.

> Everyone they employ already pays tax.

But this is their tax they pay on the money _they_ earned. Not sure why this is okay for corporations to appropriate this tax as theirs.

> Everyone that gets a dividend pays tax.

In my country dividend tax has a lower rate. You have this insanity where a person making money out of their hard work pays more tax than a person living off dividends and doing nothing.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#128

Post by Dracophoenix »

hnmullany wrote: post #52

Netflix recorded a worldwide income tax accounting expense of about 13.7% last year ($438M on $3.2B of Net Income). It also paid cash taxes of $292M (cash taxes differ from accounting taxes because of timing issues - just like revenue is not the same as cash-in). A lot of growing companies have US taxes that are quite low because they lose money for a long time while they're investing in growth. When they finally bec…

Wasn't that the point of GILTI legislation in the Trump administration's final tax bill? I would think it's no longer as easy as it was to store IP earnings overseas as it was during the Double Irish days.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#129

Post by symlinkk »

PragmaticPulp wrote: post #124
bradleyjg wrote: post #110

Earlier quoted context omitted.

> A lot of growing companies have US taxes that are quite low because they lose money for a long time while they're investing in growth. When they finally become profitable, they're allowed to roll forward those losses (within limits) to offset their profits. Human beings cannot do the equivalent. Spend the entirety of your 20s making very little money because you are investing in growth and then make $800k as an ort…

> Human beings cannot do the equivalent. Spend the entirety of your 20s making very little money because you are investing in growth That’s not really an equivalent, though. These companies aren’t simply giving up opportunity cost. They’re spending real money on real R&D expenditures. In software, that R&D expenditure is largely wages for developers like us. The tax code gives companies benefits for spending this R&D…

That doctor is spending real money on attending medical school, which pays professors. It is an equivalent.

Re: Netflix Made Record Profits in 2020, Paid a Tax Rate of Less Than 1 Percent

#130

Post by RHSeeger »

varispeed wrote: post #12

This is crazy how economy is tilted in favour of these big corporations. If you are a worker, it is not uncommon to pay over 40% of tax and if you work on your own small business you can pay even more and have very little left to reinvest. Then you have progressive tax that is preventing you from saving much - if you want to save for a deposit to buy a house, spend time on education and getting a better job, you'll g…

> Then you have progressive tax that is preventing you from saving much - if you want to save for a deposit to buy a house, spend time on education and getting a better job, you'll get hit by much higher tax and it will take ages to save anything.

I'm having a hard time understanding the logic here. The government needs a certain amount of money to run [1]. If you make the tax rate flat then, in order to bring in the same amount of money, the lower incomes _must_ pay more taxes. While I'm open to an argument that this is false, I cannot come up with any way it could possibly be. As such, your argument seems to be

> When a person makes over X amount of money, a progressive tax makes it hard for them to save any of that money over X because the amount they make over X is taxed higher. As such, we should tax earnings below X higher, so there's less of a jump.

And that ^ argument makes no sense to me.

[1] This is arguable, but it's fair to say that the amount the government needs is orthogonal to whether taxes are progressive or not.

Post reply on HN