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

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

#371

Post by valuearb » Mon, Apr 05, 2021, 10:20 PM UTC

imtringued wrote: post #356

valuearb wrote: post #269

Earlier quoted context omitted.

Actually behavior rebuts your theory. Apple has paid hundreds of billions of dividends to shareholders the last few years. It's borrowed money to do it because it would be taxed if it repatriated funds to pay dividends with. If the corporate tax rate was reduced to zero it would have zero reason to keep foreign profits offshore, it would just repatriate them and pay dividends directly.

>Apple has paid hundreds of billions of dividends to shareholders the last few years. It's borrowed money to do it because it would be taxed if it repatriated funds to pay dividends with. Yeah, the reason why this strategy works is because Apple can pay dividends today and just wait for the inevitable tax holiday that comes when a republican president enters the white house. Similar schemes work with cryptocurrency i…

I'd argue no tax code is needed, just treat C corps like S corps and LLCs.

1) Increase the incentives to save and invest in the U.S/

2) Restore progressivity to the tax code by taxing profits when paid to investors on a progressive rate based on their tax brackets.

3) Repurpose hundreds of thousands of accountants into doing actual business finance and development of wasting their efforts reconciling the differences between GAAP & a super convoluted Tax code accounting (and searching for loopholes)

4) Simplify business decisions and reward honest management based solely on GAAP accounting with no more "angles" to take advantage of tax code loopholes.

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

#372

Post by valuearb » Mon, Apr 05, 2021, 10:24 PM UTC

imtringued wrote: post #357

SavantIdiot wrote: post #306

Earlier quoted context omitted.

/china enters chat/ Right. That's great: the richest employees of apple get richer, and the people doing the worst labor live in dorms and work 18 hour days. > If the corporate tax rate was reduced to zero it would have zero reason to keep foreign profits offshore, Again, you seem to be ignoring the abundant evidence. Trickle down has never worked. Corporate tax rates are the lowest they've EVER been (down from >80%…

I don't think the argument is trickle down economics. The argument is that there is a race to the bottom and simply opting out from the race is the only way to win. Trickle down doesn't work because republicans love pumping the supply side of the economy even when it is fully saturated. The days of a weak US economy are long gone. The real problem is that savings exceed investments. You either let the government crea…

There has never been anything such as "trickle down economics", it's merely a political label to demonize lowering the tax rates on investments.

Arthur Laffer tried to argue that tax cuts would lead to an increase in growth enough to produce the same or more tax revenues, which clearly didn't happen. But tax cuts did clearly lead to an increase in growth.

Right now, even under the lower Trump corporate rates, if you want to invest in a U.S. Business you will lose 33-50% of your profits to Federal and State taxes. Thats a tax on investment, reinvestment and savings. If you want to convert savings to investment, just cut those taxes.

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

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Post by browningstreet » Mon, Apr 05, 2021, 10:27 PM UTC

thehappypm wrote: post #349

browningstreet wrote: post #331

Earlier quoted context omitted.

> Netflix annual revenue for 2020 was $24.996B, a 24.01% increase from 2019. Would they go to the trouble of making themselves 25 different companies? There might be a way for lawmakers to figure this out... -- https://www.macrotrends.net/stocks/charts/NFLX/netflix/reven...

Even splitting off 1 company, and shielding that $999M in revenue from the higher tax burden, would make sense for Netflix.

Versus paying $0 on the whole.

Fine, I'll take it.

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

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Post by gher-shyu3i » Mon, Apr 05, 2021, 10:28 PM UTC

listenallyall wrote: post #367

gher-shyu3i wrote: post #361

Earlier quoted context omitted.

Still, this left over money will be available to spend in other areas like R&D, marketing, etc. The government does not have a right to 30% of it or whatever the corporate tax rate is.

No, you are repeating your mistake. Companies are free to spend on marketing or R&D, which are common expenses, thereby reducing their profit and by extension, reducing the amount upon which they are taxed. >> The government does not have a right to 30% Apparently it does, since governments all over the globe have been levying taxes on corporations for decades. Unless you think the Cayman Islands, Bahrain, and Isle o…

The Gulf countries don't charge corporate taxes as far as I'm aware, not just Bahrain. Also, the company might want to spend the money on R&D and marketing the following year, so having a spend it or lose it model is backward.

And, just because the rest of the world's governments are stealing does not make it ok.

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

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Post by bradleyjg » Mon, Apr 05, 2021, 10:46 PM UTC

owenversteeg wrote: post #332

leetcrew wrote: post #276

Earlier quoted context omitted.

it doesn't really make sense to tax long-term capital gains as income, especially under a progressive system. if I hold an asset for ten years and then sell it, a significant part of the nominal gain will be due to inflation (though this is also a problem with the existing cap gain rules). but conceptually, an LTCG is not a sudden windfall, and should not be taxed as such. it is the result of one or more years' appre…

I'd be very curious to see HN's perspective on Biden's plan to scrap the LTCG tax (aka tax it the same as income.) On the one hand, it would be a fairly clean way to tax the wealthy (basically nobody poor has LTCGs.) On the other hand, it disincentivizes long term investing. It'd also cost a lot of people here a lot of money, so I imagine that would make it at least mildly unpopular.

I can’t speak for HN as a whole, but to me I can see an argument for dividends to be taxed favorably but why all capital gains? If I buy a collectible stamp and later sell it for a big gain, there’s no double taxation argument. Adjust the basis for inflation, sure, but that’s about it.

That would also incentivize companies to pay dividends, which I think is good for various reasons.

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

#376

Post by dragonwriter » Mon, Apr 05, 2021, 10:48 PM UTC

owenversteeg wrote: post #332

leetcrew wrote: post #276

Earlier quoted context omitted.

it doesn't really make sense to tax long-term capital gains as income, especially under a progressive system. if I hold an asset for ten years and then sell it, a significant part of the nominal gain will be due to inflation (though this is also a problem with the existing cap gain rules). but conceptually, an LTCG is not a sudden windfall, and should not be taxed as such. it is the result of one or more years' appre…

I'd be very curious to see HN's perspective on Biden's plan to scrap the LTCG tax (aka tax it the same as income.) On the one hand, it would be a fairly clean way to tax the wealthy (basically nobody poor has LTCGs.) On the other hand, it disincentivizes long term investing. It'd also cost a lot of people here a lot of money, so I imagine that would make it at least mildly unpopular.

> I'd be very curious to see HN's perspective on Biden's plan to scrap the LTCG tax (aka tax it the same as income.)

That’s not Biden’s plan. Biden’s plan is to limit the tax preference for capital gains by setting the top rate for LTCG equal to the top rate he has proposed for income taxes, with the top LTCG rate kicking in at $1 million+, while the same rate for normal income would at ~$400K.

> On the other hand, it disincentivizes long term investing.

Even if we assume an actual elimination of the preference, it would only “disincentivize” long teem investing to the same extent that taxes on normal income disincentivize income-producing activities generally, and still less than the even higher taxes on labor income (thanks to payroll/self-employment taxes) discourage labor and its employment.

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

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Post by bradleyjg » Tue, Apr 06, 2021, 12:28 AM UTC

gamblor956 wrote: post #348

clairity wrote: post #284

Earlier quoted context omitted.

loans are different for corporations due to the interest being deductible (colloquially called 'tax shields'). along with the carryforward provision, that can so valuable that it's the principal reason why a given company is bought. personal loans have no such leeway and value.

The interest on personal loans is also deductible, if used for (a) education, (b) buying a residence, or (c) for business activities of the individual.

> (a) education, (b) buying a residence

Only up to some low limit. Netflix can deduct unlimited interest.

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

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Post by Retric » Tue, Apr 06, 2021, 1:14 AM UTC

smaryjerry wrote: post #370

Retric wrote: post #365

Earlier quoted context omitted.

I never said land deprecated try reading my comment again: “if a company buys say land they can’t deduct anything ” that’s an example of default behavior. Try rereading what I actually said where again you can deduct the purchase price at the time of sale not purchase. As to depreciation being an exception that’s what it means when you change the baseline rules of a system with new rules. By default you take the dedu…

It’s not a hand out whatsoever. Firstly you are making an assumption that everything that is depreciated can be sold when the majority of depreciated items are not sold, ever. They get used up over time, kind of like... depreciation. That is why that capitalized items are capitalized, not land, which again _does not get depreciated_ so I don’t know why you would use that as your comparison for normal deduction. You a…

Now you buy something for $100,000, say construction of a building, that building falls apart and breaks down after 39 years, it was not sold.

The day it falls down it stops being useful, the day before that you have full use and therefore value of the building.

Or as I said several posts ago: “The general rule is something is a deductible expense at the point of destruction or sale not purchase.” Sure, it burned in a fire fine assuming you don’t have insurance then it’s a loss at that point.

Really equipment is generally binary either it works or it’s broken, unless you’re selling it then it’s exactly as useful on day 2854 as 2855. Worse, well maintained equipment lasts far beyond the accelerated depreciation benchmarks used. Anything not thrown away the day it’s theoretical value hit’s zero is unambiguously a subsidy, but so is anything with scrap value etc. But, as I clearly demonstrated the idea of depreciation it’s self was created as a subsidy.

> Accelerated depreciation means you pay less tax and have more money at the start of a project when it is needed and pay more to the government later when it has stabilized.

People say stuff like this, yet hopefully suggesting the government hands out zero interest loans to group X raises red flags. Depreciation is a subsidy in effect a zero interest loan and that in and of it’s self is a problem. Opportunity cost is a huge deal and trying to ignore that is why central planning fails.

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

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Post by webinvest » Tue, Apr 06, 2021, 1:46 AM UTC

valuearb wrote: post #259

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%).

The 10% capital gains tax rate is history. Now it’s been merged into the 15% bracket.

To the rest of your comment: interesting point. I wonder if there’s a certain tax rate where it makes sense to change how you invest. Sort of like the difference in investing in Voyager digital (VYVGF) or the Voyager token (VGX). Stock buybacks are not tax deductible but buying a cryptocurrency can be a business expense.

Last, I think the business tax rate hardly matters because so much can be written off and justified as business expenses. Just look at Amazon, Netflix and Tesla as examples. Amazon receives customer money before it has to pay suppliers. Thus, it can quickly go spend that surplus money on reinvesting into more distribution centers, better salaries, and automation until the taxable profit is $0.

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

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Post by webinvest » Tue, Apr 06, 2021, 2:17 AM UTC

thehappypm wrote: post #295

listenallyall wrote: post #49

Earlier quoted context omitted.

>> It would be perfectly fine for corporations to pay comically low taxes No it wouldn't

Why should corporations pay taxes on their profits? What's the argument for it?

For the privilege of continued access to a workforce that was educated by public schooling

For access to roads that are maintained by tax dollars

For environmental damages and other negative externalities that the tax payer has to pay to clean up

For an army and police system that allows the flow of commerce to continue without attacks and interruption

For a sovereign wealth fund if there is a surplus of tax revenue one year

For a court system so that corporations can continue to sue each other

To secure the population access to vaccines to reduce the spread of Covid and other diseases

To fund libraries that help the local population

To build sea ports and airports that provide the economy with better trade and transportation

These are some common things taxes are spent on but they are not reasons why corporations shouldn’t pay taxes on their free cash flow, revenue, or some other financial statement line item (FSLI) instead of their profit.