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

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

#131

Post by fractionalhare »

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…

That's not equivalent. An equivalent example would be a person who makes a large amount of money in their 20s, but spends the majority of it on things that could conceivably appreciate, such that their income artificially represents a loss. Then all of a sudden, whatever they spent money on becomes extremely profitable in their mid 30s.

Someone doing that will normally do it within the confines of an LLC by convention (because it almost always implies a business). But you could do it with investing, too. In either case you need not be a megacorp.

There are also income tax offsets for education, provided your tax bracket isn't too high.

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

#132

Post by [deleted] »

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…

[deleted]

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

#133

Post by varispeed »

Erlich_Bachman wrote: post #10

Is that calculation really correct? Does it count tax for all the employees? Does it count all specialized tax for things like gas or VAT, for all the things Netflix buys in their operation? What about all the media that Netflix buys and produces? What about all the taxes levied there on salaries and other activities? The article also talks about "income" and not "revenue"...

> Does it count tax for all the employees?

Why do you think it is okay for a corporation to appropriate the tax employees pay as theirs? Employee pays this tax, not the corporation.

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

#134

Post by FpUser »

chaoxu wrote: post #62

I actually don't get why corporation should pay taxes. When the profit of the company is distributed, or paying the employees, the employees/shareholders will be taxed on that money.

The easy ( yeah right ) fix would be single universal sales tax. You buy something - you pay. Does not matter corporation or person. No expense claims on that either. This will also eliminate need to count assets as the taxes has already been paid on those. Tax can be progressive with the possibility of rate going negative for low income people.

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

#135

Post by londons_explore »

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…

I wonder what would happen if an entirely new approach to taxation were tested. A jury of 12 random people would inspect a companies accounts, assets etc and decide if the tax paid is "fair". The jury would have no training in tax matters, but would be presented documents produced by the government and the company to argue their cases.

If the tax paid is found to be unfair by the jury, the company gets nationalised with no compensation to shareholders. The government could re-privatize it by auctioning it off again.

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

#136

Post by ysavir »

fractionalhare wrote: post #131
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…

That's not equivalent. An equivalent example would be a person who makes a large amount of money in their 20s, but spends the majority of it on things that could conceivably appreciate, such that their income artificially represents a loss. Then all of a sudden, whatever they spent money on becomes extremely profitable in their mid 30s. Someone doing that will normally do it within the confines of an LLC by conventio…

> That's not equivalent. An equivalent example would be a person who makes a large amount of money in their 20s, but spends the majority of it on things that could conceivably appreciate, such that their income artificially represents a loss. Then all of a sudden, whatever they spent money on becomes extremely profitable in their mid 30s.

Like someone getting a $150k student loan to go to college and/or post-college education?

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

#137

Post by pc86 »

rev_d wrote: post #118

What's also quite gross about this is that we have large multinationals paying zero in taxes to the US government, but there are small businesses owned by overseas US citizens that are being subjected to both resident country & US tax due to the US being "unique" in its practice of taxing overseas citizens. If you're small, you get hit by the tax. If you're big enough for creative structuring, you're fine. It's just…

It's only "quite gross" if you have a... gross misunderstanding of how taxes work. They're not paying zero taxes on profit, they haven't profited yet except on arbitrary time scales. Here's a... gross oversimplification:

Year 1: Lose $50 million. Total profit: -$50 million. $0 taxes paid.

Year 2: Lose $10 million. Total profit: -$60 million. $0 taxes paid.

Year 3: Make $35 million. Total profit: -$25 million. $0 taxes paid. People who are either uninformed or petulant ideologues scream about you not paying taxes on $35 million in profit.

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

#138

Post by bmj »

refurb wrote: post #114
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…

Student loans interest is deductible at lower incomes. You can deduct mortgage interest (investing in long term housing). You can defer taxes on income through a 401k. It’s not like individuals don’t have mechanisms to save on taxes.

This isn't really equivalent. The current maximum deduction for tuition is 4000$, and that gets phased out at incomes above ~150000$ if you are filing jointly. I have no idea what the limit on a corporation carrying forward losses is, but I'm sure the percentage is significantly greater.

Yes, individuals can save on taxes, but can most of us get an effective tax rate of 1%? And, many of the common deductions (mortgage interest, charitable deductions, tuition) all have caps. I don't believe there's a cap on a corporation carrying forward losses from year to year.

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

#139

Post by ghufran_syed »

tenaciousDaniel wrote: post #25
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…

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.

“small” corporations could do exactly the same - if you find employment easier than starting your own company and fighting to get customers, maybe everyone else does too? But if there is an economic benefit to people starting companies, shouldn’t tax policy also recognize that and try to make it easier? You never see headlines saying “$blahCo lost $400 million dollars of their own money last year, of which $50 million was taxes to the government and $300 million was payment to employees”. Doesn’t that suggest you’re only hearing one side of the story now?

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

#140

Post by matwood »

_huayra_ wrote: post #60
tlholaday wrote: post #32

Earlier quoted context omitted.

> ... unprecedented government pay-outs ... The G.I. Bill after World War 2 is a precedent. Do you think CARES is larger, or smaller?

It's larger, but less effective. The G.I. bill gave resources to veterans to advance their lives while the 'rona-based payouts disproportionately affected the already-wealthy individuals and businesses due to the military-industrial-congressional complex. It's not so much whether it's larger or smaller, but how well it was spent. Free college and the myriad other benefits in the G.I. bill helped build the US into a s…

> prevent bankruptcy from enabling other folks to come in and perhaps run things better.

Yeah, while I think the CARES act helped individuals, there's no need to try and save every business. Take restaurants for example. In good times, most restaurants fail, and new ones start. The narrative that if restaurants failed they would never come back was simply untrue.

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