Whatever
You Paid to Watch Netflix Last Month Was More Than It Paid in Income Taxes
Whether you paid $8.99
for basic, $12.99 for standard, or splurged for the $15.99 premium package so
you would have the privilege of watching endless streaming shows and movies on
Netflix last month, a new analysis shows you still paid much, much more than
the company paid in federal and local income taxes for the entire year.
According to Matthew Gardner, senior
fellow at the Institute on Taxation and Economic Policy (ITEP), "The
popular video streaming service Netflix posted its largest-ever U.S. profit in
2018—$845 million—on which it didn't pay a dime in federal or state income
taxes."
"In fact,"
noted Gardner in a blog post on ITEP's website,
"the company reported a $22 million federal income tax rebate."
So even if you paid Netflix nothing last month because you chose not to subscribe—or maybe you were enjoying an introductory free-month trial—you still didn't make out better than the online giant.
So even if you paid Netflix nothing last month because you chose not to subscribe—or maybe you were enjoying an introductory free-month trial—you still didn't make out better than the online giant.
Citing the specific
impact of the Tax Cuts and Jobs Act, which the Republicans in Congress passed
and Trump signed into law in December of 2017, Gardner explains that because
companies are finally releasing their complete 2018 earnings reports—which Netflix did last month—the public is
finally getting a look at just how well some of the nation's most profitable corporations are
making out.
While GOP leaders like
former House Speaker Paul Ryan sold the bill to
the voting public by promising lower corporate rates would be
offset by the closure of loopholes, Gardner says Netflix is a test case for how
bogus those promises were.
"Many corporations are still able to exploit loopholes and avoid paying the statutory tax rate," he explains, "only now, that rate is substantially lower."
"Many corporations are still able to exploit loopholes and avoid paying the statutory tax rate," he explains, "only now, that rate is substantially lower."
He continues:
Netflix's tax
avoidance should come as no surprise to those who followed the debate leading
up to the passage of the new tax law: A 2017 ITEP report identified Netflix as one of
100 profitable Fortune 500 corporations that paid a 0 percent federal income
tax rate in at least one profitable year between 2008 and 2015.
In fact, Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period, meaning that the company sheltered more than half of its profits from the 35 percent federal income tax rate in effect at the time.
In fact, Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period, meaning that the company sheltered more than half of its profits from the 35 percent federal income tax rate in effect at the time.
Leading up to the 2017
tax battle, the hope of reformers was that Congress would take a fiscally
responsible approach and weed out loopholes that made Netflix’s tax avoidance
possible.
Instead, GOP leaders who championed the law and President Trump chose to focus on cutting the corporate tax rate as far as possible—from 35 to 21 percent—while leaving in place special breaks and loopholes.
Instead, GOP leaders who championed the law and President Trump chose to focus on cutting the corporate tax rate as far as possible—from 35 to 21 percent—while leaving in place special breaks and loopholes.
"Netflix appears
to be every bit as unaffected by corporate tax laws now as it was before
President Trump's 'reform,'" Gardner concludes.
"This is especially troubling because Netflix is precisely the sort of company that should be paying its fair share of income taxes. With a record number of subscribers, the company’s profit last year equaled its haul in the previous four years put together. When hugely profitable corporations avoid tax, that means smaller businesses and working families must make up the difference."
"This is especially troubling because Netflix is precisely the sort of company that should be paying its fair share of income taxes. With a record number of subscribers, the company’s profit last year equaled its haul in the previous four years put together. When hugely profitable corporations avoid tax, that means smaller businesses and working families must make up the difference."