6 ms·

IRS considers taxing perks at Google, other tech firms

28 points by aray 14y ago

mindcrime 14y ago
And people wonder why some people think the government is basically a bunch of brainless fuckups who couldn't pour water out of a boot if the instructions were on the heel. This is, simply put, one of the most absurdly brain-dead stupid things I've ever heard in my life. And I've heard some really stupid ideas in my life. Whether this goes through or not, it's a perfect example of why we need to end the income tax and eliminate the IRS.
- ketralnis 14y ago
  > it's a perfect example of why we need to end the income tax I don't follow what this has to do with income tax, it's presumably a different benefits tax > and eliminate the IRS Well no. It's an example of one thing that the IRS can do. If you think it's silly (and I agree), it's an example of a silly thing that the IRS can do. But it's hardly evidence that the whole taxation system is broken. Assuming a government needs to be funded, I don't think eliminating the income tax would even get rid of the IRS, since it would still need revenue of some sort.
  - mindcrime 14y ago
    Meh... I was about to reply to this and just realized I let myself get drawn into another political debate. I enjoy this as much as anybody, but HN really isn't the place for it. Let's just say I have radically different ideas about the proper nature and scope of government than a lot of people.
  - ksherlock 14y ago
    free lunch is treated as compensation and is taxed as income.
- ipince 14y ago
  Care to explain why?
  - mindcrime 14y ago
    For more reasons than you can shake a stick at, not the least of which include the fact that not every employee receives the same value from this "benefit", and the fact that valuing it is ridiculously subjective. Add in the deleterious effect it would have on companies (who would probably just scrap free lunches altogether if this goes through) and it's hard to see it as anything other than totally brain-dead stupid.
- patrickgzill 14y ago
  Bureaucracy's main purpose is to create more bureaucracy. As a side effect, they collect taxes or issue you your driver's license, it is just a means to the end of self-perpetuation. Eliminating the income tax and going to a much more transparent method like higher fuel taxes (everyone pays them because everyone uses transportation) or some other broadly based consumption tax, would be excellent.
  - gorbachev 14y ago
    Please. There is a reason why most reasonable people don't actually seriously consider implementing such tax schemes. I know it's hard for people with good lives and great salaries to understand why, but please ask the people who clean your desks next time you see them what would happen to him/her, if fuel was taxed higher.
- rverghes 14y ago
  Why is it a stupid idea? Company A pays an employee $100 per day, and provides a lunch which costs the company $10. Company B pays the employee $110 per day, but the employee has to provide her own lunch. Is it really fair that Company B has to pay more tax than Company A? Compensation is compensation, whether in kind or in cash.
  - nazgulnarsil 14y ago
    I agree, eliminate the taxes on company B.
  - BrianEatWorld 14y ago
    The cost of the lunch is $10, but is the value to the employee $10? The problem with taxing a product is that the actual value is unknown. In your example, taxing the lunch as $10 of income is actually giving the benefit to Company B due to the "reverse inequality of exchange". IE if you buy a $10 lunch, you actually value it more than the $10.
    - anthonyb 14y ago
      You could say the same thing about $10 - the value of a $10 note to (eg.) a millionaire is a lot less than it is to most people. If the employee is hungry, then they'll value lunch more. For accounting purposes though, it's $10.
    - rverghes 14y ago
      Sure, but the cash has the value of being flexible. For example, if you were looking to save money, you could brown bag a lunch from home and pocket the extra $10. That flexibility might be more valuable to the employee than the nice lunch.
- willholloway 14y ago
  My favorite reform would be an end to the difference between business and personal expenses. I would like to see a tax code where all expenses were 100% deductible and only savings were taxed after an annual threshold was reached (similar to the current IRA rules). Allowing all expenses to be tax deductible would reduce accounting overhead incredibly, and would incentivize consumption and trade.
  - sokoloff 14y ago
    This seems backwards from what we actually want to do, but also has significant compliance concerns. It's obvious how to tax consumption. It's (fairly) obvious how to tax income. How would you tax savings? Is buying stock in a company "saving" or "consuming"? Is buying Bitcoins "saving" or "consuming"? What about gold coins/bars? What about guns and ammo? What about a collector car? Artwork? What about a house for personal residential use? What about a house for rental/income use? What about just holding suitcases of $100 bills? It seems like there would immediately spring up a system of "not treated as savings" savings mechanisms. I seriously doubt that you'd accomplish your intended accounting simplicity...
    - anthonyb 14y ago
      I think "savings" is probably the wrong word - "profit" might be better. If I have a car to drive to work, then I should be able to claim some proportion of it as a deduction. Currently that's not allowed (at least in Australia, where I'm from).
    - maxerickson 14y ago
      Homes are routinely taxed. They are also routinely taxed at different rates depending on whether they are owned for personal use or for renting out. There are even countries that have a modest tax on bank accounts.
deleted 14y ago
[deleted]
deleted 14y ago
[deleted]
avar 14y ago
I don't see why this is unreasonable. Right now it's basically a pretty easy way to evade taxes with freebies. Don't have enough money for the payments on your house? No problem, just offer to take a pay cut and move into a "free" house provided by your employer. Alcohol sales tax too high in your state? No problem, just open a bar with "free" alcohol and charge an entry fee to the premises at the door. In The Netherlands where I reside my employer provides "free" meals but they have to charge me 2 EUR for each one as a matter of law. In some other countries if you give out "free" beers to people you have to pay a mandatory minimum fee for each one etc. If you don't do that then the optimum financial endgame for a company like Google is to basically turn into some mega corporation that pays its employees almost minimum wage, but provides "free" meals, housing, food, transportation etc. which they don't have to pay any taxes on because it's not being sold to anyone and can all be written off as internal costs. Compensation isn't just handing someone a dollar bill.
- buss 14y ago
  Yeah, honestly it makes sense. Right now firms in CA are incentivized to provide perks as compensation to employees in lieu of cash because it isn't taxed. Implementing a tax on these perks will probably reduce perks, but it should have the result of higher wages.
- timcederman 14y ago
  Where do you draw the line? No free stationery? No free coffee? What about company events?
  - jlgreco 14y ago
    Chairs with wheels, AC, guest wifi...
  - esrauch 14y ago
    Stationary is directly used in working, it isn't a perk. Coffee and company Christmas parties seem completely reasonable to tax; they are part of the compensation that the company is giving you, not an intermediate product or tool used to achieve work. Reasonably the company should cover the tax just like they are covering the base purchase price. If you do work and you only get paid in room and board you currently have to pay income tax based on the value of that room and board. I don't really see how this is different; these generally don't sound like working lunches but rather only a form of compensation.
jsnell 14y ago
I don't entirely understand the arguments against taxing the perks made in the article. On one hand they're talking about how incredibly valuable to the company the free meals are, and on the other talking about how taxation would lead to these perks being killed. If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees.
- ChuckMcM 14y ago
  "If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees." How exactly? You could estimate that meals were valued at $250 a month and then bump the salary of every employee by $250*(marginal federal + marginal state)taxrate so that when their W2 came they would owe tax but they would have the money. But what about people that withhold 10% for a 401k, so the money you bump up has 10% of it contributed to the 401k so you have to bump it an additional 10% to make sure the employee cost hit is neutral. So now you're providing funding to the 401k effectively. And then there are employees who bring their meals and then don't incur the cost but they get the paybump, do they file for a reduction in gross income because they didn't eat the meals, and then just pay marginal tax on the income bump? What about when their spouse came to visit and they ate a meal too, extra bump in income? extra tax? discount? It isn't "trivially" possible to do anything except kill the benefit. That is "trivially" possible. And the people pushing for this aren't the IRS it's the companies that don't give their employees free food. I believe the free soda perk cancellation at Apple was before the web so it doesn't show up in archives but at one time all the soda machines on the Apple campus were free, and the IRS swooped in and told them to pay tax on them, and the soda was then "not free." I was at Sun (where food and soda was not free) but beer busts were, and thought that would help with our co-workers being poached. And it was part of the reason Sun killed the beer busts according to Crawford Beverage (no lie, that was his name!) who was the VP responsible. Do you follow through and tax free laundry? sports equipment? medical visits? store discounts? swag at product launches? If you really wanted to nitpick it you could kill a lot of stuff at Google. You don't think some "not Google" company wouldn't prefer to level the playing field a bit?
  - jcampbell1 14y ago
alexkus 14y ago
Given how mean my employer is I'd be in line for a substantial rebate!
benatkin 14y ago
Is the shuttle necessarily a perk, though? It may just be compensating for the negative effect of their location on employees who would rather be in SF than Mountain View.
snprbob86 14y ago
I'd be curious to see how much revenue this would generate for the government. I can't help but wonder if this is only a target because of its visibility. Even if this brought in an extra $1,000 per each of 10M IT workers in the US, that's only $10B. However, it's likely to not even be close to that. Meanwhile, the 0.0034% transaction tax only brings in less than $2B in revenue from financial trades. The proposal to increase that tax to 0.5% would bring in as much as $200B. I might be bias, but it seems like Wall Street should pay more taxes before silicon valley. http://en.wikipedia.org/wiki/Financial_transaction_tax#United_States http://en.wikipedia.org/wiki/Financial_transaction_tax#Unite...
michaelburk 14y ago
Anyone know if the IRS serves free coffee in its break rooms?
- mpyne 14y ago
  I'm in DoD and we don't. Actually I'll take it a step further, I'm in the NAVY, where we joke that the whole Navy runs on coffee, and we make the government employees bring in their own snacks/coffee/etc. Some random employee brought in their Keurig machine and lets the other employees use it. That what passes for "perks" for the rank-and-file.
  - kpozin 14y ago
    I'm reminded of the government's TP Pool Regulations [1] in Neal Stephenson's Snow Crash. [1] http://soquoted.blogspot.com/2006/03/memo-from-fedland.html http://soquoted.blogspot.com/2006/03/memo-from-fedland.html
    - mpyne 14y ago
      I actually did almost buy TP the other day after an unpleasant encounter with the new post-sequester personal hygiene equipment. But I forgot as soon as I sat down at my desk and apparently the bad TP was an accident and not actually due to the budget crunch. But yeah, the memo is spot-on in many respects (15.62 exact == smartass) but unrealistic in others. For example I haven't seem this many words correctly spelled in a memo since I was on submarine duty, and no one here would be able to figure out how to word logic as twisted as that described. Instead they would probably omit major details that need deciding while repeating minor details, slightly differently each time so that you can't be sure whether it's a unique requirement or not...
- acchow 14y ago
  Certainly not this kind of coffee: http://bit.ly/10Qh0rr http://bit.ly/10Qh0rr That's from a barista at Google.
jcampbell1 14y ago
I have heard that when Google negotiates salaries, they often chime in about the value of the perks, and that employees should be willing to take a lower base bay because of the perks. Google tells the IRS it is non-compensation, but tells prospective employees to value it as compensation.
- wutbrodo 14y ago
  This seems similar to touting "You get a Macbook Pro as your work laptop!" in recruiting materials (which I've seen countless times in recruiting pitches), even though that's undeniably a work expense when dealing with the IRS. This isn't a zero-sum game; just because a free meal at Facebook may be a net gain to Facebook (employees don't need to go off campus to work and thus can be more productive) doesn't mean the employee gets no benefit out of it and shouldn't consider it as a plus.
  - wutbrodo 14y ago
    That should say "go off campus to eat", rather than "go off campus to work"
6thSigma 14y ago
So the IRS wants Google to get taxed to buy the food and then the employees to get taxed for eating the food?
patio11 14y ago
If you're interested in what the IRS actually has to say about the taxability of meals and other perks: http://www.irs.gov/publications/p15b/ar02.html http://www.irs.gov/publications/p15b/ar02.html Meals on Your Business Premises You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests. They are furnished on your business premises. They are furnished for your convenience. This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals. Assuming AmaGooFaceSoft have prominent, enforced "These meals are provided to be consumed on the premises" signs, they're golden. (I assume that if they don't, they will shortly.)
seanmcdirmid 14y ago
In China, we get something like 20 RMB a day for lunch; this is a government-specified benefit that the company can give us tax free, which is why Microsoft, which doesn't otherwise offer free food in Redmond, will give us this benefit in China. On the other hand, we must pay tax on our health insurance, as the PRC laws on this subject are still too ambiguous.
opinali 14y ago
These meals are actually profitable. Because I have free and good meals at Google, I always have my lunch there instead of leaving office and spending an extra ~30 min to go some place near (NYC office so I have that option), wait for service etc. My pay rate for this half-hour is higher than the cost of any meal that I would buy, regularly with my own cash; so I fail to see how Google is "spending". Not to mention the days when thing are busy enough so I take the food to my desk and eat it while working [instead of eating it at my desk while reading HN as usual :)]. It's also common for coworkers to have lunch together, or having visiting customers for lunch and other "business" scenarios. Also, I know how much $ Google spends with food per employee, and it's a significantly lower number than what I would pay for the same amount and quality of food anywhere -- a small part of that due to no sales tax, but the bulk of savings comes from big economies of scale, very efficient operations, and no profit margin. I am a Brazilian, and there most companies provide complimentary compensation as food coupons that are subsidized by not paying income or payroll taxes (both are very high in BR). Even higher-salaried employees get these coupons, usually in a value that's proportional to the salary; for an engineer that's high enough you can feed your whole family... when I lived alone I couldn't hope to spend all my coupons, so whenever I had a lot of accumulated excess I'd donate that to a charity. Now THAT is an obvious loophole to increase wages at the expense of taxes. Compared to this, the free food in companies like Google is available only to the employee, only at office, and it has no relation to your salary -- everybody gets the same food and other office perks. There's an important element of healthcare too. Companies that can afford to provide free lunches are always also, companies that subsidize most or all of their employee's health insurance, which is a huge cost. The company has interest in managing employee health to minimize costs of insurance and sick leave; and Google certainly does that, they use lots of tricks and tactics to promote a healthy diet. To summarize, this is much more complex than just "giving freebies" like some other posters think.

28 points by aray 14y ago

And people wonder why some people think the government is basically a bunch of brainless fuckups who couldn't pour water out of a boot if the instructions were on the heel. This is, simply put, one of the most absurdly brain-dead stupid things I've ever heard in my life. And I've heard some really stupid ideas in my life. Whether this goes through or not, it's a perfect example of why we need to end the income tax and eliminate the IRS.

ketralnis 14y ago
> it's a perfect example of why we need to end the income tax I don't follow what this has to do with income tax, it's presumably a different benefits tax > and eliminate the IRS Well no. It's an example of one thing that the IRS can do. If you think it's silly (and I agree), it's an example of a silly thing that the IRS can do. But it's hardly evidence that the whole taxation system is broken. Assuming a government needs to be funded, I don't think eliminating the income tax would even get rid of the IRS, since it would still need revenue of some sort.
- mindcrime 14y ago
  Meh... I was about to reply to this and just realized I let myself get drawn into another political debate. I enjoy this as much as anybody, but HN really isn't the place for it. Let's just say I have radically different ideas about the proper nature and scope of government than a lot of people.
- ksherlock 14y ago
  free lunch is treated as compensation and is taxed as income.
ipince 14y ago
Care to explain why?
- mindcrime 14y ago
  For more reasons than you can shake a stick at, not the least of which include the fact that not every employee receives the same value from this "benefit", and the fact that valuing it is ridiculously subjective. Add in the deleterious effect it would have on companies (who would probably just scrap free lunches altogether if this goes through) and it's hard to see it as anything other than totally brain-dead stupid.
patrickgzill 14y ago
Bureaucracy's main purpose is to create more bureaucracy. As a side effect, they collect taxes or issue you your driver's license, it is just a means to the end of self-perpetuation. Eliminating the income tax and going to a much more transparent method like higher fuel taxes (everyone pays them because everyone uses transportation) or some other broadly based consumption tax, would be excellent.
- gorbachev 14y ago
  Please. There is a reason why most reasonable people don't actually seriously consider implementing such tax schemes. I know it's hard for people with good lives and great salaries to understand why, but please ask the people who clean your desks next time you see them what would happen to him/her, if fuel was taxed higher.
rverghes 14y ago
Why is it a stupid idea? Company A pays an employee $100 per day, and provides a lunch which costs the company $10. Company B pays the employee $110 per day, but the employee has to provide her own lunch. Is it really fair that Company B has to pay more tax than Company A? Compensation is compensation, whether in kind or in cash.
- nazgulnarsil 14y ago
  I agree, eliminate the taxes on company B.
- BrianEatWorld 14y ago
  The cost of the lunch is $10, but is the value to the employee $10? The problem with taxing a product is that the actual value is unknown. In your example, taxing the lunch as $10 of income is actually giving the benefit to Company B due to the "reverse inequality of exchange". IE if you buy a $10 lunch, you actually value it more than the $10.
  - anthonyb 14y ago
    You could say the same thing about $10 - the value of a $10 note to (eg.) a millionaire is a lot less than it is to most people. If the employee is hungry, then they'll value lunch more. For accounting purposes though, it's $10.
  - rverghes 14y ago
    Sure, but the cash has the value of being flexible. For example, if you were looking to save money, you could brown bag a lunch from home and pocket the extra $10. That flexibility might be more valuable to the employee than the nice lunch.
willholloway 14y ago
My favorite reform would be an end to the difference between business and personal expenses. I would like to see a tax code where all expenses were 100% deductible and only savings were taxed after an annual threshold was reached (similar to the current IRA rules). Allowing all expenses to be tax deductible would reduce accounting overhead incredibly, and would incentivize consumption and trade.
- sokoloff 14y ago
  This seems backwards from what we actually want to do, but also has significant compliance concerns. It's obvious how to tax consumption. It's (fairly) obvious how to tax income. How would you tax savings? Is buying stock in a company "saving" or "consuming"? Is buying Bitcoins "saving" or "consuming"? What about gold coins/bars? What about guns and ammo? What about a collector car? Artwork? What about a house for personal residential use? What about a house for rental/income use? What about just holding suitcases of $100 bills? It seems like there would immediately spring up a system of "not treated as savings" savings mechanisms. I seriously doubt that you'd accomplish your intended accounting simplicity...
  - anthonyb 14y ago
    I think "savings" is probably the wrong word - "profit" might be better. If I have a car to drive to work, then I should be able to claim some proportion of it as a deduction. Currently that's not allowed (at least in Australia, where I'm from).
  - maxerickson 14y ago
    Homes are routinely taxed. They are also routinely taxed at different rates depending on whether they are owned for personal use or for renting out. There are even countries that have a modest tax on bank accounts.

deleted 14y ago

[deleted]

deleted 14y ago

[deleted]

avar 14y ago

I don't see why this is unreasonable. Right now it's basically a pretty easy way to evade taxes with freebies. Don't have enough money for the payments on your house? No problem, just offer to take a pay cut and move into a "free" house provided by your employer. Alcohol sales tax too high in your state? No problem, just open a bar with "free" alcohol and charge an entry fee to the premises at the door. In The Netherlands where I reside my employer provides "free" meals but they have to charge me 2 EUR for each one as a matter of law. In some other countries if you give out "free" beers to people you have to pay a mandatory minimum fee for each one etc. If you don't do that then the optimum financial endgame for a company like Google is to basically turn into some mega corporation that pays its employees almost minimum wage, but provides "free" meals, housing, food, transportation etc. which they don't have to pay any taxes on because it's not being sold to anyone and can all be written off as internal costs. Compensation isn't just handing someone a dollar bill.

buss 14y ago
Yeah, honestly it makes sense. Right now firms in CA are incentivized to provide perks as compensation to employees in lieu of cash because it isn't taxed. Implementing a tax on these perks will probably reduce perks, but it should have the result of higher wages.
timcederman 14y ago
Where do you draw the line? No free stationery? No free coffee? What about company events?
- jlgreco 14y ago
  Chairs with wheels, AC, guest wifi...
- esrauch 14y ago
  Stationary is directly used in working, it isn't a perk. Coffee and company Christmas parties seem completely reasonable to tax; they are part of the compensation that the company is giving you, not an intermediate product or tool used to achieve work. Reasonably the company should cover the tax just like they are covering the base purchase price. If you do work and you only get paid in room and board you currently have to pay income tax based on the value of that room and board. I don't really see how this is different; these generally don't sound like working lunches but rather only a form of compensation.

jsnell 14y ago

I don't entirely understand the arguments against taxing the perks made in the article. On one hand they're talking about how incredibly valuable to the company the free meals are, and on the other talking about how taxation would lead to these perks being killed. If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees.

ChuckMcM 14y ago
"If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees." How exactly? You could estimate that meals were valued at $250 a month and then bump the salary of every employee by $250*(marginal federal + marginal state)taxrate so that when their W2 came they would owe tax but they would have the money. But what about people that withhold 10% for a 401k, so the money you bump up has 10% of it contributed to the 401k so you have to bump it an additional 10% to make sure the employee cost hit is neutral. So now you're providing funding to the 401k effectively. And then there are employees who bring their meals and then don't incur the cost but they get the paybump, do they file for a reduction in gross income because they didn't eat the meals, and then just pay marginal tax on the income bump? What about when their spouse came to visit and they ate a meal too, extra bump in income? extra tax? discount? It isn't "trivially" possible to do anything except kill the benefit. That is "trivially" possible. And the people pushing for this aren't the IRS it's the companies that don't give their employees free food. I believe the free soda perk cancellation at Apple was before the web so it doesn't show up in archives but at one time all the soda machines on the Apple campus were free, and the IRS swooped in and told them to pay tax on them, and the soda was then "not free." I was at Sun (where food and soda was not free) but beer busts were, and thought that would help with our co-workers being poached. And it was part of the reason Sun killed the beer busts according to Crawford Beverage (no lie, that was his name!) who was the VP responsible. Do you follow through and tax free laundry? sports equipment? medical visits? store discounts? swag at product launches? If you really wanted to nitpick it you could kill a lot of stuff at Google. You don't think some "not Google" company wouldn't prefer to level the playing field a bit?
- jcampbell1 14y ago

alexkus 14y ago

Given how mean my employer is I'd be in line for a substantial rebate!

benatkin 14y ago

Is the shuttle necessarily a perk, though? It may just be compensating for the negative effect of their location on employees who would rather be in SF than Mountain View.

snprbob86 14y ago

I'd be curious to see how much revenue this would generate for the government. I can't help but wonder if this is only a target because of its visibility. Even if this brought in an extra $1,000 per each of 10M IT workers in the US, that's only $10B. However, it's likely to not even be close to that. Meanwhile, the 0.0034% transaction tax only brings in less than $2B in revenue from financial trades. The proposal to increase that tax to 0.5% would bring in as much as $200B. I might be bias, but it seems like Wall Street should pay more taxes before silicon valley. http://en.wikipedia.org/wiki/Financial_transaction_tax#United_States http://en.wikipedia.org/wiki/Financial_transaction_tax#Unite...

michaelburk 14y ago

Anyone know if the IRS serves free coffee in its break rooms?

mpyne 14y ago
I'm in DoD and we don't. Actually I'll take it a step further, I'm in the NAVY, where we joke that the whole Navy runs on coffee, and we make the government employees bring in their own snacks/coffee/etc. Some random employee brought in their Keurig machine and lets the other employees use it. That what passes for "perks" for the rank-and-file.
- kpozin 14y ago
  I'm reminded of the government's TP Pool Regulations [1] in Neal Stephenson's Snow Crash. [1] http://soquoted.blogspot.com/2006/03/memo-from-fedland.html http://soquoted.blogspot.com/2006/03/memo-from-fedland.html
  - mpyne 14y ago
    I actually did almost buy TP the other day after an unpleasant encounter with the new post-sequester personal hygiene equipment. But I forgot as soon as I sat down at my desk and apparently the bad TP was an accident and not actually due to the budget crunch. But yeah, the memo is spot-on in many respects (15.62 exact == smartass) but unrealistic in others. For example I haven't seem this many words correctly spelled in a memo since I was on submarine duty, and no one here would be able to figure out how to word logic as twisted as that described. Instead they would probably omit major details that need deciding while repeating minor details, slightly differently each time so that you can't be sure whether it's a unique requirement or not...
acchow 14y ago
Certainly not this kind of coffee: http://bit.ly/10Qh0rr http://bit.ly/10Qh0rr That's from a barista at Google.

jcampbell1 14y ago

I have heard that when Google negotiates salaries, they often chime in about the value of the perks, and that employees should be willing to take a lower base bay because of the perks. Google tells the IRS it is non-compensation, but tells prospective employees to value it as compensation.

wutbrodo 14y ago
This seems similar to touting "You get a Macbook Pro as your work laptop!" in recruiting materials (which I've seen countless times in recruiting pitches), even though that's undeniably a work expense when dealing with the IRS. This isn't a zero-sum game; just because a free meal at Facebook may be a net gain to Facebook (employees don't need to go off campus to work and thus can be more productive) doesn't mean the employee gets no benefit out of it and shouldn't consider it as a plus.
- wutbrodo 14y ago
  That should say "go off campus to eat", rather than "go off campus to work"

6thSigma 14y ago

So the IRS wants Google to get taxed to buy the food and then the employees to get taxed for eating the food?

patio11 14y ago

If you're interested in what the IRS actually has to say about the taxability of meals and other perks: http://www.irs.gov/publications/p15b/ar02.html http://www.irs.gov/publications/p15b/ar02.html Meals on Your Business Premises You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests. They are furnished on your business premises. They are furnished for your convenience. This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals. Assuming AmaGooFaceSoft have prominent, enforced "These meals are provided to be consumed on the premises" signs, they're golden. (I assume that if they don't, they will shortly.)

seanmcdirmid 14y ago

In China, we get something like 20 RMB a day for lunch; this is a government-specified benefit that the company can give us tax free, which is why Microsoft, which doesn't otherwise offer free food in Redmond, will give us this benefit in China. On the other hand, we must pay tax on our health insurance, as the PRC laws on this subject are still too ambiguous.

opinali 14y ago

These meals are actually profitable. Because I have free and good meals at Google, I always have my lunch there instead of leaving office and spending an extra ~30 min to go some place near (NYC office so I have that option), wait for service etc. My pay rate for this half-hour is higher than the cost of any meal that I would buy, regularly with my own cash; so I fail to see how Google is "spending". Not to mention the days when thing are busy enough so I take the food to my desk and eat it while working [instead of eating it at my desk while reading HN as usual :)]. It's also common for coworkers to have lunch together, or having visiting customers for lunch and other "business" scenarios. Also, I know how much $ Google spends with food per employee, and it's a significantly lower number than what I would pay for the same amount and quality of food anywhere -- a small part of that due to no sales tax, but the bulk of savings comes from big economies of scale, very efficient operations, and no profit margin. I am a Brazilian, and there most companies provide complimentary compensation as food coupons that are subsidized by not paying income or payroll taxes (both are very high in BR). Even higher-salaried employees get these coupons, usually in a value that's proportional to the salary; for an engineer that's high enough you can feed your whole family... when I lived alone I couldn't hope to spend all my coupons, so whenever I had a lot of accumulated excess I'd donate that to a charity. Now THAT is an obvious loophole to increase wages at the expense of taxes. Compared to this, the free food in companies like Google is available only to the employee, only at office, and it has no relation to your salary -- everybody gets the same food and other office perks. There's an important element of healthcare too. Companies that can afford to provide free lunches are always also, companies that subsidize most or all of their employee's health insurance, which is a huge cost. The company has interest in managing employee health to minimize costs of insurance and sick leave; and Google certainly does that, they use lots of tricks and tactics to promote a healthy diet. To summarize, this is much more complex than just "giving freebies" like some other posters think.