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

#51

Post by b112 » Mon, Apr 05, 2021, 11:13 AM UTC

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…

I'll add this as a reply, so as to not edit the original.

The downside of all of this, is that workers in regions with abysmal workers rights, win. No health care? No paid holidays? No sick leave? Work 6 or 7 days a week, 12 hour days?

Yay! Your region gets more jobs (China), because your workers cost less.

Government doesn't tax corporations OR workers much? Well, then the worker's wages are even cheaper. The Government can't afford schools, police, etc, etc, but.. yay! You now took jobs from regions which have these things.

Which is what 'fair trade', and 'child labour' campaigns work against, but of course have limited success sadly.

Point is, I really think tariffs and a reduction in free trade, is the only way to prevent a race to the bottom.

People wonder why wages have continuously slipped in the US for the average Joe? Well, how can you compete with places that have workers working in such conditions. Who have abysmal human rights? Have no schools, or infrastructure.

Of course products are cheaper! And thus, with no tariffs, you lose in the end.

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

#52

Post by hnmullany » Mon, Apr 05, 2021, 11:13 AM UTC

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 become profitable, they're allowed to roll forward those losses (within limits) to offset their profits. That's where a lot of these "Zero taxes paid" headlines come from.

On the other hand there is a legitimate gripe about using IP offshoring to shift profits to low-tax countries and out of the US, using accelerated depreciation to decrease current year profits, allowing tax deductibility of interest and lots and lots of tax deferrals and deductions for property transactions.

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

#53

Post by Proven » Mon, Apr 05, 2021, 11:14 AM UTC

Less than 1% is too much.

What valuable service do governments provide to Netflix?

If Netflix could choose to do business with governments, they'd likely buy nothing from them.

And remember that all Netflix customers and employees already pay too much tax related to Netflix business.

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

#54

Post by lotsofpulp » Mon, Apr 05, 2021, 11:14 AM UTC

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.

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%.

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

#55

Post by dfgdghdf » Mon, Apr 05, 2021, 11:15 AM UTC

CraigJPerry wrote: post #38

dfgdghdf wrote: post #18

Earlier quoted context omitted.

I don't approve of tax loopholes that large corporates abuse to pay an effective lower rate. However, as an individual we can't change this. My (extremely cynical) advice is to hitch your wagon to theirs. Get some market exposure to these large companies and make their lobbying efforts work for you. It won't make society any more just, but at least you won't get left behind.

If they don’t pay dividends (which they don’t) then what does “Get some market exposure” mean?

Build a portfolio whose value is in some way connected to their share price. Buy shares, hold them, sell later would be one example.

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

#56

Post by lotsofpulp » Mon, Apr 05, 2021, 11:16 AM UTC

tlholaday wrote: post #21

HotAirBalloons wrote: post #2

Unfortunate as it may be, this isn't shocking to me any more. Where are efforts being made to counteract the clustercuss of a situation where the larger you are, the more you can pay your accounting team to diminish your tax burden?

> ... the more you can pay your accounting team ... I would wager the typical Hacker News reader would be able to explain accelerated depreciation after sixty seconds of reading the instructions for Schedule C. It's not arcane.

I might accept that wager based on the other comments here.

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

#57

Post by LightG » Mon, Apr 05, 2021, 11:16 AM UTC

Does anybody in the "know" understand if this is just prior year losses being set against current year profits.

Or is this something else?

It makes all the difference.

Thanks

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

#58

Post by laGrenouille » Mon, Apr 05, 2021, 11:16 AM UTC

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…

I think this is a good overview of some of the challenges in taxing corporations. Personally, I don't mind keeping taxes on corporate profits low given their ability to be gained (not just by shifting across borders, but through many other accounting tricks). The problem right now, in the U.S. at least, is two-fold: (1) smaller companies are still taxed at a relatively high-rate and (2) individuals pay a significantly lower tax on "capital gains" because it is assumed that investment income has already been taxes at the corporate level.

I would like to see an across the board lowering of the corporate tax rate, remove the capital gains exception counting all income as income, and making up any losses through a VAT. This would go a long way to decreasing the ability to gain the current system.

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

#59

Post by dpkrjb » Mon, Apr 05, 2021, 11:17 AM UTC

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…

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 (2019) respectively. It’s bonkers that employing people is a good enough reason to warrant not paying tax.

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

#60

Post by _huayra_ » Mon, Apr 05, 2021, 11:17 AM UTC

tlholaday wrote: post #32

crispyambulance wrote: post #15

It would be perfectly fine for corporations to pay comically low taxes--- IF they also had NO ability to fund large-scale lobbying operations and were not allowed to put unlimited amounts of money into political campaigns. That's NOT ever going to happen. But now is the best time for the tax part to change. The economy has been floated by unprecedented government pay-outs, narrowly avoiding a deep depression that wou…

> ... 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 superpower (well combined with other fortuitous things, like being the only major industrial power that hadn't been bombed to smithereens). The bailout of large industries that a lot of the CARES act went to were not well spent: it was cronyism to prop up underprepared corporate structures (i.e. those that have hollowed out any "emergency fund" due to it being an overhead to their bottom line) and prevent bankruptcy from enabling other folks to come in and perhaps run things better.