Zoom Pays Zero Income Taxes Despite Making $660 Million Profit During Pandemic
Zoom paid $0 in income tax in 2020 despite increasing its profits by more than 4000% during the global pandemic.
As the world grappled with coronavirus restrictions and companies were forced to have their employees work from home, many turned to online communication platforms like Zoom.
More than a year on, the video communication tool has become a part of everyday life. As its demand rose, so did its profits.
As per the Institute on Taxation and Economic Policy, Zoom saw its pre-tax profits rise from $16 million in 2019 to $660 million in 2020.
Despite its huge increase in income, the company did not pay a single dollar in taxes on its profits due to its use of ‘executive stock options’, ITEP reports.
This is a tactic often used by other large corporations such as Amazon and Netflix. Under this tactic, companies that ‘compensate their leadership with stock options can write off, for tax purposes, huge expenses that far exceed their actual cost’, ITEP explained.
‘This is a strategy that has been leveraged effectively by virtually every tech giant in the last decade, from Apple to Facebook to Microsoft. Zoom‘s success in using stock options to avoid taxes is neither surprising nor (currently) illegal,’ it added.
Zoom also benefitted from research and development tax credits, the think tank said.
The practice has been slammed by Democrat Senator Bernie Sanders as a ‘rigged tax code that benefits the wealthy and powerful’.
‘If you paid $14.99 a month for a Zoom Pro membership, you paid more to Zoom than it paid in federal income taxes even as it made $660 million in profits last year – a 4,000 percent increase since 2019. Yes. It’s time to end a rigged tax code that benefits the wealthy & powerful,’ he said in a tweet after the ITEP’s report was published.
This week, the White House announced that President Joe Biden will make good on his campaign promise by raising taxes on the wealthy and big corporations.
In a press briefing earlier this month, Press Secretary Jen Psaki said Biden believes ‘those at the top are not doing their part’ and ‘corporations could be paying higher taxes’.
The news comes after Treasury Secretary Janet Yellen told ABC News that Biden ‘has proposed that corporations and wealthy individuals should pay more in order to meet the needs of the economy, the spending we need to do, and over time I expect that we will be putting forth proposals to get deficits under control’.
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