Facebook, Tax Dodgers, and the Political System

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A curious individual asked me, via Facebook, what I thought about this Bloomberg article on Facebook’s “multibillion-dollar tax break.”

Even though Facebook (FB) reported $1.1 billion in pre-tax profits from U.S. operations in 2012, it will probably pay zero federal and state taxes—and even receive a federal tax refund of about $429 million—according to a Feb. 14 statement from Citizens for Tax Justice.

The Citizens for Tax Justice (CTJ) refer to this as a tax rebate, “compliments of U.S. taxpayers.” No, it’s actually not compliments of U.S. taxpayers at all. Taxpayers being bilked to fund redistributionist tax schemes concocted by politicians to pay off their elite constituency is completely removed from the direct action of U.S. taxpayers. The indirect action would be those “taxpayers” – or tax victims – voting for the 535 clowns in the D.C. toilet and thus enabling them to create and enforce discriminatory tax policies that are ultimately acts of aggression. This is not rocket science; this is simple thinking.

Sometimes sensationalist headlines get the most “hits,” but sacrificing quality and accuracy for attention is not good for one’s reputation. CTJ does some decent analysis of the tax issue here, and toward the end the writer even stresses that this is a tax break, which is, yes, policy set by the political system. Rather, the issue described here is actually not a tax break – it is a purposeful tax redistribution strategy on the part of politicians and special interests who benefit from the policy, and the intention is to secure profits for a certain sect of society at the expense of those who do not fall into the beneficiary category.

Yet another report by CTJ calls corporations that legally abide by the rules “tax dodgers.” Corporations are only using the rules put in place by the political system to their advantage, as we all do. The problem, again, is not the financial strategy of CFOs and corporate hacks – it is the coercive political system in place that has unlimited and unchecked powers. Note a quick quote from the Bloomberg article:

The difference is that Facebook—unlike, say, General Motors (GM)—relies heavily on stock options and restricted stock units as a form of compensation.

Remember that it is government that skews corporate compensation strategies with its thievery decrees. Companies – like all individuals – strive to have the least amount of their $$$ stolen by government. Their strategy and behavior in terms of taxes, like ours, is influenced 100% by government policy and edicts. The corporate compensation system has been turned on its ear by government central planning and tax scheming. But still, the media turns these stories into a “look how these elitist companies get around the system….”

CTJ is a shabby left-wing organization whose “analysts” can’t even make the most basic distinctions. What an embarrassment. Follow me on Twitter @karendecoster.

3:11 pm on February 16, 2013