According to the Institute of Taxation and Economic Policy, a progressive think tank, Netflix posted its largest-ever profit in the U.S. for 2018 of $845 million for which it paid no federal or state income taxes.
Reportedly, Netflix submitted a $22 million federal tax rebate. President Donald Trump’s Federal Tax Cut passed in 2017 has affected how corporations have filed taxes and their ability to get federal tax rebates. According to ITEP’s report, many corporations are able to “exploit loopholes and avoid paying the statutory tax rate” and now that rate due to the passage of the tax cut is “substantially lower.”
In 2017 Netflix was identified as one of the top 100 most profitable Fortune 500 companies in the U.S. that paid “0 percent in federal income taxes in at least one profitability year between 2008 to 2015.
“In fact, Netflix did it twice, and paid an average tax rate of 13.6 percent over the eight-year period, meaning that the company sheltered more than half of its profits from the 35 percent federal income tax rate in effect at the time,” a blog post dated Feb. 5 by ITEP states. “Leading up to the 2017 tax battle, the hope of reformers was that Congress would take a fiscally responsible approach and weed out loopholes that made Netflix’s tax avoidance possible. Instead, GOP leaders who championed the law and President Trump chose to focus on cutting the corporate tax rate as far as possible—from 35 to 21 percent—while leaving in place special breaks and loopholes.”
As of 2018, Netflix has its highest-recorded number of subscribers to its streaming services. According to Variety, Netflix raised its prices for the streaming plan three days prior to the company’s earning report being published. The stremaing service increased its basic monthly subscriber rate from $7.99 to $8.99 per month for the first time. Its other more premier services have increased as well, costing users as much as $15.99 per month for the premier streaming service plan that includes up to four HD streams.
“As more 2018 earnings reports begin to come in, we will see the results of this profligacy in real time,” ITEP wrote in it’s blog post. “Netflix appears to be every bit as unaffected by corporate tax laws now as it was before President Trump’s ‘reform.’”
Sources: Variety, ITEP