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amatulic t1_isaznz8 wrote

Looks like their tax rate went down.

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dr_leo_marvin t1_isbptbl wrote

Yeah majorly down! From 70% to 16%. How is that possible? Good lawyers and knowledge of tax loopholes or policy changes?

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Street-Individual292 t1_isdlb4x wrote

IPO years in general will be misleading because stock compensation isn’t tax deductible until it’s vested, which temporarily spikes effective tax rates. It doesn’t mean they’re actually paying that much, it’s just the way it’s recorded on financial statements

For reference, their tax rate was 36% in 2004

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Koopslovestogame t1_iscen3o wrote

Is the double Irish still a thing?

Edit: just checked myself and they said they’d stop doing it Jan 1 2020.

https://www.theguardian.com/technology/2020/jan/01/google-says-it-will-no-longer-use-double-irish-dutch-sandwich-tax-loophole

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dr_leo_marvin t1_isdc942 wrote

Wut is that?

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amatulic t1_isdegr9 wrote

It's a tax loophole. It's closed now. https://en.wikipedia.org/wiki/Double_Irish_arrangement

But companies moved on to other loopholes that are as good or better.

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Street-Individual292 t1_isdlf5n wrote

>But companies moved on to other loopholes that are as good or better

I’d disagree with this. The whole point of changing our international tax laws back in 2018 was to establish a global minimum tax for US companies

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onetwofive-threesir t1_isdwasl wrote

No it wasn't. The tax laws were changed to give companies "incentives" to return capital/jobs to the US (which we know they never do in the long term).

The tax law reduced our corporate taxes to their lowest levels in recent history. They also lowered the average person's taxes, but only temporarily (they will be rising over the next 5-6 years). And then they created new schemes, such as the business owner pass thrus. And I think they lowered the capital gains tax (don't quote me on that one).

The only somewhat positive thing they implemented was a one-time tax on corporate earnings overseas. This was used to help pay for some of the tax breaks they gave companies, but also offset the total cost of the bill. This encouraged the companies to repatriate their overseas earnings since they were going to be taxed anyways. Thought was, if they bring the money home, they'll invest in the US economy - except they said they wouldn't and then they didn't - they gave their shareholders dividend increases and stock buybacks...

Global minimum taxes were never on the table in 2017. That is a recent phenomenon...

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Street-Individual292 t1_isep6p3 wrote

Pretty much everything that you said is true, but your last two sentences are wrong. The TCJA established two different minimum taxes on global income for corps. One is called GILTI and the other is called BEAT. GILTI is the framework for the global deal that countries are attempting to implement now, but the US has had this in place for 5 years now

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beemccouch t1_iscjy3k wrote

And politicians voting to reduce taxes on corporations

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Street-Individual292 t1_isdmzvy wrote

To be fair, 2003 is an extreme outlier year, as IPO years usually are. Google wasn’t actually paying 70% of their profit in tax

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slayer828 t1_isc545z wrote

That tax rate change are sickening. Especially with how much free technology, and money they get from the government on top. Socialism for Me, but not for thee.

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Street-Individual292 t1_isdn4m3 wrote

How is that sickening?

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Ricksterdinium t1_isdwglj wrote

How is it not??

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nworb200 t1_ise072k wrote

70% tax is sickening. Why even fucking bother?

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Street-Individual292 t1_isfsru1 wrote

Because their reported effective tax rate isn’t the rate they actually pay. The large difference between the two rates mainly come from the way they have to report stock compensation

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slayer828 t1_isekfca wrote

70% is too much, 16% is too little. Why should they pay less taxes than the middle class.

The company SHOULD pay more in taxes then the workers who make the billions.

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garygoblins t1_iselz0y wrote

While I agree corporations don't pay quite enough, people actually don't pay more than this. The vast majority pay a much lower effective tax rate.

"The Tax Foundation derives an average tax rate of 14.6% for the top 50% of taxpayers, just 3.4% for the bottom 50%, and an average of 13.3% overall."

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Street-Individual292 t1_isepnng wrote

They’re not paying less tax than the middle class. Corporate effective tax rates are calculated very differently than individual rates

A rate of 16% doesn’t actually mean they’re paying 16% of their profit in tax

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almightygarlicdoggo t1_isahpe4 wrote

Given how big YouTube is, I expected it to generate much more profit. It's even smaller than Amazon in 1997

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thblackdeth t1_isalcvy wrote

Helps explain why in the last two years it feels like YouTube is doing 4-5x more adds

I suspect part of the difference is also paying content creators enough. That cuts into Google's share, if they don't give creators enough money, the content will go to other platforms

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almightygarlicdoggo t1_isam15z wrote

Yes I think that makes sense, nevertheless it's still odd given how big YouTube is. This might be why it has so few competitors, they would have to operate at a very big loss for many years, I don't think many companies have that much money to throw away

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thblackdeth t1_isamc9d wrote

Yeah good point, it has to be insanely expensive to have enough storage space and bandwidth for all the videos. If you can't pull in enough of a crowd quickly, it would be massive losses.

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almightygarlicdoggo t1_isanz2s wrote

Interestingly, as you previously commented, you might be right why they are pulling so may ads nowadays, their revenue in 2016 was "only" 6.7$bn. And with how expensive you said it is to operate, I don't think they were making that much profit back then, even though it was still a massive corporation.

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TheRomanRuler t1_isat40i wrote

Cost of hosting videos is enormous. Its why Youtube has practical monopoly on the stuff. Just storing that many videos takes huge amount of storage, allowing people to view it in HD resolution across the world for free... its hugely expensive.

Its actually amazing that we have free platform like Youtube at all.

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cereal-kills-me t1_isefhp9 wrote

The costs are high. But we’re talking about revenue not profit, so costs aren’t really relevant to revenue. I’m very surprised that YouTube isn’t up there closer to Google search ads.

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lucun t1_isaz6m5 wrote

Note that is Youtube revenue, not profits. We're not sure if YT is even profitable or not since Alphabet doesn't break out YT in their operating/net profit lines. YT is rolled up under Google Services outside of the revenue categories in Alphabet's earning reports.

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ProductOfLife t1_isbhszj wrote

Net profit / Tax IPO = 43.98%

Net profit / Tax 2021 = 517.00%

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Zyxtaine t1_isbcm5l wrote

Weird that YouTube premium isn't included in YouTube revenue

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Accomplished-Video71 t1_isbf35h wrote

It's in "other". Ads are obviously the cash cow and I think having YT ads it's own category makes a lot of sense.

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hghg1h t1_isbymui wrote

Is this accurate? How can a corp pay 70% tax?

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Street-Individual292 t1_isdncun wrote

Stock compensation isn’t tax deductible until it’s vested, so an IPO year is going to have a huge upward adjustment. The following year, their rate was 35%

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ApprehensiveWhale t1_iscikee wrote

Their employees excised their stock options early. If you hold stock options before converting them to stocks then it gets treated as capital gains. If you excise before the holding period is up it gets treated as ordinary income instead.

If I'm reading their 10-K right (it's been a long time since I studied financial & tax accounting), they held a provision in 2003 for early conversions, which was reduced in 2004 by $42m.

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bd_one t1_isd1k0h wrote

Did Google classify a bunch of their operating expenses as capex at the time for the IPO chart?

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gautiexe t1_isd2p9x wrote

Sundar Pichai is a bad ass!

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TheSpoonKing t1_isdaosw wrote

Found the Googler, shouldn't you be working?

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gautiexe t1_isdxzcx wrote

Not a googler dude. Although there is some Indian pride!

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TheSpoonKing t1_ise6ya4 wrote

So you support one of the worst tech ceos on the planet because he's the same ethnicity as you? Great.

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datsun1978 t1_ise8gv8 wrote

%of tax is lower now. This is a problem rite. And so the gap between the have and have not just grows.

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