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Facebook, The Coolest Cutest Corporate Welfare Queen Of Them All

testosteronepit's picture




 

Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

Last year, the government extracted $1.1 trillion in taxes from us more or less hardworking individual taxpayers. But now it will pay, along with the states, $429 million of our taxes to the coolest Silicon-Valley beauty queen: Facebook. In net tax refunds! Part of a vast package of juicy corporate welfare programs. Facebook isn’t just hogging our data; it’s gobbling up our money.

Timing was a bit inconvenient, however. The “sequester,” as the automatic spending cuts by the federal government have been elegantly named, is scheduled to kick in on March 1. A national disaster, according to the New York Times. It would threaten everything from national security to preschool programs for low-income kids. It would cause hundreds of thousands of jobs to evaporate, or whatever. Clearly, trying to live within one’s means, or at least a modest step closer to it, is never a healthy idea.

So, as the drama with all its lurid theatrics was playing out in Washington, Facebook filed its first 10-K annual report with the SEC, containing its financial statements for 2012 along with a host of small-print footnotes which presumably no one would ever look at. But the recalcitrant nonpartisan research and advocacy group, Citizens for Tax Justice, combed through it anyway.

And it found “an amazing admission”: despite $1.1 billion in pre-tax profits from its US operations in 2012, Facebook didn’t pay any federal or state income taxes in the US—in fact it will collect net tax refunds totaling $429 million.

Facebook is relying on a single tax break in our glorious corporate tax-dodge code to obtain its negative tax rate: the deductibility of executive and employee stock options. It cut Facebook’s federal and state income taxes by $1.03 billion last year—but that was just part of it. As Facebook said in its footnote under “Share-based Compensation,” on page 68 of the 10-K: “during the years ended December 31, 2012, 2011, and 2010, we realized tax benefits from share-based award activity of $1.03 billion, $433 million, and $115 million respectively.”

Another $2.17 billion of this US tax break is carried forward. To rub it in, COO Sheryl Sandberg giddily pointed out during the earnings call that the company “ended the year with a total of $5.8 billion in NOL tax loss carry forwards created by stock compensation”—to be used in future years.

Given Facebook’s anemic “profits” in the US, it’s unlikely that it will have to pay federal or state income taxes anytime soon. Instead, taxpayers will have to continue showering tax refunds on what has become the cutest, coolest welfare queen of them all [but it does have its share of not-so-real-world issues, like this one: Is The “Self-Promotion-And-Envy Spiral” Taking Down Facebook?].

On its financial statements, Facebook claimed that it had a federal tax liability in 2012 of $559 million, that it would somehow pay $559 million in taxes in the coming year. But the number was wiped out by its infamous footnote on page 68 of the 10-K. And suddenly, that “federal tax liability” of $559 million had, like so many things on financial statements, no graspable relationship to reality.

Facebook isn’t the only one sucking on the big government teat. The tax break is available to all companies where stock-based compensation plays a big role. And innumerable other tax breaks are available as well. In its Corporate Tax Dodgers report of November 2011, the CTJ found that 30 of the 280 most “profitable” companies for the tax years 2008-2010 paid no income taxes but instead collected net tax refunds on their combined pre-tax profits of $160 billion! And 78 of them had at least one year when they didn’t pay taxes. At the same time, other companies in the study were getting whacked by huge tax bills. Hence the inherent unfairness of the corporate tax-dodge code.

So, CEO Mark Zuckerberg was raving about the limitless opportunities of mobile during the earnings call. “We have more engagements from the people who we reach, and I think we’ll also be able to make more money for each minute people spend with us on their mobile devices,” he said. But it just won’t contribute to the convoluted and painful process of reducing the US budget deficit.

Meanwhile, corporate insiders rotate in and out of various government agencies that are supposed to regulate them. Perhaps the most egregious example is the SEC, where Wall Street culture and personalities have come to dominate. Regulation and enforcement have become a joke. A principle so common that it has a name: “Regulatory Capture.” Read.... Wall Street Takes Over Its Regulator

 

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Tue, 02/19/2013 - 10:07 | 3255795 WTFUD
WTFUD's picture

Get fisted or fist fucking on facebook for beginners.

Tue, 02/19/2013 - 09:41 | 3255717 Shizzmoney
Shizzmoney's picture

I've been getting more "you have notifications pending" in my FB account lately...with no actual "new" notifications....methinks that users aren't logging into the site as much as they used to (with the exception of those addicted to it).

If Facebook didn't have pictures, and didn't hold a monopoly on the social media scene from 2005-2009 (when Twitter came along), it wouldn't be even as close to big as it is (this mostly due to not the teens and young ppl signing up, but to get their PARENTS to sign up so they can keep up to date with their families' lives).

At some point, FB is going to die.  It's not built for the long term.

 

Tue, 02/19/2013 - 06:42 | 3255533 steveo77
steveo77's picture

Farcebook is evil, here is photographic proof

http://oahutrading.blogspot.com/2012/07/facebook-is-evil.html

Tue, 02/19/2013 - 03:59 | 3255426 steveo77
steveo77's picture

Farcebook is evil.   Look  this picture, and tell me that ain't evil

 

http://oahutrading.blogspot.com/2012/07/facebook-is-evil.html

Tue, 02/19/2013 - 00:00 | 3254981 Quicksilver Will
Quicksilver Will's picture

 Amazing outrage over a "refund"; and it is a "refund" not a "tax credit". Facebook may not be feeding the government pig but it ain't exactly sucking at its teats either. Meanwhile the employees who got that stock compensation for four years of labor paid taxes big time as their shares suddenly had a taxable value. As much as I dislike Facebook this is rant is misleading.

http://www.businessinsider.com/why-facebook-gets-an-income-tax-refund-20...      

Mon, 02/18/2013 - 21:49 | 3254632 MFLTucson
MFLTucson's picture

These Jews are sealing their own fate.

Mon, 02/18/2013 - 22:14 | 3254672 Notarocketscientist
Notarocketscientist's picture

See The Israeli General's Son http://www.youtube.com/watch?feature=player_embedded&v=TOaxAckFCuQ    Forward this to everyone you know - it exposes Israel for what it is.

Mon, 02/18/2013 - 21:18 | 3254577 adr
adr's picture

Fuck Zuckerberg in the ass with a 3' rusty piece of rebar smeared with pig excrement, rabies infected squirrel, and the blood of a cambodian whore.

For starters...

Actually I think that is the initiation rght of passage for the Bilderbergs. I'll have to think of something else.

Mon, 02/18/2013 - 22:01 | 3254651 willwork4food
willwork4food's picture

Naw, that was the rights of Yale Skull & Bones. It's why Bushy limped -trying to fake it like he was a cowboy or something.

Mon, 02/18/2013 - 19:19 | 3254376 Lumberjack
Lumberjack's picture

Welfare Queen???

Larry Summers...

He likes the renewable and medical/pharmaceutical sectors too.

Mon, 02/18/2013 - 18:54 | 3254314 working class dog
working class dog's picture

The CIA rewards those who cooperate, the RIOT data base with Raytheon has a partner Facebook

Mon, 02/18/2013 - 18:27 | 3254244 Theos
Theos's picture

...The employee pays taxes on the options when they are exercised. And the company loses the spread as would anyone who is short an option.

 

Are you implying that i cannot deduct a capital loss on a short option from my income?

 

Or should I just get all frothy and buy your book to learn more?

Mon, 02/18/2013 - 18:24 | 3254237 izzee
izzee's picture

 

Virginia family, seeking clues to son’s suicide, wants easier access to Facebook

 

Ricky Rash’s search for answers began almost from the moment he found his son’s body in a field a few miles from their Virginia farm.

Why would a 15-year-old boy take his own life? Why especially this boy, a hard-working teenager whose dreams and intelligence seemed sure to take him far beyond his Nottoway County dairy farm? Here was a kid who was big for his age but gentle, who loved to read so much that he carried his Kindle into the woods when he hunted deer and talked of going to Virginia Tech and then maybe Harvard Law School.

After Eric’s suicide in January 2011, Ricky and Diane Rash hunted for clues to explain their son’s death, including his Facebook page. But they found that the Internet giant, citing state and federal privacy laws, blocked their access until their son’s estate was settled. So now the Rashes want to change the law.

“In those rare cases where the family of the deceased seeks access to the contents of their loved one’s account, we will respond in a way that is sensitive to their loss and is consistent with applicable law, which limits a provider’s ability to disclose data to third parties,” said Noyes, who is Facebook’s manager of public policy communications.

Facebook eventually turned over some information from Eric’s page, but his father was not satisfied.

“I’m still locked out, to this day,”

 

 

http://www.washingtonpost.com/local/va-politics/virginia-family-seeking-...

Mon, 02/18/2013 - 18:21 | 3254229 q99x2
q99x2's picture

Its a conspiracy. Puppetberg is another actor like Obama.

Mon, 02/18/2013 - 19:09 | 3254355 Enslavethechild...
EnslavethechildrenforBen's picture

Conspiracy theory no.

Conspiracy fact yes.

Mon, 02/18/2013 - 17:52 | 3254159 thisandthat
thisandthat's picture

Admit it, capitalism is nothing more than socialism for the few (inverted redistribution of wealth).

Mon, 02/18/2013 - 22:31 | 3254711 MeelionDollerBogus
MeelionDollerBogus's picture

nonsense. Capitalism is for producers, to profit by efficiency in reducing costs, to trade only by consent without government interference, to survive by innovation.

What you see here before you is Fascism which is strongly anti-capitalist and anti-socialist.

Tue, 02/19/2013 - 10:37 | 3255925 thisandthat
thisandthat's picture

Read my reply above.

Capitalism is the negation of free market, the same way as statism was the negation of socialism: it's offer based (impositive), as opposed to demand based (requisitive) free market

The fundamental difference between capitalism and statism is simple: statism uses politics to control economy; capitalism uses economy to control politics. Both aim the same: control of society.

 

Wed, 02/20/2013 - 05:18 | 3258724 MeelionDollerBogus
MeelionDollerBogus's picture

and you're still wrong. With good capitalism we don't need politics at all. Politics is for idiots & liars. Capitalism & markets is for actual useful production.

Thu, 02/21/2013 - 15:27 | 3264293 thisandthat
thisandthat's picture

Good capitalism for WHOM? Capitalism is for capitalists, not you, me and the rest of the unwashed masses - that'd be socialism... It's in the name, think about it before you call it good or bad (or go to the Hamptons and ask around...).

"Politics is for idiots & liars." - so Stalin was right... he abolished drought in the USSR because "drunkards aren't interested in politics" - and Ancient Greece was wrong... but how exactly would you have an actual functioning society without politics to begin with - American revolution, anyone (btw, democracy and republic are the exact same thing)?

Mon, 02/18/2013 - 22:02 | 3254654 Marge N Call
Marge N Call's picture

"Admit it, CRONY capitalism, FOISTED OFF AS CAPITALISM, is nothing more than socialism for the few (inverted redistribution of wealth)."

There, fixed it for ya. Thank me later.

Tue, 02/19/2013 - 10:11 | 3255814 thisandthat
thisandthat's picture

CAPITALISM - it's all about the money, stupid, nothing to do with free market - go read some Rockefeller.

PSA - no need to thank me.

Wed, 02/20/2013 - 05:20 | 3258725 MeelionDollerBogus
MeelionDollerBogus's picture

the function & form of money is decided IN the market, not BEFORE the market. That's why free markets made gold & silver money - no government decree could force them out over thousands of years, not everywhere. It takes the harshest of police states to take the food, silver, gold & land, and to offer slave ticket IOU papers in place. Without this slave-pen & slave-enforcers the system collapses because the market, however suppressed, is not that dumb. It's fairly dumb at times but not THAT dumb. That's why people do things like demand COLLATERAL (goods, not cash) & talk about COUNTER-PARTY RISK.

Thu, 02/21/2013 - 14:49 | 3264157 thisandthat
thisandthat's picture

That's what you decided to believe, but is it really? - where does the information people use to make IN the market decisions comes from (exclude ZH and such, since they're fringe sites).

"Free markets made gold & silver money" - true... and capitalist markets unmade them and are taking them down, as we speak.

Simple truth is, under capitalism, money is used to gain control over market (trough politics), which is then used to get more money out of it, and you can iterate that till kingdom comes. That's the exact opposite of a free market, to me.

And what do you think those "harshest of police states", "slave ticket IOU papers" and "slave-pen & slave-enforcers" which result in "system collapses" are, if not a part and parcel of the capitalist system of taking control over regulation, for the sake of almighty profit?

Tue, 02/26/2013 - 03:36 | 3276790 MeelionDollerBogus
MeelionDollerBogus's picture

I don't choose to believe anything. History tells the story. Facts are group-confirming. Inconsistencies catch each other out, showing what can't be trusted. Your definition of "capitalism" is in defiance to what the rest of the world & history uses for the same word. A system of capitalism doesn't take control of regulation - it banishes it. A system of regulation is always anti-capitalist. A police-state is always anti-capitalist.

Capitalism & free-markets are one and the same. Neither can remove each other any more than mass can remove gravity. THey work together not against each other.

Every act of stopping a market from having consenting participants is always anti-capitalist and external to the market.

In all history you've never seen a market attacked by capitalism, only boosted by it. Every time you've seen a market attacked it's because people with guns march in & shoot anyone who is resisting their will, jail some more on top of that (kidnapping). It's always government. Always.

Mon, 02/18/2013 - 18:02 | 3254180 DJ Happy Ending
DJ Happy Ending's picture

Que?

How's the Kool Aid?

Mon, 02/18/2013 - 18:19 | 3254225 thisandthat
thisandthat's picture

Who's kool aid, really?

Mon, 02/18/2013 - 17:12 | 3254052 Agstacker
Agstacker's picture

I've never used my FB account much anyway, when I read this I went ahead and deleted the damn thing.  Felt good. too.  

Mon, 02/18/2013 - 22:30 | 3254708 alien-IQ
alien-IQ's picture

Here's something worth knowing about FB:

Facebook tracks you online even after you log out

Summary: Think logging out of Facebook means the social network can't track what you're doing online? Think again.
http://www.zdnet.com/blog/facebook/facebook-tracks-you-online-even-after...

Mon, 02/18/2013 - 22:33 | 3254717 MeelionDollerBogus
MeelionDollerBogus's picture

use Linux, use firefox, delete all cookies & if you need to, firewall the IP address for facebook. Also in firefox NoScript allows disabling any site connected to facebook that has any scripting at all.

Also, longer term, never go to facebook ever again, delete any active account (shut down not really erased).

Mon, 02/18/2013 - 23:29 | 3254876 laomei
laomei's picture

Don't just delete the active accounts. It's not good enough. You have to zero that drive.  Fill it with absolute garbage.  Use the gaming lists that are out there to mss-add hundreds of users, if not thousands as "friends", then delete everyone real, allow that account to spam non-stop with absolute trash, request deletions of every picture you are "tagged" in, and THEN delete the account.  The archive will be left with a smoldering piece of garbage that is completely useless.

Tue, 02/19/2013 - 02:08 | 3255300 MeelionDollerBogus
MeelionDollerBogus's picture

no, I don't have to zero the drive. It's sequestered storage that no program can access all of. There's no way in hell that Faceplant already with NoScript got past LINUX's sandboxing.

As for the rest of your nonsense if you feel your time has so little value, do it - my time is spent charting gold & market futures, not re-spamming faceplant.com

Sat, 03/02/2013 - 17:09 | 3294042 laomei
laomei's picture

I'm talking about zeroing the account.  Do you honestly think they don't store information on you and share it with anyone who asks?  The only way to counter it is to make it utterly utterly useless in every aspect.

Mon, 02/18/2013 - 20:22 | 3254498 Christophe2
Christophe2's picture

I've had to delete a FB account that was FORCED on me by some 3rd party that went ahead and decided to build me an account using a private email that few people have other than banking institutions and the like.

 

The hook was supposed to be all the people it had magically/creepily found for me, to 'reconnect' me...

 

I had to waste time deleting the account since I want nothing to do with their shit, but I can't help but wonder how many of the 'new accounts' and 'accounts growth' comes from shenanigans like my recent experience.  BS accounts for a BS company for sale on a BS market valued in BS money.

Mon, 02/18/2013 - 23:25 | 3254866 laomei
laomei's picture

Facebook actually has systems in place that "build" a virtual profile for non-users with the notion that they will eventually sign up and when they do, it will basically already know who they are and have improved capability to "suggest" people you might know.  Yep, you have an account even if you don't.  Seriously, don't let people take pictures of you at all, or hang out with them if they are social addicts.  Absolutely no good can ever come of it.

Tue, 02/19/2013 - 15:54 | 3257106 Joseph Jones
Joseph Jones's picture

It's our only marketing tool for our exclusive product which we sell almost exclusively direct (few if any retail dealers).  What could replace FB for us?

We use personal pages to steer people to our business page.   

Mon, 02/18/2013 - 17:46 | 3254150 JimS
JimS's picture

I, too, am one who rarely went to FB, and I just deleted it as well. It felt very good.

Mon, 02/18/2013 - 19:07 | 3254351 lotsoffun
lotsoffun's picture

as soon as i found that they excepted billions of windfall for suckingberger little sock cooker i closed mine.

Mon, 02/18/2013 - 19:08 | 3254354 lotsoffun
lotsoffun's picture

and i didn't even mention his connection to goldmine shacks - you see, i'm not racist.  but isn't it odd??

 

Mon, 02/18/2013 - 17:06 | 3254045 ebworthen
ebworthen's picture

Disgusting.

Yet another sign post on the U.S.S.A. kleptoligarchy's road to perdition.

Mon, 02/18/2013 - 17:06 | 3254044 laomei
laomei's picture

Well duh.. it's a CIA monitoring tool with full USG backing.  Please note how it went after and crushed competition in other countries with hilarious lawsuits.  TPTB want to ensure that they have full access to everything on it.... seriously, you have to be an idiot if you still have an account on that thing that's not 200% fake.

Mon, 02/18/2013 - 16:55 | 3254018 Mad Mohel
Mad Mohel's picture

What else did you expect from a smoke and mirrors piece of shit created by a yid kid name Zuckerborg?

Mon, 02/18/2013 - 16:42 | 3253986 Nick Jihad
Nick Jihad's picture

So instead of Facebook paying tax on profits, employees will pay tax on stock options? Seems like six-of-one versus half-dozen of the other, to me.

Mon, 02/18/2013 - 17:18 | 3254069 mumbo_jumbo
mumbo_jumbo's picture

Nick,

too bad their "income" will be taxed at 15% and i'm sure the "loopholes" those stock recipients will use would make even the accountants at facebook blush.

Mon, 02/18/2013 - 16:40 | 3253980 falak pema
falak pema's picture

you americans are tearing your own icons apart; like King Lear on the heath descending into folly faced with flattery and lies.

Is there no one left amongst the entrepreneurial oligarchs, not those blood sucking leaches kings of HF shadow banking, that inspire your confidence? 

Mon, 02/18/2013 - 17:19 | 3254073 RopeADope
RopeADope's picture

Elon Musk, though Tesla is questionable the guy at least has the old school build something real mentality.

Mon, 02/18/2013 - 21:10 | 3254565 adr
adr's picture

That whiny little bitch sucks the dick of government as much as Zuckerberg. Fine he built a worthless electric car only the hedge fund set can afford and built a supercharger network on routes they drive. The Tesla superchargers only work with Tesla cars. The Model S has THE WORST INTERIOR OF ANY CAR EVER MADE. Yes I've sat in one. Wake me up when he does something that matters.

Oh the SpaceX Dragon, whoop dee fucking doo. There are about 10k surplus ICBMs that can do the same thing, even better. I'd worry the fucker would sell rockets to North Korea for a few extra cents over what anyone else would pay.

Musk does things for his ego only. See his cameo in Iron Man 2 fr example.

Mon, 02/18/2013 - 15:41 | 3253824 earleflorida
earleflorida's picture

corporations are people too?

Mon, 02/18/2013 - 15:45 | 3253834 Uber Vandal
Uber Vandal's picture

The moment Texas executes one, sure.

Mon, 02/18/2013 - 19:19 | 3254374 cxl9
cxl9's picture

Silly. Corporations get killed all the time. Don't pay the annual registration fee, or don't file an annual report, and watch how quickly the corporation gets dissolved.

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