Business

OP-ED: Why are you paying more in taxes than Amazon and Netflix?

MINNESOTA SPOKESMAN-RECORDER — This tax season, millions of Americans will be receiving smaller refunds from the IRS — or worse, a bill.

Published

6 years ago

March 19, 2019

Oakland Post

By Morris Pearl

This tax season, millions of Americans will be receiving smaller refunds from the IRS — or worse, a bill. At the same time, two of the most profitable companies in the country are not only avoiding paying taxes altogether, but one is receiving a federal rebate check of hundreds of millions of dollars.

Both corporations and individuals are subject to federal income taxes. For those individuals who earn their money through work, the rates are anywhere from 10 to 37 percent. For those of us who live off investment income, marginal tax rates are zero percent, 15 percent and 20 percent (this sucks too, but I’ll get into that at another time).

On the other hand, the corporate tax rate is 21 percent. It would be reasonable to assume that companies like Amazon and Netflix would pay 21 percent — or at least close to that figure — after applying deductions and other tax credits. This has not been the case.

From 2012 to 2017, Amazon paid federal income tax at an average rate of 11.4 percent on over $8 billion in profits, almost half the highest marginal tax rate for corporations now and less than one-third the marginal tax rate for corporations before 2018, which was 35 percent. In both 2017 and 2018, the company paid $0, and this year, the company will be receiving a $129 million rebate.

Netflix didn’t pay much more, either. The streaming service paid $0 in tax in 2017, and their tax rate was 1 percent for 2018. This is despite Netflix boasting 139 million paying subscribers in 2018, with a profit of about $845 million.

Unfortunately, this is a longstanding problem with the tax code; not simply a result of Republicans’ Tax Cuts and Jobs Act going into effect. In 2017, after raking in $5.6 billion in U.S, profits, Amazon paid $0 in federal income tax. They achieved this zero-dollar tax bill in part by claiming tax credits for executive stock options.

These companies get a tax deduction when people with stock options exercise these options. For example, say two years ago (when the stock price was $140), the company issued stock options with an exercise price of $140. Let’s say that now, the stock price is $340, and employees cash in their options. The company issues them shares of stock, and the company gets a tax deduction of $200 per share even though the company does not actually have any cash expenses (on a cash basis, the company is actually up $140 per share). In fact, for financial accounting purposes, the company only has the much smaller expense of the value of the option at the time it is granted.

Netflix did the same, as well as something even more ridiculous. To lower their tax contribution, Netflix claimed a number of research and development (R&D) credits. This credit doesn’t just mean that research is deductible (like any other expense), but that (for the eligible R&D costs) the federal government actually pays 100 percent of the costs one of two ways.

A company can either take 100 percent of the eligible R&D costs and deduct it from whatever they owe or have it added to their refund. Interestingly, in all of the discussions of that credit that I read, members of Congress were always talking about inventing lifesaving drugs to cure cancer or something similar. I never heard anyone discuss the need for taxpayers to pay for research into making better recommendations for what shows you might like to stream, but alas.

Obviously, Netflix’s effective tax rate of 1 percent is fundamentally unfair, and Amazon getting a refund is absurd. But, after Republicans’ tax overhaul in late 2017, one can be sure their tax rate is lower than that of middle-class Americans is now absolutely by design and not a mistake.

There’s no reason why two extremely successful companies have lower effective tax rates than the average middle-class American, but here we are.

Morris Pearl is a former managing director at BlackRock, Inc., and Chair of the Patriotic Millionaires.

This article originally appeared in the Minnesota Spokesman-Recorder.

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BWOPA Honors Black Leadership and Legacy at 2024 Ella Hill Hutch Awards Dinner

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills. At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

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6 hours ago

December 18, 2024

Oakland Post

L-R: BWOPA State Executive Director LaNiece Jones; State Asm. Mia Bonta; BWOPA 2024 Man of The Year/Urban League SFBA CEO Ken Maxey; BWOPA State President Hon. Dezie Woods-Jones; State Senator Lola Smallwood-Cuevas; Rowena Brown, Oakland Councilmember At-Large, Elect; BWOPA State Regional Director Vashone Huff. Courtesy photo.

By Oakland Post Staff

Black Women Organized for Political Action (BWOPA) is a statewide non-profit advocacy and membership organization committed to solving problems affecting Black Californians.

On Dec. 5, BWOPA held its Annual Ella Hill Hutch Awards Ceremony, at the Fairmont Claremont Hotel in the Oakland/Berkeley Hills.

At the event, the group comprised of Black women from various professional backgrounds, honored distinguished local and state leaders whose contributions have shaped civic engagement and advanced critical social issues impacting Black communities.

The evening was hosted by Dr. Shawna Charles, founder of The Charles Communications Group (CCG) headquartered in Los Angeles. Charles served as mistress of ceremonies.

With a track record of elevating voices and empowering communities, Charles’ leadership and insight brought a certain dynamism to the celebration.

“Each year, this event not only celebrates the enduring legacy of our beloved BWOPA founding member, Ella Hill Hutch, but also reaffirms and amplifies our unwavering commitment to building and sustaining Black political power across California,” said Dezie Woods-Jones, BWOPA founding member and State president.

“Ella Hill Hutch’s trailblazing leadership continues to inspire us as we forge ahead, empowering Black women to lead, advocate, and shape a more equitable future for all,” added Woods-Jones.

This year’s event introduced the DWJ Rising Star Award, honoring young leaders like Solano County Board Supervisors-elect Cassandra James, Danielle Motley-Lewis, Naomi Waters and newly elected State Assemblymember elect Rhodesia Ransom (D-Stockton).

According to organizers, the awardees all exemplify “the next generation of changemakers.”

Other awardees included:

Lifetime Achievement Awardees: Congresswoman Barbara Lee (D-CA-12) and Alameda County Supervisor Keith Carson
Man of the Year: Kenneth Maxey, CEO of the Greater SF Bay Area Urban League
President’s Corporate Award: Yvette Radford, Kaiser Permanente
In the Spirit of Ella State and Chapter Awards: Dr. Carolyn Greene, Dr. Marcella K. Smith, Dr. Carolyn Drake, Tinisch Hollins, Jackie Jones, Gloria Burgess Johnson, Tamika L’Ecluse, Ellen Nash, Betty Reid Soskin, and Ay’Anna Moody.

BWOPA also celebrated local champions across its chapters, including leaders in voter education, healthcare, criminal justice reform, and community advocacy.

In a statement, BWOPA said, “Honoring Ella Hill Hutch’s legacy, BWOPA recognizes her pioneering efforts as the first Black woman elected to the San Francisco Board of Supervisors. Her tireless work amplifying underrepresented voices continues to inspire BWOPA’s mission to build Black political power across California.”

“We extend our heartfelt thanks to our members, partners and allies who believe in BWOPA’s vision to invest in building power for Black women’s leadership,” said LaNiece Jones, BWOPA State executive director. “Your support ensures that Black women have a voice at decision-making tables locally, regionally, statewide, and nationally, advancing diversity and equity in leadership spaces.”

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Oakland Post: Week of December 11 – 17, 2024

The printed Weekly Edition of the Oakland Post: Week of December 11 – 17, 2024

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5 days ago

December 13, 2024

Oakland Post

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Post News Group to Host Second Town Hall on Racism, Hate Crimes

The mission of CRD is to protect the people of California from unlawful discrimination in employment, housing and public accommodations (businesses) and from hate violence and human trafficking in accordance with the Fair Employment and Housing Act (FEHA), Unruh Civil Rights Act, Disabled Persons Act, and Ralph Civil Rights Act. The employment anti-discrimination provisions of the FEHA apply to public and private employers, labor organizations and employment agencies. “Housing providers” includes public and private owners, real estate agents and brokers, banks, mortgage companies, and financial institutions.

Published

1 week ago

December 10, 2024

Oakland Post

By Oakland Post Staff

On Tuesday, Dec. 10, from 5-6:30 p.m. PT, Post News Group Global Features Journalist Carla Thomas will host a second Virtual Town Hall on Racism.

Guests will include community builders Trevor Parham of Oakstop and Shawn Granberry of Hip Hop TV.

“There’s been an uptick of blatant racist acts going on in the community and it’s important for communities to have a forum, an outlet, and to be educated on the California Vs. Hate initiative that has resources available for victims and witnesses,” said Thomas. People like Trevor Parham and Shawn Granberry have found a multitude of ways to strengthen, heal, and protect the community through their entrepreneurial networks, special events, and mentoring.”

While community leaders step up, the state has added extra support with the CA vs. Hate, initiative, a non-emergency hate incident and hate crime reporting system to support individuals and communities targeted for hate.

“We are committed to making California a safer and inclusive place for all,” said James Williams, Jr. of the California Civil Rights Department.

In partnership with organizations across the state, the network is designed to support and protect diverse and underserved communities.

“Through CA vs. Hate, we support individuals and communities targeted for hate, identify options for next steps after an act of hate, and connect people with culturally competent resources and care coordination services,” said Williams.

“It’s important to report these incidents in order for us to use the data to enhance prevention and response services,” said Williams.

Funded by the California State Legislature, the California Civil Rights Department (CRD) received funding and authorization from the State Legislature to establish the non-emergency, CA vs. Hate Resource Line and Network to support individuals and communities targeted for hate.

CRD began in 1959 with the creation of the Fair Employment Practices Commission to implement California’s first state-wide protections against discrimination in the workplace. In 1980, the 1959 Fair Employment Practices Act, and the 1963 Rumford Fair Housing Act were combined and rebranded FEHA. The Fair Employment Practices Commission became a department-level agency named the Department of Fair Employment and Housing (DFEH) to enforce that law.

In July 2022, DFEH’s name changed to CRD to more accurately reflect the Department’s powers and duties, which include enforcement of laws prohibiting hate violence, human trafficking, discrimination in business establishments, and discrimination in government-funded programs and activities, among others.

For more information visit the PostNewsGroup.com and CAvsHATE.ORG.