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No Such Thing As a Tax-Free Lunch At Google?
theodp writes "In search of the best corporate cafeteria in the world, Gourmet Live's Tanya Steel visited the Googleplex, where she found Petaluma chicken cacciatore, porcini-encrusted grass-fed beef, whole-wheat spaghetti pomodoro, and Parmesan-creamed onions on the menu in one of the search giant's 25 cafes. So, must all good things come to an end? The WSJ's Mark Maremont reports that it's debatable whether Silicon Valley's daily fringe-benefit meals are taxable, and the issue is now on the IRS's radar. 'What would a food tax on Google's meals look like for the average employee?' Maremont asks. 'Assuming a fair-market value of between $8 and $10 per meal, a Googler chowing down two squares a day could get dinged for taxes on an extra $4,000 to $5,000 a year.' That'd be just fine with UF tax-law Prof. Martin J. McMahon. 'I buy my lunch with after-tax dollars,' said McMahon. 'And I have to pay taxes to support free meals for those Google employees.'"
On the otherside, an employer or contractor can 'expense' their meals if it's business related. However, I believe there is a percentage cap, based on overall income.
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I'm pretty sure that Google's advertisers pay Google to pay for the free meals for those Google employees. Without prejudicing any other case for equitable treatment, just because someone isn't paying taxes doesn't mean they're robbing you. It's the fruits of their own labor. In the absence of laws to the contrary, is Google not entitled to dispose of their money as they see fit?
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I don't think this guy knows what he's talking about ....
Wouldn't it be just as valid to say that this is provided as a service to enable Google employees to avoid going home to cook their own lunch or to avoid having to eat a less-desirable cold bagged-lunch, keeping them more productive at work?
I bring my lunch 80% of the time. When I buy my lunch I don't like spending more than $5, sometimes upwards of $7 if I don't have a lot of choice in the matter. When I bring my lunch it probably costs $1.
If Google has hired on-staff the food prep staff, it'd be more analogous to how school lunches cost, which is to say that an adult lunch in this school system for faculty is about $4.00. If Google doesn't generally allow just anyone to eat in their lunchrooms, then I don't see how they can be held to a full retail standard.
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So if I go home and eat my lunch ... no taxes since you don't get taxed on food (maybe in California, you guys are nutjobs ;).
But if I eat it at work, where a cook makes my meal instead of my wife ... that I get taxed for?
Lets see, whats better? Me driving home for lunch, wasting gasoline, road wear and tear and pollution ... or staying at work for lunch?
The UF tax law professor just needs to be shot. He's just a whining bitch. Its not like he has a real job, he's a fucking professor, he doesn't actually work anyway. Two classes a week that he sits in while his assistants do all the work or someone else lectures. String his ass up from a tree until he stops talking. No, I don't like lawyers, especially ones who like to whine about how they are treated unfairly while essentially doing nothing but draining otherwise useful resources from the world and our budget.
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There is a cost that you are not measuring - I was fortunate enough to work somewhere where we also had some quite awesome food freely available at lunch time. Maybe not to Google standards, but it really was plentiful, fresh and very nice. Needless to say I then spent a small fortune on gym membership to bring my weight back down to almost normal levels.
Now I'm hungry again, dammit
So, I can't imagine that most Google employees are eating TWO meals a day there - maybe a meal and a snack. So, the benefit is probably $2500/yr or so.
And that is gross income. Even if their marginal rate is 35% they'd only pay an extra $800 in actual taxes on that.
If you gave me a choice of paying for typical cafeteria fare at a typical fortune 500 at typical rates for cafeteria food (ie mediocre food at premium prices), or paying an extra $800 in taxes so that I could have gourmet food at lunch every day (just grab whatever you want and stop by for ice cream in the afternoon if you have a craving), I think I'd take the gourmet food. I pay way more than $800/yr on lunches already most likely, and I don't eat like they do at Google.
A cheese steak, drink, and mushy fries at work costs me $7.50. Gourmet food for $3.50/meal in taxes - sign me up! Oh, and if your marginal rate is lower then it is even cheaper.
From my experience two meals a day seems reasonable. It's not particularly good, mind you - it's comparable to an average college dining hall - but it's free and convenient. It's also free and convenient for local homeless people, who seem to get into some of the cafeterias by being clean and walking through the door with a purpose. Last time I was in a Google cafeteria, at least, they were taking full advantage of the lack of authentication (and so was I).
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In Canada, this is already going on.
We (as a country, and yes, I'll speak for my country here) tend to tax things that employees receive as part of doing their job. Like, income. Company car usage on personal business. Certain types of business accommodation perks.
Unless google is willing to open their cafeteria to the world, getting "free" meals as part of your job is, well, part of your job. I think most people can agree that the US tax system has a few loopholes - but why is it crazy to expect people to pay taxes on their income?
- Nec Impar Pluribus, or so I'm told.
"'I buy my lunch with after-tax dollars,' said McMahon. 'And I have to pay taxes to support free meals for those Google employees.'"
How exactly do tax dollars go to fund the lunches at Google's cafeterias? Last time I checked, that money came from revenue earned by Google, through its business. You know, from working.
How would the government prove that a given employee is actually eating the meals? Do they have a swipe card that tracks them? What if they are bringing their own lunch?
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Technically, if you get free parking from your employee (i.e. you don't pay to park at a parking garage because they pay for the spot), that is considered a taxable event. You are supposed to report that on your taxes.
This would be a similar event. You are benefiting by your employer covering the cost.
Whether the final ruling on this matter is considered the same remains to be seen.
We will bankrupt ourselves in the vain search for absolute security. -- Dwight D. Eisenhower
... and while we're at it let's tax free coffee, free snacks, hell even all that free water workers drink on break.
Even better, let's tax all time spent on break -- I'm sick of supporting lazy workers on break with my hard-earned-no-break hours!
Say the professor prefers tea & fills his teapot from his university's tap. Does he have an individual meter so that his usage is not coming out of the pocket of the rest of the faculty or the students? If a corporate lunch is an untaxed benefit shouldn't he have one for his tea? Shouldn't he also have one for the toilets he uses? How is his use of these common resources any different from free lunches -- or is it just a matter of time until this becomes the norm as well??
Democracy is a sheep and two wolves deciding what to have for lunch. Freedom is a well armed sheep contesting the issue
I have to pay taxes to support free meals for those Google employees
Only in the most roundabout way. It's not like they're getting state funded lunches, they're just not paying a tax. Just like I don't pay a tax when I eat some raspberries that grew on my land. Of course the commissaries at Google probably pay a tax on the foodstuffs when they buy the bulk ingredients.
I'm so sick of the expression "cost the government". It's a weasel expression intended to convince people that all money belongs to the government first and they let you have some only after they've spent whatever they want. Bulldinky. Every day you hear about how things have gotten too expensive. Food? Too expensive. Coffee? Too expensive. Air travel? Too expensive. Higher education? Too expensive. Gasoline? Too expensive. Electricity? Too expensive. Insurance? Too expensive. Rent? Too damn high. Healthcare? Too expensive. Why the hell isn't government too expensive? IMHO, if the government got rid of baseline budgeting and actually reduced expenses across the board, those of us who pay for all that crap might not be hell bent on looking for every write-off under the sun.
The university, unless it uses well water, pays for its water like everyone else via the water taxes.
By the way: $10 of water is an ENORMOUS amount of water. $10 barely gets you a nice cheeseburger or salad in many US cities. Typical US household water bill is $330/year, according to a quick search.
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Why? Because you don't work at Google. Too bad, so sad. I get free water where I work. And free toilets. Do I have to pay taxes on that? You'd rather peopel be even more dependent on their federal government masters? No thanks.
That’s a good analogy, but then why do I pay taxes for my benefits, like my pension plan?
Simple answer, you shouldn't. Just cause government's scummy in one area, let's not invite it into others.
First is the blatant unfairness: why do Google employees get tax-free lunches when, someone else (say, for example, me) has to pay for my lunch with post-tax income.
Jeez, take it up with your employer. Why do people feel that if they can't get ahead themselves, they need to try to take others down?
The rules are clear if you are working on an oil rig or a deep-diving submersible --- any site so remote and secured that only your employer can keep you fed and housed and the costs are astronomical.
The five-star buffet in Mountain View?
That is taxable as income.
This is not a new issue. Although the concept of tech companies offering their employees gourmet catered dining is relatively recent, restaurants, hotels, bars, and other hospitality businesses have offered their staffs free meals since time immemorial.
In those cases, the US federal tax code allows a business to exclude the cost of meals from its employees' income only as long as the meals are eaten on the employer's business premises and they are provided "for the employer's convenience."
A company like Google might have a hard time proving the latter clause. A recent job posting for a "Food Experience Design Manager" would seem to suggest that mealtimes at the Chocolate Factory's over 120 cafes are designed as much for its employees' enjoyment as to bolster the bottom line:
As the Global Service and Experience Design Manager, you think about everything that goes into how Googlers interact with food. From our ever-popular micro-kitchens to multi-course meals at cafes, the design, layout and experience of eating at Google should promote healthy habits and social serendipity for Googlers. Our food venues need to support the healthiest, happiest workforce on the planet.
Similarly, Yahoo! started offering its employees free food last August, with a spokesperson telling El Reg that the move was "part of how Yahoo! looks after its talent." But meals offered as a recruitment or retention tactic don't count as being ''for the employer's convenience'' either, according to experts.
Tax man to take a bite of tech employees' free meals?
Who says "No Thanks" to a meal that they didn't have to pay for? Any college student will tell you the best meal they had was "free" not because of the food quality, but because it was free. I'm assuming Google just has a cafeteria that employees can just walk into and get a meal or two during any given day while they are working, and that this is an every day occurrence. I can honestly say, I'm a tad jealous, but I see that as a perk of working for that company. If the IRS is going to tax lunches, CEOs across the nation will have to start paying taxes for their elaborate lunches. But wait, so would every college student who didn't pay taxes on food they ate. Oh and what about all those free day care services some places offer or exercise room, shouldn't those perks be taxable also? Wouldn't this then also impact me going over to a friends house and receiving a meal from a party? I didn't pay for it so I wasn't taxed on it.
This is a slippery slope, and one that if pushed as taxable then it opens up a whole new can of worms. If Google is paying the taxes on the food and upon purchasing the food for giving away, wouldn't taxing the employees be double - taxation?
I'd love it if I could reap such awesome benefits, but I do not begrudge a Google employee from enjoying the perks of working for Google. I'm happy to learn that a company that large is still so generous to their employees.
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You touch on an interesting point.
If the meals are not reserved strictly for employees only, then it could be argued that the food doesn't even qualify as a fringe benefit to begin with since you don't have to work to get it.
"dinged for taxes on an extra $4000-5000 per year." Not "pay an extra $4000 to $5000 per year in taxes."
If they are given $4-5k in food by their employer over the course of a year, the argument is that this is a form of income, and thus they should be paying taxes on the value of that food.
Kind of a reasonable argument, actually. If "things" aren't taxable income, then can CEO's request to be paid in cars, jets, and yachts, and avoid all income taxes?
Because without laws that keep things fair like this, people abuse the system. What happens when Google decides to reduce salaries but pay your mortgage. They drop it a little further and pay for your car. What's the problem? It's a nice benefit, stop being jealous. But now the tax base just went down. It's just Google. Well, if that's the status quo, then it won't be just Google. Pretty soon, companies are skirting around taxes by giving employees tax free benefits in lieu of salary. Which leaves those still paying taxes on their salaries holding the bag of those who aren't.
Did he bother to google (heheh) the IRS Publication for this? (warning, PDF). Scroll down and:
The fair market value of meals or lodging furnished to an employee by an employer may be nontaxable to the employee. IRC Â119 provides an exclusion for meals and lodging under certain circumstances. Cash provided for meals is not excludable under this Code section; however, under certain circumstances cash can be excluded as a de minimis fringe benefit. IRC Â119
And a few other paragraphs clarifying this seem to indicate that Google and all the other Valley companies that do this are following the rules just fine. Sheesh! I'm not even a lawyer and certainly not a friggin' professor of such.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Not charging employees income tax on an employer-provided lunch is "letting them walk off with the henhouse"? And coporations complying with tax laws in order to not pay more than they're legally required are "malefactors"? I'd argue that they'd be in dereliction of their duty to shareholders if they *didn't*.
The thing is that in your examples the law is pretty unambiguous. If the company is paying for your home and car and they aren't used for work, it's considered employee income and is subject to regular income tax. Meanwhile, food given to regular employees at work, like factory worker or doctor eating at the on-site cafeteria, or the soldier in the field eating an MRE, is normally not counted as a benefit for taxing purposes. The idea behind the exception was that the employer couldn't afford to give the employee time off to leave facility to eat. The question is whether or not this rule should also apply to tech workers who have a more flexible schedule.
I've worked many years in a restaurant as a waiter, and my wife has moved up from working as a server to a manager in the restaurant industry. Did you know many restaurant employees have employee meals? These are either discounted (50% typically) or free meals, and sometimes free fountain drinks also. If Google employees have to report the meal as income, does that mean the servers (who in my state make $2.33 an hour plus tips) have to report the 50% discount as income also? Additionally, almost every manager gets free meals during their work shift - so do they have to record those? What of free fountain drinks - do you charge one per shift, or is each soda refill a full drink charge?
I understand that some people are upset that they pay in post-tax dollars while others are getting a free perk. I don't get a company car - but should those that do be charged the lease value as income when they are provided with one? If a company provides you a uniform, do you pay taxes on it as if you earned the money to buy it? If you make personal printouts or use a company computer for personal activities, if you are provided a company mobile phone and free plan, or any other of the "perks" a job provides, does that have to be counted as income?
Again, I understand you are upset. However, if a company wants to give their employees a perk, I think it should be. If a company is required to report food given to an employee as income in goods to an employee, then it should apply to every little perk given and not just food. In other words, take a pen home, then be taxed on that income - which would mean a much more totalitarian system at work to monitor every little thing every employee does.
If Google lunches were truly free, open to the public, then it can be argued it's not employment benefit/compensation - merely a charitable expense for Google. But if one needs to be a Google employee to get Google lunches, then the lunches are clearly compensation for employment, and it stands to reason that it should be taxable as such.
http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States
According to Wikipedia:
Arkansas, Georgia, Illinois, Missouri, North Carolina, Tennessee, Virginia, and West Virginia are the only states that levy sales tax on groceries. So, yeah, Americans don't generally pay sales tax on food used to prepare meals seems about right.
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According to an acquaintance of mine working for another large software company many of his fellow employees barely qualify under those criteria.
They didn't pay tax already on the money used to purchase them in the sense that they paid corporate income tax on the funds. Because the expense of buying the food and preparing it and cleaning up afterwards etc is written off as a business expense and thus isn't all Google's profit ... some of it is (depending on what tax bracket Google is paying) but some would be tax money that could pay for all the infrastructure Googlers and the rest of us use every day.