'Silicon Six' cyberbehemoths slick at skirting taxes, says study
IPI pulls boner on ‘Netflix and chill’
Mark Zuckerberg’s Facebook is among the “Silicon Six” U.S. computer companies charged with building up a “tax gap” of more than $100 billion over the decade. (Wikimedia Commons/Anthony Quintano)
By Ted Cox
The “Silicon Six,” including the top U.S. computer companies, are cooking the books on the taxes they pay worldwide, according to a new study released this week.
CNBC reported on the study, conducted by Fair Tax Mark, which the business-oriented U.S. cable news outlet called “a British organization that certifies businesses for good tax conduct.” The study charged that the six U.S. cyberbehemoths — Facebook, Apple, Amazon, Google, Netflix, and Microsoft — had built up a $100 billion “tax gap” between the money they set aside to pay taxes and the taxes they actually paid.
The study examined U.S. 10-K filings, in which corporations tout how much tax provisions they’ve set aside. It charged that, while those amounts might look good on paper, what those six companies paid over this decade was quite a bit less than what was set aside — over $100 billion less.
While the study found that most of those unpaid taxes “almost certainly arose outside the United States,” it also charged that profits were “shifted to tax havens, especially Bermuda, Ireland, Luxembourg, and the Netherlands.”
CNBC quoted Paul Monaghan, chief executive officer of Fair Tax Mark, as saying, “The amount of tax being paid by these businesses is $100 billion less than reported in their accounts.”
The study charged that Amazon was the worst at shortchanging global taxes, paying $3.4 billion worldwide over the decade, just 12.7 percent of its profits. That was while the U.S. corporate tax rate was 35 percent for most of the decade until President Trump signed a Republican-backed law cutting it to 21 percent two years ago. Amazon responded with a statement insisting it had paid “a 24 percent effective tax rate on profits from 2010-2018.”
Facebook paid the lowest overall tax rate, according to the study, at 10.2 percent overall, and just 5 percent of foreign profits. Facebook responded, “In 2018 we paid $3.8 billion in corporation tax globally and our effective tax rate over the last five years is more than 20 percent.”
Google paid a 15.8 percent overall tax rate, the study said, and just 7.1 percent outside the United States. A Google spokesperson said the study “ignores the reality of today’s complicated international tax system and distorts the facts documented in our regulatory filings.”
According to the study, Netflix, Apple, and Microsoft all paid overall tax rates of 15.8 percent or just above.
U.S. Sen. Bernie Sanders, the Vermont independent running for the Democratic presidential nomination, has charged many of the same firms with paying no federal U.S. taxes at all. Just last month, he tweeted, “Your $8.99 Netflix subscription is more than the company paid in federal income taxes last year (nothing).” Earlier in the year he charged, “Amazon made $16.8 billion in profits over the past two years but have paid ZERO in federal income taxes. In fact it got a $269 million tax refund.”
Newsweek reported that an investigation “claimed that while Netflix did pay around $133 million in taxes for 2018, all of the taxes paid were foreign and none of the money went to the United States. And because the federal government gives credits for foreign taxes paid, the company allegedly ended up with a ‘negative tax rate’ due to millions in foreign tax credits. The company's worldwide revenue for 2018 is said to have topped $1.2 billion.”
Former U.S. Labor Secretary Robert Reich stated earlier this year: “At least 60 companies reported that their 2018 federal tax rates amounted to effectively zero. Those companies included some of most profitable corporations in America such as Amazon, Netflix, Chevron, and Eli Lily. Some even got a multimillion-dollar tax rebate.” He cited an NBC News story finding that the number of major corporations paying no federal taxes had doubled under the Trump tax cuts.
The Illinois Policy Institute, however, has used Netflix to argue that too much taxes are being paid on the streaming service by focusing on taxes paid by subscribers in Chicago. The city moved under former Mayor Rahm Emanuel to include streaming services like Netflix and Spotify under its 9 percent amusement tax.
The IPI cited a bill submitted in the General Assembly earlier this year that would have extended a similar tax statewide.
The bill was sidetracked into the House Rules Committee during the spring session, but that didn’t stop the IPI from promoting its story anew on Facebook earlier this week. Yet it fell victim to a new usage largely employed by millennials on the phrase “Netflix and chill.”
The IPI’s Facebook post snarkily told tax-eager legislators, “Way to take the ‘chill’ out of ‘Netflix and chill.’” Yes, the phrase originated soon after Netflix expanded its reach early in the decade to mean, basically, stay in and veg out in front of the TV with a Netflix film, but beginning about five years ago it took on new meaning as a euphemism for “hooking up.”
The Urban Dictionary cites the usage meaning, “Something you tell your parents when you want your boyfriend/girlfriend to come over and” engage in sex.
The IPI has sure pulled some boners in the past, but nothing quite like that.