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There can be a huge difference between "income tax expense", which will be the numerator for any headline income tax rate and "income taxes paid". For Netflix

There can be a huge difference between "income tax expense", which will be the numerator for any headline income tax rate and "income taxes paid". For Netflix this is true for 2018. In fact they paid $131 million for income taxes, which, as a percent of their income is way higher than "$0" which the original article claims in its. Also, the article makes no mention of R&D tax credits, which saved NFLX $141 million in state and federal income tax credits (the second biggest component). It would not have been difficult to find this in NFLX's 10-K. Netflix says the Tax Cuts and Jobs Act of 2017 _cost_ them an additional $79 million [0] "In accordance with the Act, we recorded $79 million as additional income tax expense in the fourth quarter of 2017"; https://www.sec.gov/Archives/edgar/data/1065280/000106528019000043/form10k_q418.htm#s207D2AE00AD558F2B1F131B519593779 https://www.sec.gov/Archives/edgar/data/1065280/000106528019...

gammateam 8y ago
From the article > "In fact, the company reported a $22 million federal income tax rebate." So if they paid 131 in income taxes, and received 141 in tax credits, then that accounts for $10 million of the $22 million the article mentions. That's pretty cool, I was assuming their earnings were just debt fueled. Therefore spending more money than they made, which is always a fun way of not sending that money to the government but on something you feel is more productive.
- briandear 8y ago
  It is more productive. Taxes always result in some amount of deadweight loss. $10 million spent in the private sector is mathematically more productive than $10 million paid to the government. https://www.investopedia.com/terms/d/deadweight-loss-of-taxation.asp https://www.investopedia.com/terms/d/deadweight-loss-of-taxa...
  - clairity 8y ago
    in theory (mathematically) it's more productive (in operating businesses that can put the capital to good use quickly), but in practice, that's not necessarily true. markets are not perfectly efficient, and have hidden losses as well (e.g., productive asssets being sidelined due to competition). governments are capable of putting capital to good use (hoover dam --> california expansion, at the expense of the environment, a hidden cost). neither markets nor governments are perfect, and such superficial arguments are at best misleading. you can't just compare idealized markets to practicing governments to reach substantive understanding.
brianpgordon 8y ago
> Netflix says the Tax Cuts and Jobs Act of 2017 _cost_ them an additional $79 million $32 million of that was paid to repatriate foreign profits that they would have had to pay even more to repatriate before the tax cut.

gammateam 8y ago

From the article > "In fact, the company reported a $22 million federal income tax rebate." So if they paid 131 in income taxes, and received 141 in tax credits, then that accounts for $10 million of the $22 million the article mentions. That's pretty cool, I was assuming their earnings were just debt fueled. Therefore spending more money than they made, which is always a fun way of not sending that money to the government but on something you feel is more productive.

briandear 8y ago
It is more productive. Taxes always result in some amount of deadweight loss. $10 million spent in the private sector is mathematically more productive than $10 million paid to the government. https://www.investopedia.com/terms/d/deadweight-loss-of-taxation.asp https://www.investopedia.com/terms/d/deadweight-loss-of-taxa...
- clairity 8y ago
  in theory (mathematically) it's more productive (in operating businesses that can put the capital to good use quickly), but in practice, that's not necessarily true. markets are not perfectly efficient, and have hidden losses as well (e.g., productive asssets being sidelined due to competition). governments are capable of putting capital to good use (hoover dam --> california expansion, at the expense of the environment, a hidden cost). neither markets nor governments are perfect, and such superficial arguments are at best misleading. you can't just compare idealized markets to practicing governments to reach substantive understanding.

brianpgordon 8y ago

> Netflix says the Tax Cuts and Jobs Act of 2017 _cost_ them an additional $79 million $32 million of that was paid to repatriate foreign profits that they would have had to pay even more to repatriate before the tax cut.