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Rather than being outraged at the headline, what are the actual details? Why were they able to pay no taxes? Was it due to carried losses or something like that

Rather than being outraged at the headline, what are the actual details? Why were they able to pay no taxes? Was it due to carried losses or something like that? Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law.

ghostly_s 8y ago
Please point me to the people who are mad at the company. I'll wait.
blackguardx 8y ago
Companies also lobby heavily for these tax laws. The laws may be directly responsible, but big companies share some blame as well.
- partiallypro 8y ago
  Actually the biggest lobbyists for tax laws aren't companies but accounting firms.
- chanandler_bong 8y ago
  The answer is to outlaw lobbyists, it would fix a lot of problems. That, and enact term limits for Congress. That will fix even more.
  - briandear 8y ago
    I’m not sure what we are mad about here, that companies and individuals want good tax laws? I am not sure how Netflix’s alleged tax rate hurts anyone. Remember, 45% of Americans pay no federal income tax at all! How about we complain about that first assuming the goal is that everyone pay their fair share. There is no argument that is logical that can justify the top 20% of earners paying 70% of all income taxes. Nobody’s fair share is zero.
    - 24gttghh 8y ago
      http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/ http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-loo... Your 45% number is misleading on it's own. People don't pay income tax because they had so little income to tax in the first place.
  - jayko 8y ago
    Can you just stop parotting Bernie Sanders nonsense and have an opinion of your own?
  - macspoofing 8y ago
    >The answer is to outlaw lobbyists, it would fix a lot of problems. No it wouldn't. Our current regulated lobby 'industry' is an attempt to control something that would happen ANYWAY if it was made illegal. Furthermore, lobbying is necessary and a core part of any democracy. You need to be able to petition your representative government for changes, regardless if you're a regular citizen, an activist, a business owner, or even a corporate entity.
    - 24gttghh 8y ago
      Speeding happens anyway even though it is illegal, but at least there are legal consequences for speeding to deter people.
      - macspoofing 8y ago
        Right, 'speeding' is an infraction that results from regulating traffic. Nobody suggests that lobbying should not be regulated (and guess what, it is!). OP suggested that lobbying should be illegal. The equivalent to that in your analogy is to ban cars.
otachack 8y ago
It's not that simple. Companies lobby to keep, even coerce, laws that benefit them and allow these sorts of things to happen. What is the common person, or collection of persons, supposed to do when they are against that kind of force? I believe one way is to actually be involved in politics and get into the seats that govern and make the laws. But it's easier said than done.
- refurb 8y ago
  Honest question - can you give an example of a tax law that was lobbied for that benefited corporations? And I mean beyond just a decrease in tax rate which businesses would be expected to lobby for.
  - elcomet 8y ago
    Big companies lobby every law for their benefits. They hire full time lobyists. Big companies can pay million $ a year for lobbying. Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.
    - rayiner 8y ago
      I think your last point is precisely backwards. Total annual lobbying spending is just $3.7 billion a year, in a $19 trillion economy. It's a tiny amount of money compared to the stakes. If lobbying was so effective companies would spend way more money on it. It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large contingent of people who favor that just on principle.
      - smt88 8y ago
        We don't know how much companies spend in secret through dark money, individual contributions, holding companies, bribes, etc., so that $3.7B is likely very low.
      - standerman 8y ago
shawnz 8y ago
> Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law. Agreed. Are they supposed to purposely waste their shareholders money to take a moral stance against tax avoidance? When it's something that any corporation can do, then they have no choice but to do it to stay competitive. Regulators are the only ones in a position to stop it.
- jayko 8y ago
  Regulators don't care about stopping it, they only care about lining up their pockets. You have a corrupt agent and then you expect another corrupt agent to do you justice.
  - shawnz 8y ago
    > You have a corrupt agent and then you expect another corrupt agent to do you justice. I don't expect anything. I am just saying that regulators are the only ones in a position to stop tax avoidance. Corporations might be corrupt or they might not, and it would have no impact on the issue either way. The corruption of regulators is the sole cause of tax avoidance, not the corruption of corporations. Even morally sound corporations are forced to use tax avoidance to be competitive, since it is legally permitted. If they don't, they will be outcompeted. Therefore whether or not a corporation is corrupt has no impact on whether it will use tax avoidance.
  - macspoofing 8y ago
    You have evidence of Netflix paying-off corrupt IRS agent, right?
    - jayko 8y ago
      How is an IRS agent a regulator? IRS are just enforcers of regulation.
      - macspoofing 8y ago
onion2k 8y ago
If I spend a few million to get some lawyers to work out a legal loophole that means I can murder someone and get away with it that wouldn't make it OK to actually do it. The same applies to tax avoidance. It might be legal but it's still wrong.
- natalyarostova 8y ago
  Argument by contrived analogy is so awful.
  - druddha 8y ago
    Can you explain why you think that analogy is contrived?
    - EpicEng 8y ago
      Probably because tax avoidance within the constraints of the law is actually legal, and comparing murder to tax avoidance is just silly.
    - natalyarostova 8y ago
      I think the argument is contrived because loop holes for murder don't exist for a reason, which is that the electoral connection -> legislative process essentially leaves zero room for there to be such a loophole. In fact, concepts such as the intended meaning of the law mean that even if you hacked some edge case in the written law, you'd still go to jail. Conversely, tax law operates under a general regime where the expected and encouraged behavior of firms is to do their best to avoid paying taxes. In fact, maximizing share-holder value is even legally required (if blatantly ignored the firm is open to lawsuit). More generally, analogy is an attempt to model one unknown phenomena, by claiming it is actually just a subset in the core abstract moral dimensions as another obvious and solved phenomena. While making comparisons isn't always bad, In practice it frequently seems to obfuscate or wash away really critical idiosyncratic differences (e.g. what I alluded to above) and as a result over-simplifies often complex topics. The original point was really just 'legality is not the same thing as morality,' which is fine, I think most people agree with that. The question is how and does that concept apply in this given case, and I think to address that question properly requires engaging with the specific details.
endorphone 8y ago
Netflix hasn't, to my knowledge, even filed their 2018 annual yet (or their Q4 2018), so I'm not sure what they're even basing their numbers on. But they admit elsewhere that Netflix paid taxes most of the preceding years, averaging out around 13.5%. In the end their tax lawyers do exactly what tax lawyers do, and unless they're breaking the law so be it. As an aside, it's rich that it's always Americans complaining about companies paying low American taxes on billions that they make overseas. Netflix is more international than American now (2/3rds of their subscribers are not Americans), yet they are especially adept at avoiding taxes everywhere else. In the UK they have repeatedly paid $0 because they claim to be a Netherlands operation there, etc. In Canada every single competitor has to charge a sales tax of 13% (and consumers weigh the total cost, so if applied it would put downward pressure on Netflix's prices), but Netflix charges none. In any case, corporate tax rates are often much ado about nothing because in the end that money ends up in various other tax brackets. It becomes a capital gain, or a dividend, or some other form that often gets taxed at the personal level.
- chosenbreed37 8y ago
  > In any case, corporate tax rates are often much ado about nothing because in the end that money ends up in various other tax brackets. It becomes a capital gain, or a dividend, or some other form that often gets taxed at the personal level. Clearly corporate taxes are charged for a reason and presumably the additional revenue would be of benefit. However it seems to me that in our outrage we lose sight of the fact that the money doesn't disappear. If a company retains a greater portion of its revenue it has to do something with it. And as you say whether they payout dividends, hire more staff, expand their operations the at least some portion of the money comes back into the system. I guess the main difference is that the government doesn't get to decide how it is spent...
  - zdragnar 8y ago
    > at least some portion of the money comes back into the system. Apple is a fairly decent point to the contrary; they were able to let money sit around doing absolutely nothing at all because they didn't want to touch it until they didn't face stiff repatriation taxes for doing so. Generally speaking, though, I agree with your later points. The first one- corporate taxes are charged for a reason- I'm less convinced that the reason is a good one. It mostly seems like a feel-good way to bury the tax so people don't realize that they're ultimately paying for it.
vkou 8y ago
Because in a democracy, it is always easier for one bad actor to spend $xyz,000 on lobbying the government to let them steal $10,000,000 from the public, then for 300 million people to organize, and lobby against you stealing 3 cents from each of them. It's an obvious defect of the system. Of course, in 2019, half of those people have been convinced that they'll become rich, if they just let large firms fleece them.
- umanwizard 8y ago
  Stopping this sort of bribery is part of the definition of a functioning democracy in my opinion. You say “in a democracy” but you really mean “in the corrupt US”. Political campaign finance works totally differently in a lot of places.
mverwijs 8y ago
Could it be possible that sometimes laws are immoral? And that companies, while following the letter of the law are in fact acting immoral too? Why defend those companies?
lm28469 8y ago
> Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law. Either way it's a symptom of a rotten system.
ionised 8y ago
Companies lobby to create favourable laws. They are as much to blame.
jjallen 8y ago
Answers from the 10-K: #1: "Excess tax benefits on stock-based compensation": (191,323) #2: "Federal and California R&D tax credits": (140,749) https://www.sec.gov/Archives/edgar/data/1065280/000106528019000043/form10k_q418.htm https://www.sec.gov/Archives/edgar/data/1065280/000106528019...
- businesslucas 8y ago
  Do we have any idea what Netflix activity qualifies for the Federal or California R&D tax credits? Would Netflix OSS meet the Seven Tests for Internal Use Software [1] to qualify for the R&D Credit? Or is it likely to be something else? Is this information public? [1] https://www.ftb.ca.gov/businesses/credits/rd/seventests.shtml https://www.ftb.ca.gov/businesses/credits/rd/seventests.shtm...
vernie 8y ago
Rather than be mad realize that this is actually good.
arjbah 8y ago
Moneyland by Oliver Bullough tells you exactly how.
nprz 8y ago
>Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law. If a company is dumping waste into a lake and it is not against the law to do so, it is then wrong to get mad at the company? What if this is the behavior of all companies in the area? They all need to dump waste in the lake in order to remain competitive. Is it wrong to become outraged at the companies for their behavior? They should not be held accountable?
- umanwizard 8y ago
  Well, “wrong” is subjective, but it’s certainly pointless to get mad at such a company. Companies are amoral, and they are emergent behavior that is a product of a particular political, economic, and cultural situation. It’s a bit like getting outraged at a tree for falling on your house.
  - nprz 8y ago
    Human beings are also an emergent behavior that are a product of complex biological processes and their environment. Is it pointless to become outraged at a person?
- blhack 8y ago
  In seemingly every one of these cases of "corporation doesn't pay TAXES!", it's more along the lines (to use your analogy) of: in 2017, Netflix dredged out a canal to allow access to another waterway. in 2018, they added concrete to the new shoreline to prevent erosion due to the newly created canal. 2019 headlines: In 2018, netflix dumped over 18 bazillion tonnes of concrete into lake nature! It's clickbait, almost every time. Are there "loopholes" (incentive programs) that companies take advantage of? Of course there are. One might argue that those tax incentives are why the United States has one of the strongest economies in the world.
simonebrunozzi 8y ago
What a naive view, frankly. Yes, it's probably perfectly legal for them (and others) to pay single-digit taxes. And they can do so because they can 1) afford expensive lawyers and tax advisors, and 2) lobby congress to protect them indefinitely. It's unfair, plain and simple. Stop pretending it's right only because it's legal.
- nomel 8y ago
  I think his point is that some set of arbitrary morals don't stop behavior when filing taxes, laws do.
pluc 8y ago
I love that in arguments like these there's always someone who switches the blame to the consumer. There are lots of things that are unwritten rules in life. The consumer is expected to follow them, why would it be any different for corporations? Not paying you fair contribution to society might not be illegal, but it sure sounds immoral to me. I think it's about time everyone stops shrugging this shit away.
ahoy 8y ago
Companies lobby politicians/make campaign contributions/fly them to expensive resorts to be wine'd, dine'd and golf'd. Then politicians make policy that favors those wealthy companies.
dawhizkid 8y ago
I'm guessing a lot of people on here will be shocked, if you aren't shocked already, by their tax returns this year. The new $10k cap on SALT (state and local tax) deductions, which was previously unlimited, will really hurt a lot of people living in high tax states like CA and NY/NJ, especially those who have even a modest property in those states.
xparco 8y ago
Go to hell you scum, my grandparents were treated like shit due to law, color of thier skin
trumped 8y ago
> If you don't like the law elect different politicians. lol, you are being hopeful. (for example, I voted for Obama because he promised to repeal the "PATRIOT" Act and instead of doing that, he made it worst) (But I agree with you that the laws are the problem...)
deleted 8y ago
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jlarocco 8y ago
I'm not sure the point of these articles is to make people mad at the companies. Nobody expects a large public company to break the law evading taxes because they have to release their numbers, so what they're doing must be legal. The best way to highlight loopholes and broken parts of the tax system is to point out when they're being used and taken advantage of.
rconti 8y ago
I also would like the details. I think citing people "mad at the company" is a straw man. I'm sure someone is, but most people are angry at the system. It's really quite simple. My marginal tax rate is probably 28% or 32% or something. My effective federal rate is, I'm sure, sub-20%, but every additional dollar I make is taxed at that top rate. I don't need billionaires to be taxed at 70% or have a wealth tax. I just want people to pay the tax they're supposed to pay. I don't want loopholes where someone made $100m through cattle future derivatives that have a carve-out when implemented in cities in farm states with populations of under 10,000, so they pay 0%. Same for corporations. Fine, you write of x,y,z. But at some point if you're making more money than ever you shouldn't be paying less tax than ever, let alone $0. The solution, in my mind, is not to soak them for being successful. The solution is to find each and every loophole they're exploiting, and tear them the hell up.
lmilcin 8y ago
More than that, public companies have obligation to maximise profits for their shareholders as long as they are following the letter of law. There is not much choice here, they can't pay even if they wanted unless they can show this is somehow in shareholders' best interest.
- pbhjpbhj 8y ago
  >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].
  - robdachshund 8y ago
    Jello Biafra v. Dead Kennedys is an example of this. Singer lost most of his rights to his music because he didn't want to do a Levi's ad. Since he ran the label the band was on, they sued him for lost profits. He lost.
  - lmilcin 8y ago
    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" of the company and its shareholders as defined by this mission statement. As long as paying minimum tax serves the best interest of company that is brought for profit of its shareholders then that's what the company is bound to do. As I mentioned, it is possible that pure monetary value is not the best interest in the company. That's why, for example, companies spend on image building, because it believes it is in the best interest for the company and the shareholder in achieving long term mission of bringing profit (as long as the mission is "for profit"). The company may build local school or feed poor children in Africa, as long as it serves the best interest of the company and shareholders as defined by its mission. "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-corporations-obligations-to-shareholders/a-duty-to-shareholder-value https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...) The way I understand it is US, the people, who decide what is in the best interest of the companies. We have power to decide that being pro-environment is in the best interest of every company and we also have power to make it in the future the best interest of every company to pay taxes. But now that the standards are set, at any given point in time, the officers of the company have obligation to serve in its best interest and we only have ourselves to blame for allowing this to continue be the best interest of the company.
everdev 8y ago
> Don't get mad at companies that follow the law. I think people are outraged because the laws themselves are unfair and special tax breaks are doled out. > If you don't like the law elect different politicians. In our form of government it's possible for a presidential candidate with fewer total votes to win (Trump & Bush). If we had a popular vote for President this argument would make more sense. Also, on a ballot we're often given 2 (maybe 3) choices for representation. These representatives often need to raise money and they raise money from the companies and wealthy individuals that benefit from the tax breaks and exemptions. Unfortunately, it's a cycle of influence (aka - light bribery) that keeps these unequal laws going. A flat tax without exemptions seems like the fair and simple way to address this, but there's so much money to be made by making taxes complicated that it's hard to imagine well funded politicians actually passing something like that.
drugme 8y ago
Don't get mad at companies that follow the law. The companies... make the law. That's what people are angry about.
bogomipz 8y ago
>"If you don't like the law elect different politicians." What an incredibly naive statement that is. Of the 11K registered lobbyists in Washington, DC more than half of them 6200 of them worked on tax related issues in 2017. 4,200 of them specifically on tax reform[1][2][3] Put another way that is 11 lobbyists for every individual member of congress. The lobbyists are the ones shaping the tax code. Further tax reform is a generational thing, the last time it was taken up was under Reagan in 1986. Simply "electing different politicians" will accomplish nothing. >"Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law." No, one of the reasons that the US is great place to start a business is because there's a mature legal system, a stable government, and infrastructure and those things take money to run. If the country provides an environment that allowed a Netflix to start up and prosper then why shouldn't that company be expected to help pay for all those things? Both individual and corporations should share the burden of that. So no the anger is not "misdirected" at all when it's directed at entity who's shirking their responsibility. Just because something is legal does not necessarily make it right. [1] https://www.citizen.org/sites/default/files/swamped-tax-lobbying-report.pdf https://www.citizen.org/sites/default/files/swamped-tax-lobb... [2] https://www.nytimes.com/2017/12/15/us/politics/lobbyists-tax-overhaul-congress.html https://www.nytimes.com/2017/12/15/us/politics/lobbyists-tax... [3] https://thehill.com/business-a-lobbying/business-a-lobbying/362796-analysis-more-than-6000-lobbyists-have-worked-on https://thehill.com/business-a-lobbying/business-a-lobbying/...
- MockObject 8y ago
  > The lobbyists are the ones shaping the tax code. Further tax reform is a generational thing, the last time it was taken up was under Reagan in 1986. Simply "electing different politicians" will accomplish nothing. If the lobbyists had infinite power, I guess the corporate tax rate would be zero -- or negative. So, popular voting must be accomplishing something. > mature legal system, a stable government, and infrastructure and those things take money to run Which is by no means the lion's share of a state or federal budget. Chief are all the transfer programs, followed by defense well in excess of the necessary spend for protecting the 50 states from invading armies.
  - 8y ago
6cd6beb 8y ago
A senate race costs a few million. 20 at most. Netflix revenue for 1 year was 845 million. Netflix can afford a few senators if they want. Instead they just lobby existing legislators and put bills on their desks. Corporations are not just "following the law", they're writing it. >If you don't like the law elect different politicians How? Government officials are far more beholden to corporations like netflix than they are to people like us. If push comes to shove then corporations can spend a trivial amount of money to crack the consensus among the group of people pushing for change.
smsm42 8y ago
Judging from the text of the article: > Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period Carryover losses is the most likely reason, and focusing it on only one year makes for a good headline but terrible economic/policy analysis.
porpoisely 8y ago
Yes. Companies follow the law. But companies also write the laws. Pretty much every tax loophole/shelter/etc ( international or domestic ) was created at the behest of companies and their hordes of lobbyists and lawyers. Slave owners followed the law also. Kings followed the law. If we can't get mad at companies for following the law, can we at least be mad at them for creating these laws?
fatnoah 8y ago
From what I recall of a report in 2017, the main ways Netflix was able to avoid tax was due to Research Tax Credits and, mostly, due to the way stock options are treated. (I am not a tax lawyer, so go easy) The gist was that companies can claim a discount on stock options exercised by employees.
deleted 8y ago
[deleted]
omarforgotpwd 8y ago
It’s pretty simple. I’m surprised more people don’t know about this. it’s called net operating loss. when you’ve lost money over the last ten years you can deduct those losses from your gains and only pay taxes on the difference. Makes senses, right? A business needs to cover the losses before there is really a “profit” to pay taxes on. But this ends up incentivizing losing money, and makes the silicon valley business model of raising a ton of money and running at a loss to try and dominate the market a lot more profitable
AdamHede 8y ago
While that on principal is true, as an average citizen, digging into whether or not Netflix actually did something illegal is logistically impossible (not to mention requires skill very few outside of private industry-tax-optimization has). Looking at a successful company like Netflix, boasting massive profits and growing fast while paying no taxes is a reasonable proxy for something not being right. Either Netflix is doing something wrong (and the public needs to take action) or the system is broken (and the public needs to take action). In either case, anger and discussion is in its place

ghostly_s 8y ago

Please point me to the people who are mad at the company. I'll wait.

blackguardx 8y ago

Companies also lobby heavily for these tax laws. The laws may be directly responsible, but big companies share some blame as well.

partiallypro 8y ago
Actually the biggest lobbyists for tax laws aren't companies but accounting firms.
chanandler_bong 8y ago
The answer is to outlaw lobbyists, it would fix a lot of problems. That, and enact term limits for Congress. That will fix even more.
- briandear 8y ago
  I’m not sure what we are mad about here, that companies and individuals want good tax laws? I am not sure how Netflix’s alleged tax rate hurts anyone. Remember, 45% of Americans pay no federal income tax at all! How about we complain about that first assuming the goal is that everyone pay their fair share. There is no argument that is logical that can justify the top 20% of earners paying 70% of all income taxes. Nobody’s fair share is zero.
  - 24gttghh 8y ago
    http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/ http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-loo... Your 45% number is misleading on it's own. People don't pay income tax because they had so little income to tax in the first place.
- jayko 8y ago
  Can you just stop parotting Bernie Sanders nonsense and have an opinion of your own?
- macspoofing 8y ago
  >The answer is to outlaw lobbyists, it would fix a lot of problems. No it wouldn't. Our current regulated lobby 'industry' is an attempt to control something that would happen ANYWAY if it was made illegal. Furthermore, lobbying is necessary and a core part of any democracy. You need to be able to petition your representative government for changes, regardless if you're a regular citizen, an activist, a business owner, or even a corporate entity.
  - 24gttghh 8y ago
    Speeding happens anyway even though it is illegal, but at least there are legal consequences for speeding to deter people.
    - macspoofing 8y ago
      Right, 'speeding' is an infraction that results from regulating traffic. Nobody suggests that lobbying should not be regulated (and guess what, it is!). OP suggested that lobbying should be illegal. The equivalent to that in your analogy is to ban cars.

otachack 8y ago

It's not that simple. Companies lobby to keep, even coerce, laws that benefit them and allow these sorts of things to happen. What is the common person, or collection of persons, supposed to do when they are against that kind of force? I believe one way is to actually be involved in politics and get into the seats that govern and make the laws. But it's easier said than done.

refurb 8y ago
Honest question - can you give an example of a tax law that was lobbied for that benefited corporations? And I mean beyond just a decrease in tax rate which businesses would be expected to lobby for.
- elcomet 8y ago
  Big companies lobby every law for their benefits. They hire full time lobyists. Big companies can pay million $ a year for lobbying. Then the question is, does it really influence laws? Well I think if it didn't, they wouldn't spend so much money.
  - rayiner 8y ago
    I think your last point is precisely backwards. Total annual lobbying spending is just $3.7 billion a year, in a $19 trillion economy. It's a tiny amount of money compared to the stakes. If lobbying was so effective companies would spend way more money on it. It's also notable that you couldn't point to a specific tax law, like OP asked for. Lower taxes in general--nobody needs to lobby for that, there is a large contingent of people who favor that just on principle.
    - smt88 8y ago
      We don't know how much companies spend in secret through dark money, individual contributions, holding companies, bribes, etc., so that $3.7B is likely very low.
    - standerman 8y ago

shawnz 8y ago

> Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law. Agreed. Are they supposed to purposely waste their shareholders money to take a moral stance against tax avoidance? When it's something that any corporation can do, then they have no choice but to do it to stay competitive. Regulators are the only ones in a position to stop it.

jayko 8y ago
Regulators don't care about stopping it, they only care about lining up their pockets. You have a corrupt agent and then you expect another corrupt agent to do you justice.
- shawnz 8y ago
  > You have a corrupt agent and then you expect another corrupt agent to do you justice. I don't expect anything. I am just saying that regulators are the only ones in a position to stop tax avoidance. Corporations might be corrupt or they might not, and it would have no impact on the issue either way. The corruption of regulators is the sole cause of tax avoidance, not the corruption of corporations. Even morally sound corporations are forced to use tax avoidance to be competitive, since it is legally permitted. If they don't, they will be outcompeted. Therefore whether or not a corporation is corrupt has no impact on whether it will use tax avoidance.
- macspoofing 8y ago
  You have evidence of Netflix paying-off corrupt IRS agent, right?
  - jayko 8y ago
    How is an IRS agent a regulator? IRS are just enforcers of regulation.
    - macspoofing 8y ago

onion2k 8y ago

If I spend a few million to get some lawyers to work out a legal loophole that means I can murder someone and get away with it that wouldn't make it OK to actually do it. The same applies to tax avoidance. It might be legal but it's still wrong.

natalyarostova 8y ago
Argument by contrived analogy is so awful.
- druddha 8y ago
  Can you explain why you think that analogy is contrived?
  - EpicEng 8y ago
    Probably because tax avoidance within the constraints of the law is actually legal, and comparing murder to tax avoidance is just silly.
  - natalyarostova 8y ago
    I think the argument is contrived because loop holes for murder don't exist for a reason, which is that the electoral connection -> legislative process essentially leaves zero room for there to be such a loophole. In fact, concepts such as the intended meaning of the law mean that even if you hacked some edge case in the written law, you'd still go to jail. Conversely, tax law operates under a general regime where the expected and encouraged behavior of firms is to do their best to avoid paying taxes. In fact, maximizing share-holder value is even legally required (if blatantly ignored the firm is open to lawsuit). More generally, analogy is an attempt to model one unknown phenomena, by claiming it is actually just a subset in the core abstract moral dimensions as another obvious and solved phenomena. While making comparisons isn't always bad, In practice it frequently seems to obfuscate or wash away really critical idiosyncratic differences (e.g. what I alluded to above) and as a result over-simplifies often complex topics. The original point was really just 'legality is not the same thing as morality,' which is fine, I think most people agree with that. The question is how and does that concept apply in this given case, and I think to address that question properly requires engaging with the specific details.

endorphone 8y ago

Netflix hasn't, to my knowledge, even filed their 2018 annual yet (or their Q4 2018), so I'm not sure what they're even basing their numbers on. But they admit elsewhere that Netflix paid taxes most of the preceding years, averaging out around 13.5%. In the end their tax lawyers do exactly what tax lawyers do, and unless they're breaking the law so be it. As an aside, it's rich that it's always Americans complaining about companies paying low American taxes on billions that they make overseas. Netflix is more international than American now (2/3rds of their subscribers are not Americans), yet they are especially adept at avoiding taxes everywhere else. In the UK they have repeatedly paid $0 because they claim to be a Netherlands operation there, etc. In Canada every single competitor has to charge a sales tax of 13% (and consumers weigh the total cost, so if applied it would put downward pressure on Netflix's prices), but Netflix charges none. In any case, corporate tax rates are often much ado about nothing because in the end that money ends up in various other tax brackets. It becomes a capital gain, or a dividend, or some other form that often gets taxed at the personal level.

chosenbreed37 8y ago
> In any case, corporate tax rates are often much ado about nothing because in the end that money ends up in various other tax brackets. It becomes a capital gain, or a dividend, or some other form that often gets taxed at the personal level. Clearly corporate taxes are charged for a reason and presumably the additional revenue would be of benefit. However it seems to me that in our outrage we lose sight of the fact that the money doesn't disappear. If a company retains a greater portion of its revenue it has to do something with it. And as you say whether they payout dividends, hire more staff, expand their operations the at least some portion of the money comes back into the system. I guess the main difference is that the government doesn't get to decide how it is spent...
- zdragnar 8y ago
  > at least some portion of the money comes back into the system. Apple is a fairly decent point to the contrary; they were able to let money sit around doing absolutely nothing at all because they didn't want to touch it until they didn't face stiff repatriation taxes for doing so. Generally speaking, though, I agree with your later points. The first one- corporate taxes are charged for a reason- I'm less convinced that the reason is a good one. It mostly seems like a feel-good way to bury the tax so people don't realize that they're ultimately paying for it.

vkou 8y ago

Because in a democracy, it is always easier for one bad actor to spend $xyz,000 on lobbying the government to let them steal $10,000,000 from the public, then for 300 million people to organize, and lobby against you stealing 3 cents from each of them. It's an obvious defect of the system. Of course, in 2019, half of those people have been convinced that they'll become rich, if they just let large firms fleece them.

umanwizard 8y ago
Stopping this sort of bribery is part of the definition of a functioning democracy in my opinion. You say “in a democracy” but you really mean “in the corrupt US”. Political campaign finance works totally differently in a lot of places.

mverwijs 8y ago

Could it be possible that sometimes laws are immoral? And that companies, while following the letter of the law are in fact acting immoral too? Why defend those companies?

lm28469 8y ago

ionised 8y ago

Companies lobby to create favourable laws. They are as much to blame.

jjallen 8y ago

Answers from the 10-K: #1: "Excess tax benefits on stock-based compensation": (191,323) #2: "Federal and California R&D tax credits": (140,749) https://www.sec.gov/Archives/edgar/data/1065280/000106528019000043/form10k_q418.htm https://www.sec.gov/Archives/edgar/data/1065280/000106528019...

businesslucas 8y ago
Do we have any idea what Netflix activity qualifies for the Federal or California R&D tax credits? Would Netflix OSS meet the Seven Tests for Internal Use Software [1] to qualify for the R&D Credit? Or is it likely to be something else? Is this information public? [1] https://www.ftb.ca.gov/businesses/credits/rd/seventests.shtml https://www.ftb.ca.gov/businesses/credits/rd/seventests.shtm...

vernie 8y ago

Rather than be mad realize that this is actually good.

arjbah 8y ago

Moneyland by Oliver Bullough tells you exactly how.

nprz 8y ago

>Companies follow the law. If you don't like the law elect different politicians. Don't get mad at companies that follow the law. If a company is dumping waste into a lake and it is not against the law to do so, it is then wrong to get mad at the company? What if this is the behavior of all companies in the area? They all need to dump waste in the lake in order to remain competitive. Is it wrong to become outraged at the companies for their behavior? They should not be held accountable?

umanwizard 8y ago
Well, “wrong” is subjective, but it’s certainly pointless to get mad at such a company. Companies are amoral, and they are emergent behavior that is a product of a particular political, economic, and cultural situation. It’s a bit like getting outraged at a tree for falling on your house.
- nprz 8y ago
  Human beings are also an emergent behavior that are a product of complex biological processes and their environment. Is it pointless to become outraged at a person?
blhack 8y ago
In seemingly every one of these cases of "corporation doesn't pay TAXES!", it's more along the lines (to use your analogy) of: in 2017, Netflix dredged out a canal to allow access to another waterway. in 2018, they added concrete to the new shoreline to prevent erosion due to the newly created canal. 2019 headlines: In 2018, netflix dumped over 18 bazillion tonnes of concrete into lake nature! It's clickbait, almost every time. Are there "loopholes" (incentive programs) that companies take advantage of? Of course there are. One might argue that those tax incentives are why the United States has one of the strongest economies in the world.

simonebrunozzi 8y ago

What a naive view, frankly. Yes, it's probably perfectly legal for them (and others) to pay single-digit taxes. And they can do so because they can 1) afford expensive lawyers and tax advisors, and 2) lobby congress to protect them indefinitely. It's unfair, plain and simple. Stop pretending it's right only because it's legal.

nomel 8y ago
I think his point is that some set of arbitrary morals don't stop behavior when filing taxes, laws do.

pluc 8y ago

I love that in arguments like these there's always someone who switches the blame to the consumer. There are lots of things that are unwritten rules in life. The consumer is expected to follow them, why would it be any different for corporations? Not paying you fair contribution to society might not be illegal, but it sure sounds immoral to me. I think it's about time everyone stops shrugging this shit away.

ahoy 8y ago

Companies lobby politicians/make campaign contributions/fly them to expensive resorts to be wine'd, dine'd and golf'd. Then politicians make policy that favors those wealthy companies.

dawhizkid 8y ago

I'm guessing a lot of people on here will be shocked, if you aren't shocked already, by their tax returns this year. The new $10k cap on SALT (state and local tax) deductions, which was previously unlimited, will really hurt a lot of people living in high tax states like CA and NY/NJ, especially those who have even a modest property in those states.

xparco 8y ago

Go to hell you scum, my grandparents were treated like shit due to law, color of thier skin

trumped 8y ago

> If you don't like the law elect different politicians. lol, you are being hopeful. (for example, I voted for Obama because he promised to repeal the "PATRIOT" Act and instead of doing that, he made it worst) (But I agree with you that the laws are the problem...)

deleted 8y ago

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jlarocco 8y ago

I'm not sure the point of these articles is to make people mad at the companies. Nobody expects a large public company to break the law evading taxes because they have to release their numbers, so what they're doing must be legal. The best way to highlight loopholes and broken parts of the tax system is to point out when they're being used and taken advantage of.

rconti 8y ago

I also would like the details. I think citing people "mad at the company" is a straw man. I'm sure someone is, but most people are angry at the system. It's really quite simple. My marginal tax rate is probably 28% or 32% or something. My effective federal rate is, I'm sure, sub-20%, but every additional dollar I make is taxed at that top rate. I don't need billionaires to be taxed at 70% or have a wealth tax. I just want people to pay the tax they're supposed to pay. I don't want loopholes where someone made $100m through cattle future derivatives that have a carve-out when implemented in cities in farm states with populations of under 10,000, so they pay 0%. Same for corporations. Fine, you write of x,y,z. But at some point if you're making more money than ever you shouldn't be paying less tax than ever, let alone $0. The solution, in my mind, is not to soak them for being successful. The solution is to find each and every loophole they're exploiting, and tear them the hell up.

lmilcin 8y ago

More than that, public companies have obligation to maximise profits for their shareholders as long as they are following the letter of law. There is not much choice here, they can't pay even if they wanted unless they can show this is somehow in shareholders' best interest.

pbhjpbhj 8y ago
>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].
- robdachshund 8y ago
  Jello Biafra v. Dead Kennedys is an example of this. Singer lost most of his rights to his music because he didn't want to do a Levi's ad. Since he ran the label the band was on, they sued him for lost profits. He lost.
- lmilcin 8y ago
  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" of the company and its shareholders as defined by this mission statement. As long as paying minimum tax serves the best interest of company that is brought for profit of its shareholders then that's what the company is bound to do. As I mentioned, it is possible that pure monetary value is not the best interest in the company. That's why, for example, companies spend on image building, because it believes it is in the best interest for the company and the shareholder in achieving long term mission of bringing profit (as long as the mission is "for profit"). The company may build local school or feed poor children in Africa, as long as it serves the best interest of the company and shareholders as defined by its mission. "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-corporations-obligations-to-shareholders/a-duty-to-shareholder-value https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...) The way I understand it is US, the people, who decide what is in the best interest of the companies. We have power to decide that being pro-environment is in the best interest of every company and we also have power to make it in the future the best interest of every company to pay taxes. But now that the standards are set, at any given point in time, the officers of the company have obligation to serve in its best interest and we only have ourselves to blame for allowing this to continue be the best interest of the company.

everdev 8y ago

> Don't get mad at companies that follow the law. I think people are outraged because the laws themselves are unfair and special tax breaks are doled out. > If you don't like the law elect different politicians. In our form of government it's possible for a presidential candidate with fewer total votes to win (Trump & Bush). If we had a popular vote for President this argument would make more sense. Also, on a ballot we're often given 2 (maybe 3) choices for representation. These representatives often need to raise money and they raise money from the companies and wealthy individuals that benefit from the tax breaks and exemptions. Unfortunately, it's a cycle of influence (aka - light bribery) that keeps these unequal laws going. A flat tax without exemptions seems like the fair and simple way to address this, but there's so much money to be made by making taxes complicated that it's hard to imagine well funded politicians actually passing something like that.

drugme 8y ago

Don't get mad at companies that follow the law. The companies... make the law. That's what people are angry about.

bogomipz 8y ago

>"If you don't like the law elect different politicians." What an incredibly naive statement that is. Of the 11K registered lobbyists in Washington, DC more than half of them 6200 of them worked on tax related issues in 2017. 4,200 of them specifically on tax reform[1][2][3] Put another way that is 11 lobbyists for every individual member of congress. The lobbyists are the ones shaping the tax code. Further tax reform is a generational thing, the last time it was taken up was under Reagan in 1986. Simply "electing different politicians" will accomplish nothing. >"Anyone mad at a company for not pay taxes is misdirecting their anger. Companies follow the law." No, one of the reasons that the US is great place to start a business is because there's a mature legal system, a stable government, and infrastructure and those things take money to run. If the country provides an environment that allowed a Netflix to start up and prosper then why shouldn't that company be expected to help pay for all those things? Both individual and corporations should share the burden of that. So no the anger is not "misdirected" at all when it's directed at entity who's shirking their responsibility. Just because something is legal does not necessarily make it right. [1] https://www.citizen.org/sites/default/files/swamped-tax-lobbying-report.pdf https://www.citizen.org/sites/default/files/swamped-tax-lobb... [2] https://www.nytimes.com/2017/12/15/us/politics/lobbyists-tax-overhaul-congress.html https://www.nytimes.com/2017/12/15/us/politics/lobbyists-tax... [3] https://thehill.com/business-a-lobbying/business-a-lobbying/362796-analysis-more-than-6000-lobbyists-have-worked-on https://thehill.com/business-a-lobbying/business-a-lobbying/...

MockObject 8y ago
> The lobbyists are the ones shaping the tax code. Further tax reform is a generational thing, the last time it was taken up was under Reagan in 1986. Simply "electing different politicians" will accomplish nothing. If the lobbyists had infinite power, I guess the corporate tax rate would be zero -- or negative. So, popular voting must be accomplishing something. > mature legal system, a stable government, and infrastructure and those things take money to run Which is by no means the lion's share of a state or federal budget. Chief are all the transfer programs, followed by defense well in excess of the necessary spend for protecting the 50 states from invading armies.
- 8y ago

6cd6beb 8y ago

A senate race costs a few million. 20 at most. Netflix revenue for 1 year was 845 million. Netflix can afford a few senators if they want. Instead they just lobby existing legislators and put bills on their desks. Corporations are not just "following the law", they're writing it. >If you don't like the law elect different politicians How? Government officials are far more beholden to corporations like netflix than they are to people like us. If push comes to shove then corporations can spend a trivial amount of money to crack the consensus among the group of people pushing for change.

smsm42 8y ago

Judging from the text of the article: > Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period Carryover losses is the most likely reason, and focusing it on only one year makes for a good headline but terrible economic/policy analysis.

porpoisely 8y ago

Yes. Companies follow the law. But companies also write the laws. Pretty much every tax loophole/shelter/etc ( international or domestic ) was created at the behest of companies and their hordes of lobbyists and lawyers. Slave owners followed the law also. Kings followed the law. If we can't get mad at companies for following the law, can we at least be mad at them for creating these laws?

fatnoah 8y ago

From what I recall of a report in 2017, the main ways Netflix was able to avoid tax was due to Research Tax Credits and, mostly, due to the way stock options are treated. (I am not a tax lawyer, so go easy) The gist was that companies can claim a discount on stock options exercised by employees.

deleted 8y ago

[deleted]

omarforgotpwd 8y ago

It’s pretty simple. I’m surprised more people don’t know about this. it’s called net operating loss. when you’ve lost money over the last ten years you can deduct those losses from your gains and only pay taxes on the difference. Makes senses, right? A business needs to cover the losses before there is really a “profit” to pay taxes on. But this ends up incentivizing losing money, and makes the silicon valley business model of raising a ton of money and running at a loss to try and dominate the market a lot more profitable

AdamHede 8y ago

While that on principal is true, as an average citizen, digging into whether or not Netflix actually did something illegal is logistically impossible (not to mention requires skill very few outside of private industry-tax-optimization has). Looking at a successful company like Netflix, boasting massive profits and growing fast while paying no taxes is a reasonable proxy for something not being right. Either Netflix is doing something wrong (and the public needs to take action) or the system is broken (and the public needs to take action). In either case, anger and discussion is in its place