Zoom Pays $0 in Federal Income Taxes on Pandemic Profits

[Nevilledog]

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ITEP
@iteptweets
NEW: Last year, Zoom saw its profits increase by more than 4,000%. The company's federal income taxes? $0.

How? The platform appears to be using the same recipe as well-known corporate tax avoiders Amazon and Netflix. @gardmaf explains.

Zoom Pays $0 in Federal Income Taxes on Pandemic Profits
Zoom Video Communications, the company providing a platform used by remote workers and school children across the country during the pandemic, saw its profits increase by more than 4,000 percent last...
itep.org
11:08 AM · Mar 19, 2021

https://itep.org/zoom-pays-0-in-federal-income-taxes-on-pandemic-profits/


Zoom Video Communications, the company providing a platform used by remote workers and school children across the country during the pandemic, saw its profits increase by more than 4,000 percent last year but paid no federal corporate income tax on those profits.

The company reports that it made $660 million of pre-tax profits for 2020, an exponential increase from its $16 million in pre-tax profits in 2019. The immediate shift to online activity explains the company’s unprecedented income growth. For many, Zoom has become a ubiquitous daily meeting space, both for work, class instruction, family gatherings and evening happy hours.

But why was the company’s income bonanza not matched by at least a token federal tax bill? The main answer appears to be the company’s lavish use of executive stock options. Zoom’s income tax reconciliation says it reduced its worldwide income taxes by $300 million in 2020 using stock-based compensation.

As an ITEP report explains, companies that compensate their leadership with stock options can write off, for tax purposes, huge expenses that far exceed their actual cost. This is a strategy that has been leveraged effectively by virtually every tech giant in the last decade, from Apple to Facebook to Microsoft. Zoom’s success in using stock options to avoid taxes is neither surprising nor (currently) illegal.

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[jimfields33]

1. So instead of a paycheck, they give out stocks instead?

Eventually they will pay when the stocks are sold. I worked a part time job at Walmart in addition to full fine and bought Walmart stock with my paycheck and still paid taxes.

[Resistance1]

2. Zoom did perform a community service by not charging for the first 30 minutes

[andym]

3. Don't the employees receiving the stock options pay the taxes?

Won't they be taxed, so the government is getting the money due despite the maneuver?

[TexasBushwhacker]

4. Yes, and generally they sell the stock as soon as they exercise the options

So it gets taxed as regular income rather than capital gains at a lower rate.

[Mariana]

7. That's the way it worked when my husband had stock options.

He had to pay FICA tax, too, because his income wasn't high enough to have reached the cap.

[msfiddlestix]

5. Well, to be fair, Zoom allows for FREE use for hundreds of purposes, and thousands of people using

every single day. Now the free time is limited, but I'm on zoom cumulatively several hours a week, personally about 4 times or sometimes more a week working with other musicians.

I'm personally not going to single out Zoom as a bad guy in our tax free haven for the rich world. From educators to low income folks just wanting to hook up with others for whatever purposes has been a life saver mentally and emotionally.

They've provided an important service during this covid pandemic for the entire country, a great deal of it for free.

[TexasBushwhacker]

6. Personally, I think we need to have an Alternative Minimum Tax

for businesses. They use our infrastructure, their employees were usually educated in our public schools, they are protected by our military, etc.

[WarGamer]

8. I don't want to hear a fucking squeak about raising a 37% tax to 39%...

Or some incremental bullshit like that without facing the REAL revenue problem this nation faces...

Corporations are ROBBING US BLIND.

Stop focusing on the periphery while ignoring the monster in front of us.