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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

#251

Post by TuringNYC »

villgax wrote: post #30

Can people band together & save money doing the exact same thing?

Ask any of a thousand startups gone dark -- tons of people try. Many fail. You lose your time and your personal investment. Ask me how I know (hint: 3yr full time co-founder)

If you make it somehow, you have the benefit of deducting your R&D against profits, which seems fair to me...Except then people get upset (see comments on this page) that you "aren't paying your fair share of taxes."

This seems ludicrous given how many years startups spend burning their own money to hope to reach the point Netflix has reached. Good for Netflix.

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

#252

Post by Kiro »

SavantIdiot wrote: post #193
hntrader wrote: post #94

Earlier quoted context omitted.

What would be the incentive for this? The whole point is for stakeholders to eventually get paid in a taxable event; either shareholders through a capital gains taxable event or employees through an income taxable event. Some tech companies are hoarding cash but I don't believe this is due to incentives created by taxation, although I could be mistaken.

> What would be the incentive for this? Greed, son, greed. That is why 5 people in the US have more money than the bottom 100 million. They didn't work hard to become that rich, they stole it by not paying wages, health care, benefits, or sharing the wealth. Because they do not have to, nothing prevents them from keeping it and paying low wages in an economy where the ONLY jobs are working for them. (Look at the most…

No-no doubts the incentive of rich people wanting to be richer but I don't see how greed answers the question. What would the incentive be to just let the money sit in the company forever? Greed would be to maximize the outtake.

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

#253

Post by valuearb »

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…

If you spent your 20s making money, little or no, you didn't have losses.

If you spent your 20s conducting losing trades in the stock market, you accumulate capital gains losses that you can only apply $3,000 per year against your regular income. If at age 30 you made $800,000 in capital gains you are able to apply all those unused losses against those gains.

So "human beings" aren't much different.

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

#254

Post by pinky1417 »

TheCoelacanth wrote: post #224
Erlich_Bachman wrote: post #198

Earlier quoted context omitted.

The government takes tax from the same amount of money twice. How is that not well described by the term "double taxation"?

The entire concept of "double taxation" is BS. All money is taxed multiple times as it moves around. If I get paid a wage, my employer pays payroll tax, then I pay income tax. Then when I buy something with it, I pay sales tax. Then the company I bought it from pays payroll tax on it when they pay it out to an employee, then the employee pays income tax on it. Then they pay sales tax when they buy something with it,…

You have a point in that money does get taxed multiple times as it moves around. But I don’t believe that makes the term “double taxation” BS. It’s a useful term in a world where there are two structures for business entities (a) the “double taxation” corporate structure where lower corporate taxes allow increased investment at the expense of less efficient shareholder distributions or (b) the “single taxation” structure of partnership-type entities where earnings are only taxed once, but at the higher rate.

I don’t use the term “double taxation” to imply corporations are necessarily a worse structure compared to partnerships; that depends on context. But it’s a useful descriptive term.

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

#255

Post by TuringNYC »

bzbarsky wrote: post #246
TuringNYC wrote: post #240

Earlier quoted context omitted.

>> 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). There is also state tax, which can be significant (double digits), esp for top brackets.

Indeed. That varies widely, though, and corporations are subject to it too, with its own weirdnesses, so I was trying to stick to apples-to-apples federal tax comparisons.

I does vary widely, but the weighted majority of all such cases are in California (and NY might be next.) Those two states happen to have among the highest state taxes also.

Consider this: Where were the last 20 major IPOs? The last 20 major acquisitions? Where were the founding teams (i.e., the ones with the most stock facing such issues.) ...I'll bet 80% or more of these were in CA. I'm only pointing this out because once you're a super-successful startup and you've gone thru all the steps for a successful liquidity event, there is the final bath of taxes :-/

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

#256

Post by Kiro »

varispeed wrote: post #133
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.

You have taxes deducted from your salary but the company pays an additional payroll tax on top of this, outside of your salary.

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

#257

Post by eric_b »

We have progressive taxation for individuals - why not for corporations?

I don't have an army of accountants to avoid the corporate tax rate for my small business. So as a percentage I pay vastly more taxes than the multinationals.

Why can't we have varying rates depending on the size of the business?* Bigger businesses have a bigger tax rate. This would also incentivize organizations to stay small.

*Calculating the size of a business is tricky. Is it revenue based? Number of employees? Does it change per sector? Anyways, I'm sure it's possible to find a decent set of metrics.

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

#259

Post by valuearb »

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…

Investors almost always pay a minimum of 40% in taxes on earnings from their investments in corporations.

First the corporation pays 20% (soon to be 28% again) on the profits. Then it pays state income taxes on the remaining profits (0-11%). Then the investor pays capital gains or dividend taxes (10-20%). Finally they pay their state taxes (0-12%).

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

#260

Post by varispeed »

kube-system wrote: post #170
varispeed wrote: post #112

Earlier quoted context omitted.

If you cross a threshold from 20% to 40%, for every £1000 made over that threshold you pay £400 instead of £200. Sure you are still making more money, but suddenly you don't have that £200 that you could save or invest.

A linear tax would mean a person trying to move up the income ladder is more encumbered by tax for the same amount of tax revenue on a given population. Your suggestion above that low income workers are exempt from taxes, is a description of a progressive tax. I’m not really sure I understand what you’re suggesting should be done.

Are you saying that 40% of tax is less than 20% of tax? I don't follow. My point is that the tax should be linear with tax free allowance. That is everyone pays 20% on income above tax free allowance. You can call it a progression, but this way anyone can level up if they want to. If you add 40% and more further down the line you are slowing down how people from poor background can improve their living.
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