Twitter Tax Controversy Explained In Cartoon Form

theodp writes "If you prefer to digest your news in a cartoon format, you'll be happy to know that the Twitter tax controversy has gotten the Next Media Animation TV treatment. In the NMAtv clip, Twitter co-founder Biz Stone cuts a tax break with San Francisco Mayor Ed Lee and ascends a ladder to 'Tax-Free Haven' where he's high-fived by execs from GE and Google. If you insist on reading the news, IBD has an account of the payroll tax break, which critics are calling corporate welfare." A hilarious, but true, story. Please remember, when you see 'haven' instead of 'heaven,' that English isn't everyone's first language.

Comments

i think haven was a pun

[retchdog]

admittedly it's a bad pun, but would it really be surprising that the taiwanese media have a better grasp of english than slashdot editors?

Re:i think haven was a pun

[Asclepius99]

Tax Haven isn't a pun, it's an actual term. Remember, English isn't the first language of all the /. editors.

Tax Haven

Re:i think haven was a pun

[Jon Stone]

"Tax haven" is a common term in UK English. Is the term not common in the US?

English audio version

[mailman-zero]

English audio for those who don't like reading subtitles. http://www.youtube.com/watch?v=Jh1evfTk58o

Tax heaven

[pablomme]

Please remember, when you see 'haven' instead of 'heaven,' that English isn't everyone's first language.

Interestingly, the expression for "tax haven" in Spanish is "paraiso fiscal" (tax heaven), which I'm pretty sure was a mistranslation in the first place. Ok, ignore the "interestingly"..

Fucking Bullshit

[cosm]

I understand it's SOP, but I do think it is motherfucking bullshit that I pay a higher percentage of my income in taxes than these companies. And I guarantee my net is six to seven orders of magnitude less than what they bring in, which is probably true for most Americans as well. But its the welfare state that is bankrupting us they say!

Re:Fucking Bullshit

[corbettw]

I do think it is motherfucking bullshit that I pay a higher percentage of my income in taxes than these companies

First off, the tax in question here is a payroll tax which comes out of the employees' salaries and stock options. So this is a good thing for workers at Twitter.

Second, you only pay income tax on your net income. Of course, when people piss and moan about corporations "not paying their share", they only look at their gross income. Companies can have enough expenses in a year that they essentially have no or little income, and you have to keep that in mind when looking at their tax burden.

Third, a company that is successful and hires lots of workers is going to pay into Social Security and other tax schemes through payroll taxes. So whether the corporation itself pays taxes or not, the government is still getting money from them. No one gets out of paying completely, it just doesn't happen.

Re:Fucking Bullshit

[ShakaUVM]

>>I understand it's SOP, but I do think it is motherfucking bullshit that I pay a higher percentage of my income in taxes than these companies

You know what's bullshit? San Francisco's tax laws. Combined with California's tax laws. That's why there's this controversy in the first place. They have one of the most business-unfriendly environments in the US.

My company pays 1.5% of its profits to the state of California. You know what's bullshit about it? It's an S-Corp, so there are no profits, technically - all money passes through to the shareholders, who pay personal income tax on the money. But you get the privilege of paying 1.5% anyway, on top of the taxes you get to pay for personal income, simply because you have a corporation. If your profits are not that high, you get to pay a minimum tax of $800 anyway. Which can work out to a lot more than 1.5% of your income, if you're a small operation. Hey, that's fair, right? Mom and Pop start a $20,000/year candle business, and so California taxes them a bonus 4% for the privilege. (And people wonder why corporations are leaving the state.)

C-Corps (that retain earnings) get to pay corporate taxes (unless you're rich enough to buy a loophole) on top of the taxes that the owners pay when they eventually draw money out of the corporation. That's double-bonus awesome, right?

Twitter was going to be charged a bonus 1.5% taxes on all money it spent on payroll (i.e. personnel expenses), on top of all the other bullshit. That's the San Francisco Treat right there, and why they were going to move to San Jose. Twitter is big enough and famous enough to get an exemption from the SF government though. Smaller corporations just have to take it or leave. (Guess which companies are hard to relocate? That's right, small businesses.)

Even more fun: if you're a corporation grossing over $100,000 a year, you get to pay California sales tax on all purchases of durable goods bought outside of California. (http://www.boe.ca.gov/taxprograms/usetax/index.html) How's that for being fair? And if you don't keep records for your "exemptions" (i.e. purchases from companies like Newegg that charge CA sales tax already), you get to pay sales tax twice. Lucky you, eh? Oh, and after they enroll your corporation for Use Tax, it's retroactive for the past four years, taxes and penalties due immediately.

You're right about the corporate tax code being bullshit, but the reality isn't exactly what you think it is for anyone not rich enough to buy off the legislature.

Re:Fucking Bullshit

[Anonymous Coward]

So, why did you start an S-corp if you don't like the laws governing them?

Let me guess -- because you wanted to take any losses on your personal income tax, and gain the ability to claim things as business expenses. Seems like you're getting consideration in this deal too.

Re:Fucking Bullshit

[Keen Anthony]

This should be modded up, but I'll reiterate it since the poster was an AC. The parent wanted to gain the ability to claim business expenses. Having been an S-corp myself, I know the hassle of filing quarterly taxes and then doing personal on top of it. But I still came out ahead. I love the concept of an S-corp. I love that I get business expense deductions, not to mention the limited personal liability in the advent of my company being sued. I wouldn't say California is not business friendly. Many businesses thrive in California. I will accept some alternative reasons though such as: life is hard, paying taxes is a bitch no matter where you live, things cost more in California, and my favorite the Franchise Tax Board seems to be run by incompetent monkeys that really make the experience rougher than it has to be.

Re:Fucking Bullshit

[Jah-Wren Ryel]

That's a canard designed to appeal to the people who think they are smart but are in fact ignorant of how corporate taxes work in practice.
Much of the time it is loopholes, not actual expenses, that result in corps "not paying their share" - double-taxation is practically a myth under the current system.

Here's a short discussion of the myth with a table of companies that had negative or near-zero taxes but still reported significant profits and paid significant dividends in the same year.

Roblimo isn't a native English speaker?

[MartinSchou]

Seriously?

Please remember, when you see 'haven' instead of 'heaven,' that English isn't everyone's first language.

What the fuck? Now you're mocking people for using the term "haven"? A perfectly acceptable word when talking about tax-free locations.

Dictionary.com definition of "haven"

ha ven [hey-vuhn]

-noun
1. a harbor or port.
2. any place of shelter and safety; refuge; asylum.

-verb (used with object)
3. to shelter, as in a haven.

Now, as a person for whom English is his 3rd language, allow me to dumb down my judgment of Roblimo's IQ and knowledge of English to a level that even he should be able to understand, despite it having three syllables: Imbecile.

You may also want to look up the term "walking on cloud nine".

Re:Roblimo isn't a native English speaker?

[Paul Jakma]

It's quite obviously a visual pun on "haven" (the normal and correct term used in "tax haven") and "heaven". Which makes it clear that either Roblimo is being super-ultra-ironic, or he has failed to realise that the cartoon authors have a better grasp of english than himself.

Re:Fuck IBD, the corporate whores

[Anonymous Coward]

It's funny how in your world everybody but the government has to justify their "share."

Seems to be a popular opinion of late.

Re:Fuck IBD, the corporate whores

[AK Marc]

I'm betting it's an AC who made up numbers he thinks proves his point. I'm not an AC. With income at $100,000 in a year, I was at 10% federal income tax, and about 20% for the sum of all taxes I paid (SS, Medicare, sales, state, local, property - multiple properties, and all that). It would be hard to reach 40% in the US. Though some people manage it, like those hit with AMT and other such weirdness. Or those who pay both halves of SS themselves (contractors) but he specifically said "salary" so that doesn't count.

Re:twitter makes money

[hairyfeet]

While I hate corporate welfare I really don't know if you can call it that in this case. In fact what they got Twitter to agree to is to build new offices in a scummy slum part of town, which of course will now cost Twitter in extra security and such, in the hopes that they can renew the area and get businesses to move back which will also get the same break if they move into scum town.

Now considering this neighborhood is probably "welcome to the jungle" you are gonna have to offer something for any business to take the risk, and I'm sure there will be employees that will turn down an offer from twitter because they'd have to go into and out of such a rough area.

So while I think bullshit like GE paying almost no taxes by pulling crap like the double dutch IS bullshit and needs to be stopped ASAP, giving a company a break for taking increased risk by moving into bad areas in the hope of fixing them up is just smart. The same was done several years ago in my own state with the river market area, and whereas before the place looked like Beirut, what with all the bombed out looking buildings and garbage everywhere, now it is a really nice neighborhood with little shops and a thriving gay community.

Everything there is clean and nice with plenty of foot paths and nobody is afraid to walk there anymore, so I'd say the tax breaks the city gave were money well spent. If by giving them a tax break the city of SF can do the same to one of their slums why not? Better than just letting the buildings fall apart and become fire hazards like Detroit.

Re:Fuck IBD, the corporate whores

[ShakaUVM]

I'm betting it's an AC who made up numbers he thinks proves his point. I'm not an AC. With income at $100,000 in a year, I was at 10% federal income tax, and about 20% for the sum of all taxes I paid (SS, Medicare, sales, state, local, property - multiple properties, and all that). It would be hard to reach 40% in the US. Though some people manage it, like those hit with AMT and other such weirdness. Or those who pay both halves of SS themselves (contractors) but he specifically said "salary" so that doesn't count.

http://www.paycheckcity.com/NetPayCalc/netpayCalcResult.asp

At $100,000 a year, you will lose 35% of your paycheck before deductions and writeoffs. Throw in the 10% state sales tax in California, and there you go.

Re:I don't post too much but

[ShakaUVM]

>>The existence of a corporation is supposed to be contingent on the public good.

I think keeping a thousand people employed in your city is a public good, right?

>>Leash the damn corporations already and stop this race to the bottom.

Leash the tax-hungry legislators that caused this mess to begin with.

The controversy was over the extra-special 1.5% of *expenses* "San Francisco Tax" Twitter would be paying over what they'd pay if they relocated 45 minutes south to San Jose. Hopefully the SF city council will realize that their hostile environment to businesses is bad for the city as a whole, and repeal the damn law.

Re:I don't post too much but

[PhunkySchtuff]

Consider this: if they had just let Twitter move somewhere else, lots of jobs would be terminated.

So don't let it move. Leash the damn corporations already and stop this race to the bottom. The existence of a corporation is supposed to be contingent on the public good.

Sorry, but just how can you stop a corporation (or anyone for that matter) from getting up and moving somewhere else?

Re:The explanation is easy

[makomk]

Bullshit. Corporations pay for their additional burden on local utilities... by paying for the extra utilities. At power rates in California about 5x higher than the US average.

Except when they go bankrupt with bills unpaid. One of the extra benefit of being a corporation is that, when the business fails, the owners can just walk away from the bills. It's exactly this that ShakaUVM was complaining about paying an extra 1.5% tax to get - if he or she wants to avoid the extra tax, there are other ways to structure the business, but they involve personal liability for corporate debts.