Social networking outfit Facebook not only managed to avoid paying any taxes this year, its accountants managed to collect tax refunds of $429 million.
While the US owes huge amounts of dosh to the Chinese, hoping that it never choses to collect, Facebook has avoided paying any tax on its $1.06 billion dollar profits.
Instead, the cash strapped US will have to write a $429 million for the pleasure of having Facebook make its profits in its country.
Apparently the reason is that Facebook was able to deduct tax paid on executive stock options.
According to a report from Citizens for Tax Justice, that loophole reduced Facebook’s federal and state income taxes by $1.03 billion.
Facebook is carrying forward another $2.17 billion in additional tax-option tax breaks for use in future years, the report says.
This means that Facebook will not have to pay more than $3 billion in current and future taxes.
It joins a large number of big US companies that are somehow avoiding paying taxes. These include General Electric, Boeing and Goldman Sachs.
Senator Bernie Sanders has compiled a list of the worst corporate income tax avoiders, including Bank of America and Citigroup.
He said that the wealthiest Americans and most profitable corporations must do their share to help bring down the record-breaking deficit.
That is the US for you. For years, big corporates have managed to get away with paying little tax because they own politicans who believe that they are saving US business from evil communists.
However, this year, taxes for many individuals went up in 2013, making ordinary people feel put out. Now it turns out that pain was partly caused by paying Facebook so its executives could have shares. This would be much better than getting their kids educated or other communist schemes, like healthcare.
All these tax breaks should be trickling down, so the mantra goes, but what actually happened is that corporate profits have jumped since 2000, helped in part by strategies to minimise their tax burdens. These have been sent to off-shore cash mountains to save for a rainy day.