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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

#201

Post by bradleyjg »

Erlich_Bachman wrote: post #196
bradleyjg wrote: post #97

Earlier quoted context omitted.

What about the benefits that flow to foreign shareholders? You can’t effectively tax their capital gains.

Why not just tax any sale of a stock or a divident payout in the country of the company, - not the country of owner of said stock? These operations have to go through country of company anyway...

They don’t. Suppose I incorporate a company in Grand Bahama “Shell” and fund it with $10,000. The company turns around and buys $10,000 worth of Apple stock. A year later, Apple has doubled and I sell my company Shell to my friend John. If John and I are both non-Americans then the US taxing authority will never hear about this transfer or be able to tax the capital gain.

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

#202

Post by easton »

SavantIdiot wrote: post #190
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 Netflix has been around for 20+ years

But they pivoted models (twice, if you count both streaming and the shift to original content over other companies IP). There’s a ton of spending with that, and they are still gaining subscribers.

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

#203

Post by bzbarsky »

lotsofpulp wrote: post #54
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.

How was it paid out that your federal income tax liability is 40% Or are you talking about withholding? Which is not accurate to describe as “taxes paid”. Also, if including state tax, then it might be higher, but I would still be surprised if your total tax liability was over 40%.

If it's paid out as ordinary (W-2) income, then your top federal tax rate right this minute is 39.35% (37% regular tax, 1.45% medicare tax, 0.9% medicare surtax).

If it's paid out as some sort of investment income not subject to long-term capital gains treatment (e.g. interest, non-qualified dividends), then your top federal rate is 40.8% (37% regular, 3.8% net investment tax).

That does assume $500k of taxable income not counting the payout we're talking about here, to hit that 37% tax bracket.

If you have kids, you can hit these sorts of marginal rates at lower incomes too, because of the 5% marginal tax rate from the child credit phaseout.

I should note that money is fungible, so the fact that some of this is claimed to be "medicare" tax and some is claimed to be "income" tax is irrelevant to both the person paying the tax and the government collecting the tax. Medicare is not funded solely by the "medicare" tax in practice, so the fact that there's a separate tax is more or less an accounting oddity.

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

#204

Post by frockington1 »

SavantIdiot wrote: post #190
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 Netflix has been around for 20+ years

They are still growing, growth can happen at any and often multiple times

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

#205

Post by Erlich_Bachman »

bradleyjg wrote: post #201
Erlich_Bachman wrote: post #196

Earlier quoted context omitted.

Why not just tax any sale of a stock or a divident payout in the country of the company, - not the country of owner of said stock? These operations have to go through country of company anyway...

They don’t. Suppose I incorporate a company in Grand Bahama “Shell” and fund it with $10,000. The company turns around and buys $10,000 worth of Apple stock. A year later, Apple has doubled and I sell my company Shell to my friend John. If John and I are both non-Americans then the US taxing authority will never hear about this transfer or be able to tax the capital gain.

To realize that gain you actually need to sell the Apple stock. It would be perfectly possible (as I am proposing) and viable to make that transaction be forced to go through US. You could still sell the "Shell" to someone without US knowing about it, but once you actually would want to do something with that gained money - you would need to sell the underlying stock and deal with IRS.

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

#206

Post by someguydave »

carmen_sandiego wrote: post #45
refurb wrote: post #29

Carry loss forward....again? No! Exciting it something different. Looks like depreciation (those bastards!) and R&D tax credits. How devious! Maybe reporters should get an accounting primer before writing articles about taxes?

It's not even just about taxes. Economists largely agree generally low corporation tax is good for everyone. > Maybe reporters should get an accounting primer before writing articles about taxes? That will just make them feel bad when they choose the clickbait anyway. HN is a semi-rarefied atmosphere and even these comments are mostly ignorant rabble. No way the journalists are giving up the sensational headlines for…

agreed, if you think this article points to a real scandal you are an ignorant rube - netflix’s low tax bill is justified by reasonable tax spending

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

#207

Post by drdec »

areyousure wrote: post #83
lotsofpulp wrote: post #36

Earlier quoted context omitted.

What is the source for 40% tax on income for labor? https://www.irs.com/articles/2020-federal-tax-rates-brackets... If you’re adding state taxes, note that the linked article is discussing federal income taxes only. Even then, including state taxes does not get you to 40% for 99% of people.

For (single) self-employed people making between ~$85k and $137k, the marginal federal tax rate they face is a little under 40%, with 24% from your link, ~12% from Social security, and ~3% from Medicare. This excludes the effect of phaseouts of various deductions (eg, student loan interest), which can easily drive that higher while remaining within the context of federal taxation only.

Everybody forgets about Social Security and Medicare. Writing out the federal marginal rates for the different income brackets with SS and Medicare included is very eye-opening.

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

#208

Post by _wp3r »

tehwebguy wrote: post #7

After a decade or two of these stories it’s clear this won’t change until someone offers a retail solution for everyday small businesses and individuals to enjoy the same level of “tAx PlAnNiNg.” It’s the only thing that will motivate the rest of the legislature to plug the holes.

Loss deductions are not complicated. I have a small business and built a building year before last. Deducted the expenses from that half last year and half this year. It cost me 500 bucks for an accountant that I would pay anyways. It is no different from home office remodel deductions or anything similar.

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

#209

Post by astrostl »

b112 wrote: post #39
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…

Yes, but... Decades and decades ago, corporations paid most of the tax. People paid very little. Then things shifted. Instead of taxing corporations, people were taxed. Said people, with less money in their pocket, required raises. And so, over time, tax shifted from corporate to personal, but with people in the end taking home approximately as much as they had before. For example, you have $60k pretax, $50k take hom…

> Decades and decades ago, corporations paid most of the tax. People paid very little.

Regarding corporations paying most of the tax, according to the data at FRED (b. 1947) there has never been a point at which corporate tax receipts have exceeded individual income tax receipts: https://fred.stlouisfed.org/graph/?g=CTxn

Regarding people paying very little, all taxes (the main federal types are income, payroll, corporate, excise, and "other") are ultimately paid by people: customers, employees, shareholders, etc.

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

#210

Post by frockington1 »

varispeed wrote: post #88
dpkrjb wrote: post #59

Earlier quoted context omitted.

I remember reading that employment numbers is often a case big Corps make when they warrant dodging tax. “We employe X thousand people who contribute Y to the tax base so we really do pay tax”. It gets worse when you think about how few people technology companies really employ when compared to more traditional companies (Alphabet employs 130k, Walmart 2.2 million). They have annual profits of 40billion and ~4billion…

To add to that - they essentially appropriate taxes workers pay as their own taxes - as if they owned the work that worker put their life into. This is insanely evil.

Isn't an employment contract a worker entering an agreement to give work to an employer? Why is it evil for a corporation to own the work a worker is paid to do?
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