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Zoom Increased Profits 4000% Last Year, Still Paid Zero Income Taxes

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Image: Zoom.us

If you bought a Zoom Pro account in the last year to help have meetings or video chat with family and friends, you paid $14.99 a month. And that’s $14.99 more than Zoom paid in federal taxes for the entire year 2020. Despite the fact that Zoom made $660 million in profits during the pandemic year of 2020, they paid $0 in federal income taxes on that profit.

Senator Bernie Sanders was quick to notice this in a Sunday morning tweet. Sanders notes that Zoom “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.”

This reporting comes from the tax analysis nonprofit Institute on Taxes and Economic Policy (ITEP), and explains how Zoom paid $0 in federal taxes. “The main answer appears to be the company’s lavish use of executive stock options,” ITEP explains. “Zoom’s income tax reconciliation says it reduced its worldwide income taxes by $300 million in 2020 using stock-based compensation.  

“Companies that compensate their leadership with stock options can write off, for tax purposes, huge expenses that far exceed their actual cost,” the report continues. “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.”

Zoom is based in San Jose, CA. That means they will be an unwelcome addition to our annual list of Bay Area tech companies that pay no federal taxes.

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Joe Kukura- Millionaire in Training

Joe Kukura- Millionaire in Training

Joe Kukura is a two-bit marketing writer who excels at the homoerotic double-entendre. He is training to run a full marathon completely drunk and high, and his work has appeared in the New York Times and Wall Street Journal on days when their editors made particularly curious decisions.

1 Comment

  1. James A. Hudkins
    March 25, 2021 at 5:00 pm — Reply

    Each and every Tax Return has its own situation. The IRS issues reports about all of the Tax Returns filed. It shows consistently that the rich pay much more in tax and a much higher percentage of tax. You can look it up. Don’t just rely on what “someone” says about a single Tax Return. In California almost all of the State income tax is paid by a few thousand Californians. Look at the IRS and California numbers and then tell us what you think.

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