Opposing Views: Facebook Made Over $1 Billion in 2012, Paid No Taxes

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By Michael Allen, Fri, February 15, 2013

Citizens for Tax Justice recently reported that Facebook received $429 million in tax refunds last year and paid no federal and state income taxes on its profits, which were more than $1 billion.

Citizens for Tax Justice states:

Last year at this time, CTJ predicted, based on Facebook’s IPO paperwork, the company would get a federal tax refund in 2012 approaching $500 million, and the company’s SEC filing this month tells us we were right: Facebook is reporting a $429 million net tax refund from the federal and state treasuries. And it’s not because they weren’t profitable. Indeed, Mark Zuckerburg’s little company earned nearly $1.1 billion in profits.

CTJ’s new 2-pager on what Facebook’s February 2013 SEC filing means is here.

Facebook’s income tax refunds stem from the company’s use of a single tax break, that is the tax deductibility of executive stock options. That tax break reduced Facebook’s federal and state income taxes by $1,033 million in 2012, including refunds of earlier years’ taxes of $451 million.

Of course, Facebook is not the only corporation that benefits from stock option tax breaks.  Many big corporations give their executives (and sometimes other employees) options to buy the company’s stock at a favorable price in the future

Last year when Facebook was preparing its initial public offering, Sen. Carl Levin (D-MI) said: “When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden."