Don't see the issue, looks like they saved on taxes due to depreciation, the use of stock options to compensate employees, and an R&D tax credit. None of this is remotely sophisticated or fishy.
Why do I as an individual not get any of these benefits? Why can't I deduct the depreciation of my assets on my personal taxes? Why can't I change the way I pay for goods to avoid paying taxes? More importantly, why do I not only get these benefits, but I have to make up for all of these corporations getting these benefits by paying higher taxes. The money has to come from somewhere, why are all of the policies in favor of large businesses and in opposition to me as an individual? That's the issue.
Because you don't employ people. From a taxation perspective it's much better to have companies running on quite low margins that allows them to keep existing. It's why some companies get subsidies so even though they are barely profitable, their employees, the voters, can stay happy.
Netflix will have X engineers at +$300k/year paying taxes, injects money in the TV/movie industry with their productions and is overall a positive for the economy.
Additionally:
> Why do I as an individual not get any of these benefits? Why can't I deduct the depreciation of my assets on my personal taxes? Why can't I change the way I pay for goods to avoid paying taxes?
While I don't know where you live or your financial situation, there are probably a ton of benefits/tax credits that you do in fact get to incentivize a specific behaviour (think retirement account, tax-free saving accounts, etc...)
You're missing the point. I understand the pretext and boilerplate reasons given for why ordinary people pay lots of taxes but corporations don't. The deeper question that I pose to you and everyone else defending the status quo is WHY. There is no natural law of taxation, no platonic ideal to strive for. Tax policy is what it is because people have made it this way. There have been many decisions made, and other decisions could just as well have been made. Ask yourself why all of those decisions have been made in favor of corporations and not ordinary people.
>Because you don't employ people. From a taxation perspective it's much better to have companies running on quite low margins that allows them to keep existing. It's why some companies get subsidies so even though they are barely profitable, their employees, the voters, can stay happy.
All* of Netflix's income comes from subscribers who are ordinary people. Ordinary people are the reason why Netflix exists. Why don't we subsidize ordinary people to ensure their happiness?
*(or at least most, for this discussion at least, I'm not familiar with all of Netflix' income streams)
> Netflix will have X engineers at +$300k/year paying taxes, injects money in the TV/movie industry with their productions and is overall a positive for the economy.
Again, all of that money flows from ordinary people, Netflix is just the conduit. People inject money to the industry via Netflix. Point is, it's all a matter of perspective and line drawing, and every line is drawn so that large corporations benefit, not ordinary people. It's all choices that have been made, and all in favor of large corporations.
> While I don't know where you live or your financial situation, there are probably a ton of benefits/tax credits that you do in fact get to incentivize a specific behaviour (think retirement account, tax-free saving accounts, etc...)
But none take my overall personal tax liability down to 1.1%. There's an order of magnitude difference there. Show me one (well off, just as Netflix is) W2 employee who has ever legally reduced their tax liability down to 1.1%.
Businesses get preferential tax treatment because we want to encourage risk-taking. Yes, focusing on a handful of hyper-successful businesses make it seem like things are "not fair", but that's neglecting the much higher likelihood of businesses failing vs. a payroll employee getting fired. In most cases, even if an employee is fired, there are still labour law protections, social security, severance packages, and the employee has right to sue. When businesses fail, they fail.
If you want to get preferential tax treatment, go start a business! Go take risks, hire people, make money, pay other businesses, this is how capitalism works! If you can make it, by all means enjoy your tax deductions.
What can make this system dysfunctional is when you have corruption and cronyism that unfairly disadvantages some businesses vs. others. For example special access to loans, bailouts, or special tax deductions for meeting esoteric criteria. But this would a corruption problem IMO, rather than an inherent unfairness in the tax scheme.
As an individual, you certainly can deduct depreciation, as long as you're using the asset for business purposes (as defined here [1]). You also can choose how you pay for goods (buy vs. lease, for example) to minimize your tax liability. In addition, there are certain tax deductions that are available to you as a small business that would not be available to large corporations like Netflix.
What is a realistic example of what I'd have to do as an individual to get my tax burden down to 1%? Also, why do billionaires and those who need it the least pay proportionally less in taxes than I do?
Get married and have a few kids and for most working and middle class people, your federal income tax liability will be in that range or even below it.
Note that right away, it begins with taxable income. That means you've already subtracted the standard deduction (25k for married couples), and any pretax deductions like 401(k)s or HSAs, which could be up to ~25k, and health insurance premiums.
The current Child Tax Credit is 3600 for children under 6 (3000 for children 6 and over.)
So, based on the above tables, assuming that a married couple can do no better than the standard deduction, and qualifies for no tax credits other than two Child Tax credits, they have to have more than about 63k of taxable income to be paying any federal income tax at all.
Why isn't my life a business purpose? Who decided what a 'business purpose is' and why? And how perverse is it that I can benefit from tax policy by masquerading as a business myself, but as a human I'm excluded.
Can't you get that? I can. In a different jurisdiction, but I bought tools that I need for my work, and write them off. The taxman hasn't protested.
BTW, that Netflix writes off things "more quickly than the equipment wears out and loses value" is probably at least incorrect. That equipment has to be servers, routers and switches, and replacing that well before seven years is conventional wisdom, even in places where the tax code suggests that seven years is appropriate.
I've no idea what W2 is... are you saying that if you, a person, buy a server, a switch and a router, you cannot write that cost off, but if Netflix buys that, it can? Or are you saying that the US has phased out depreciation for the kinds of expenses W2s typically have, while servers, switches and router can still be written off?
Then you should hire CPA/taxperson to help you with it. Been filing taxes on my own until I got my own CPA few years ago and realized how much money I saved. Normally I spent 3k in taxes since I am 1099 (independent contractor for those non-USAian. I only paid less than 1k in taxes after using my CPA. I don't mean Johnson Hewitt, HR Block, or any chain tax preparation companies. Go with a LOCAL tax preparation professionals. The local is best because they know the city, county and state level of taxes than those chain companies that tries to keep your tax return minimal as possible.
To Deaf Americans, avoid using DeafTax at all cost. They screwed with my taxes by giving me the wrong information to file in a wrong state. They primary focus on the corporate taxes than individuals and they only have a few tax professionals serving the entire country which should tell you enough about their knowledge and use of their preparation. I am not the only Deaf person with an issues with DeafTax.
If you have a significant amount of cash flow you can find all sorts of tax benefits no one is forcing you to take the standard deduction when you file.
> why do I not only get these benefits, but I have to make up for all of these corporations getting these benefits by paying higher taxes. The money has to come from somewhere
Big-tech comp is so high in part of because the company can write off the equity grants. So perhaps you have been directly benefiting from it.
But the question is why is it that way? Why can't it be that the corporations pay taxes and then people will say "people shouldn't have to pay taxes because the company they work for does."
When people bring up the fact about corp not paying tax, they never include the income tax of the employees. They never include the fact that the corporation creates thousands of jobs that pay income tax.
I don't mind corporation paying income tax for us. But that seems like semantics where we simply get paid less because the tax is already paid.
I don't think I'm against that idea. Maybe there might be interesting impact on the compensation.
I think people are concerned that the saved taxes don't go towards employees as much as they should. I'm not saying it does or it doesn't, just that it's a common sentiment I've noticed.
Technically, corporations pay taxes. Practically, only individuals pay taxes.
The Tax system is built on the foundation of maximizing profit (ie: squeeze as much from the population as it can). Theoretically, we should only have a single tax: The income tax. At the end of the year, each citizen reports his income and pays his due.
In reality, people will probably won't pay much in such a system and will protest their "high taxes". It is much easier, then, to tax the big, evil, rich corporation. It makes it look like people are paying less taxes when they are paying all the taxes.
In more modern and developed systems, taxes are mainly used to control the economy rather than raise funding. The government giving solar producers a tax break is the equivalent of the communist system deploying a program to produce solar panels.
This is regressive tax policy and the crux of the issue of fairness. The less money you have, the more liability you carry. The more money a corporation has, the more they can avoid taxes without actually offsetting (paying back to the public) from depreciation accounted by nature of their assets. Some of these assets may not even be fully owned, which is a separate gaming of the system.
If the balance is to be theoretically paid through the economics of purchasing more goods, it's the same regressive trickle-down economics that has never been shown equivalent to tax revenue...by passing on the tax liability to smaller and smaller entities, who end up effectively paying the larger entity's tax burden.
The only problem I have with it is big companies find it easy to avoid corporation tax, smaller companies find it much harder. It tilts the balance in favour of the larger businesses.
People need government services, the government needs money to provide them. If corporations don't pay enough taxes, individuals and small businesses need to be taxed higher. Taxes are a burden on them. We shouldn't do that.
> Why isn't government overspending ever a problem?
It is, like all the time. When is the last time you heard something like a pre-election debate that didn't bring up government overspending?
> Why isn't government overspending ever a problem?
Whataboutism. This has nothing to do with the issue at hand. If the government wasn't "overspending" to whatever measure you interpret that, the issue remains.
The relevant section is Note 10 Income Taxes which starts at the bottom of page 57.
The biggest drivers of the reduced taxes were stock options and the Tax Cuts and Job Act (TCJA). Stock options are just timing while I presume the TCJA are true credits.
By that logic, does my employer pay my income taxes? Or I guess it’s their customers. Then again their customers are paying for the service through their income which comes from their employer… etc
