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Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

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Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#471

Post by anigbrowl »

OrwellianChild wrote: post #363
anigbrowl wrote: post #350

Earlier quoted context omitted.

There is no good reason investment income should be privileged over income from labor.

At risk of bottoming out on the threaded replies, I'd be interested in talking through how that would work... Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that? Say I earn a healthy $250K/year at my W-2 job. If I buy a large house with the proceeds from my job, have I incurred a loss? How about if I eat out at an expensive r…

Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that?

I am not all that sure about carrying forward investment losses, and as you are aware some expenses are deductible while some are not. While eating a fancy restaurant is strictly optional, spending on medical of educational costs are quite different.

In general I think if someone investigates the edge cases first (eg looking at the second-order effect like carrying deductions on negative income) that's a sign of not wanting to look at the larger picture.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#472

Post by anigbrowl »

anonymous5133 wrote: post #417
anigbrowl wrote: post #350

Earlier quoted context omitted.

There is no good reason investment income should be privileged over income from labor.

lol yes there is. If investment income is taxed at 50% (top federal bracket + top state income tax rate) then who in their right mind is going to risk their capital? lol, I know I absolutely wouldn't.

If investment income is taxed at 50%

Love it when people shoot down proposals I never made

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#473

Post by vonmoltke »

lmilcin wrote: post #380
pbhjpbhj wrote: post #316

Earlier quoted context omitted.

>public companies have obligation to maximise profits for their shareholders // They're not. Not in EU or USA at least. So, not they aren't under any obligation to be shitty to the public by diminishing tax paid in the countries they operate in. Anyone posting an attempted contradiction should cite the relevant laws making it a legal requirement for companies to maximise profits [above any [other] moral consideration…

Well. The law does not say that the reason for company to exist is to bring profit. In that you are correct, there is no legal requirement for companies to maximise profits. For example, in Delaware, company may be formed for "any lawful business or purpose". Now, once the "business and purpose" of the company is defined to be profit for the shareholders the company has fiduciary duty to perform in the "best interest…

> Now, once the "business and purpose" of the company is defined to be profit for the shareholders the company has fiduciary duty to perform in the "best interest" of the company and its shareholders as defined by this mission statement.

Absolutely not. Here are the fiduciary duties of corporate management:

https://www.nolo.com/legal-encyclopedia/fiduciary-responsibi...

The closest that comes to your assertion is the "Fiduciary Duty of Loyalty" and that states managers must put the best interests of the corporation (note, not just the shareholders) above their own. In general, the management of corporations in the US has significant leeway (from a legal standpoint) in deciding how best to run their corporation. If the board doesn't like the choices upper management is making, their recourse is to fire upper management.

Furthermore, the standard you are asserting is legally ludicrous. Not every shareholder has the same "best interest". There is no litigable standard of "best", thus no way of holding executives legally responsible for actions they didn't take. Additionally, such a standard would open up people to civil consequences merely for being bad at their job.

> "In a famous 1970 article in The New York Times Magazine, Milton Friedman wrote that the “great virtue” of the shareholder wealth maximization norm is that “it forces people to be responsible for their own actions and makes it difficult for them to ‘exploit’ other people for either selfish or unselfish purposes.”" (https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...)

That was Friedman's opinion. It was never substantiated by any statute or case law.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#474

Post by manquer »

skh wrote: post #206
manquer wrote: post #191

Earlier quoted context omitted.

You and companies do pay tax on expenses typically as some type of indirect tax (global defn, not the US defn) such as VAT, GST , excise , import/export duties etc.

A company takes in money from products and services it sells. From this amount of money the company pays employees and equipment, services, etc. for the running of the company. These are called expenses in business accounting. The company does not pay tax on the money it took in that it then spent buying/paying for things. This is what is meant by the phrase, "companies don't pay tax on expenses".

You pay the tax on your expenses even if you have zero income .

I am not talking about the tax you charge on your product and collect on behalf of the government. I am talking about the tax you pay for stuff you consume as a company.

While you may be able to offset some of the taxes you have paid already against what you collect from the customer like in Value Added Tax, you still pay those taxes on your consumption even if there are no customers.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#475

Post by memmcgee »

anonymous5133 wrote: post #417
anigbrowl wrote: post #350

Earlier quoted context omitted.

There is no good reason investment income should be privileged over income from labor.

lol yes there is. If investment income is taxed at 50% (top federal bracket + top state income tax rate) then who in their right mind is going to risk their capital? lol, I know I absolutely wouldn't.

Then what would you do with all your capital? Sit on it? I highly doubt it. You'd either spend it (which is good) or invest it because 50% of more money is still more money.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#476

Post by OrwellianChild »

anigbrowl wrote: post #471
OrwellianChild wrote: post #363

Earlier quoted context omitted.

At risk of bottoming out on the threaded replies, I'd be interested in talking through how that would work... Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that? Say I earn a healthy $250K/year at my W-2 job. If I buy a large house with the proceeds from my job, have I incurred a loss? How about if I eat out at an expensive r…

Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that? I am not all that sure about carrying forward investment losses, and as you are aware some expenses are deductible while some are not. While eating a fancy restaurant is strictly optional, spending on medical of educational costs are quite different. In general I think if so…

From your edge-case comment, it sounds like you'd prefer that losses from business income not roll over, rather than making rollovers accessible to individuals. I was approaching it the other way - trying to see if there was a reasonable way to credit individuals with a "P&L" view of their finances that could cross multiple years.

As you indicated above, so much of our personal expenses are "discretionary" in the sense that we could increase or lower them by choice. That's exactly the difference between business investment spending (required to produce the revenue that's taxed) vs. personal income/spending, which is based strongly on preferences. Hard to justify taxing frugal individuals more than lavish spenders just because they save a larger percentage of their income...

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#477

Post by mortdeus »

Just because a corporation doesnt pay any corporate tax, that doesnt mean the Government doesnt get paid their fair share when their employees pay an income tax on the salary thats paid to them by the corporation.

Having a 35% corporate tax AND a 35% income tax on all earners who make more than 120k/year, means the Government would essentially recieve %70 of all of Netflix's revenues, assuming inbound revenue and outbound expenditures are maintained at a 1:1 rate of growth.

Netflix doesn't pay (nor should they be paying any) taxes right now because they invest heavily in producing original content using borrowed money. When that original content flops they still have to pay back all that money they lost plus interest.

Netflix might have made a ton of profit this year but im pretty sure they are still heavily in debted (in the billions last i checked). To tax netflix at 35% now that they are finally starting to see a return on their investment would only cripple the corporation from maintaining their upwards momentum of growth.

You only want to start taxing a corporation when they are completely self reliant on their own revenue when funding their day to day operations and investments towards R&D.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#478

Post by FireBeyond »

Spivak wrote: post #429
objektif wrote: post #415

Earlier quoted context omitted.

Most stocks hold by Americans are owned by the top 10%. Unfortunately this libertarian trickle down fantasy of trickle down economics is not correct.

This is a stupid argument. Say we have 100 people in our economy, 90 of them $50k, 9 of them make $200k, and 1 person makes 1 million. Everyone invests 10% of their income in 'stoks' which cost $5/each. Each of the 90 people invest $5k and have 1000 stoks. Each of the 9 people invest $20k and have 4000 stoks. The millionaire invests $100k and has 20,000 stoks. The top 10% have 99.96% of the stoks. It would be weird i…

Except it's not 10%, or 1%. It's stats like "3 hedge fund makers make more than 140,000 teachers". The problem isn't disparity, it's the absolute mind boggling nature of it.

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#479

Post by m463 »

mortdeus wrote: post #477

Just because a corporation doesnt pay any corporate tax, that doesnt mean the Government doesnt get paid their fair share when their employees pay an income tax on the salary thats paid to them by the corporation. Having a 35% corporate tax AND a 35% income tax on all earners who make more than 120k/year, means the Government would essentially recieve %70 of all of Netflix's revenues, assuming inbound revenue and out…

And the customers pay for Netflix with post-tax currency.

I wonder where all this falls on the laffer curve:

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

Re: Netflix Posted Biggest-Ever Profit in 2018 and Paid $0 in Income Taxes

#480

Post by crgwbr »

OrwellianChild wrote: post #476
anigbrowl wrote: post #471

Earlier quoted context omitted.

Let's say you wanted to give income from labor the same benefits as (negative) income from investments that lost money... How would you do that? I am not all that sure about carrying forward investment losses, and as you are aware some expenses are deductible while some are not. While eating a fancy restaurant is strictly optional, spending on medical of educational costs are quite different. In general I think if so…

From your edge-case comment, it sounds like you'd prefer that losses from business income not roll over, rather than making rollovers accessible to individuals. I was approaching it the other way - trying to see if there was a reasonable way to credit individuals with a "P&L" view of their finances that could cross multiple years. As you indicated above, so much of our personal expenses are "discretionary" in the sen…

From a purely theoretical standpoint, I’m terribly curious what would happen if we incentivized spending like that. I’m sure it’d be terrible in the long run, but it’d also have definite macroeconomic stimulus effects.
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