Report: Facebook paid no income tax last year
While most of country is getting hit with higher taxes, the social-media giant got a pass -- and even got $429 million in refunds.
Taxes are said to be one of life's inevitabilities -- unless you're Facebook (FB), which last year not only didn't pay a cent in federal or state income taxes, but actually will receive tax refunds of $429 million, according to a new report.
The reason? Even though Facebook made a pre-tax profit of $1.06 billion last year, it benefited from a tax break: the tax deductibility of executive stock options, the report from the Citizens for Tax Justice says.
That reduced Facebook's federal and state income taxes by $1.03 billion last year. But it also is carrying forward another $2.17 billion in additional tax-option tax breaks for use in future years, the report says. Altogether, that means Facebook will shave off a total of more than $3 billion in current and future taxes.
To be sure, Facebook isn't alone among big corporations in tapping strategies to lower their tax burdens. Among those businesses that have come under fire for avoiding taxes are General Electric (GE), Boeing (BA) and Goldman Sachs (GS).
Senator Bernie Sanders, an independent from Vermont, has sought to highlight the issue. In 2011, his office compiled a list of the worst corporate income tax avoiders, including Bank of America (BAC) and Citigroup (C).
"[T]he wealthiest Americans and most profitable corporations must do their share to help bring down our record-breaking deficit," his office said in a 2011 statement.
Facebook didn't immediately respond to an emailed request for comment, according to The Huffington Post.
In the meantime, taxes for many individuals went up in 2013, making consumers feeling pinched.
On an after-tax basis, corporate profits have jumped since 2000, helped in part by strategies to minimize their tax burdens, according to the Huffington Post, citing data from the Commerce Department.
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The government stalks small business to pay it's taxes and lets billion dollar corporations pay no
tax. Thank Mr Obama and team! If he really wanted to collect revenue for government spending he would collect them from big corporations. But then he would get no campaign spending money.
Government at it's best. Allow massive crime but punish the litlle guy for any infraction. Where is the IRS when you need them??????????
Loss carry-over and income averaging are just a couple of techniques that are also available to individuals and small businesses, if circumstances are appropriate. This provides some stability for individuals and companies over time that mitigates the impact of severe events so could be considered fair or at least equitable.
The tax deductibiility of executive stock options is a different matter. Thhat is a specific political agenda item meant to influence how business operate as the myriad 'loop holes' are meant to influence both individual and corporate behavior. Essentially political social engineering. Unfortunately this is rarely, if ever, used for encouraging behaviors that help individuals, companies, and thus the government, be on better financial and economic footing (time-tested fundamentals like adequate saving reserves, investment in education for individuals or re-investment in companies to support growth and sustainability, etc). Mortgage interest deductions encourage home ownership but were exploited for second homes and questionable realestate gambles. Now we hear that the deduction is supposed to go away. It won't stop the questionable gambles but may hurt many pocketbooks.
Unfortunately the article is misleading. This is not a loophole or a tax break.... what the article doesn't says is the deduciton is attributable to the fact that all employees of Facebook, including Zuckerberg were required to pay tax on the value of the stock options they received. This created BILLIONS of dollars in taxable income from those who were granted Facebook stock options. I know it is hard for for people to understand but it really is truly not a loophole or something Facebook should be scorned for. No one should arguing that the same dollars to be taxed twice!
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[BRIEFING.COM] The major averages ended with solid gains as the S&P 500 rose 0.8%.
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