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Netflix’s Executive Compensation Dwarfs Federal Tax Payments by Nearly Triple: Study

Netflix’s Executive Compensation Dwarfs Federal Tax Payments by Nearly Triple: Study

The Netflix logo is displayed at the entrance to Netflix Albuquerque Studios film and television production studio lot in Albuquerque, New Mexico, on Oct.13, 2023. (Patrick T. Fallon/AFP via Getty Images)

Jessamyn Dodd

Jessamyn Dodd

3/19/2024

Updated: 3/19/2024

A recent study examining corporate tax practices has revealed that Netflix, one of the leading television and movie streaming services, paid its top executives more than it has contributed in federal taxes. This finding, reported by the non-profits Americans for Tax Fairness and the Institute for Policy Studies, underscores a broader trend of corporate entities paying more executive compensation than taxes.
According to the study, spanning the years 2018 to 2022, Netflix was among 35 companies where executive pay surpassed federal tax contributions in at least two of the five years analyzed. Throughout this period, Netflix disbursed a staggering $652 million to its top five executives, juxtaposed with a comparatively modest $236 million in federal income tax payments, resulting in a nominal tax rate of 1.6 percent.
Furthermore, the study highlighted other notable cases, including Tesla, where founder Elon Musk and fellow executives received a total of $2.5 billion in compensation amid $4.4 billion in net profits, yet the company evaded federal income taxes, even obtaining a $1 million tax refund. Similarly, T-Mobile received an $80 million refund after allocating $675 million to executive salaries.
Netflix’s collaboration with former President Barack Obama and former First Lady Michelle Obama through a production deal adds another layer to the discussion. Despite these findings, Netflix continues to engage in high-profile projects such as the Julia Roberts film “Leave the World Behind” and the documentary “American Symphony.”
Last year, SAG-AFTRA initiated a strike, with residual payments from streaming services at the forefront of the discussion.
While on the picket line, Breaking Bad star Aaron Paul told Entertainment Tonight Canada, “I don’t get a piece from Netflix on Breaking Bad, if we’re being totally honest, and that’s insane to me.”
In recent agreements spanning three years, both the Writers Guild of America (WGA) and the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) have achieved success-based bonuses for series featured on major streaming platforms, including Netflix, Amazon, Apple, Disney+, HBO Max, Peacock, and Paramount+.
In an email interview with The Epoch Times discussing billion-dollar companies benefiting from tax breaks, economic analyst Cassandra Hope from WalletHub shed light on the complexities underlying these apparent disparities.
“It’s easy to jump to conclusions and assume that large corporations like Netflix are driven by corporate greed, but several factors contribute to such disparities. These billion-dollar companies often take advantage of legal tax strategies and loopholes to minimize their tax obligations. As a result, their nominal tax rates may appear disproportionately low compared to their earnings.”
Ms. Hope emphasized the necessity of scrutinizing the efficacy of these incentives in achieving their intended goals, stating, “To address this issue, it is necessary to conduct a comprehensive review of tax policies and corporate regulations. This will ensure that companies, regardless of their size or profitability, fulfill their societal responsibilities by paying their fair share of taxes. Transparency and accountability measures are also crucial to foster public trust and ensure that corporate practices align with broader societal interests.”

White House Cracks Down on Corporate Profit

Meantime, The White House laid out its policies on corporate tax on its official website. According to the fact sheet, “President Biden would raise the corporate tax rate to 28 percent. He would also ensure that billion-dollar corporations pay at least 21 percent of their income in taxes, building on the Inflation Reduction Act’s (IRA) corporate minimum tax.”
In addition, President Biden contends that corporations offering salaries exceeding $1 million for any employee or executive should not benefit from any tax breaks.
Florida businessman and 2024 U.S. senate candidate for Florida, Keith Gross, warned of the Biden administration’s tax initiatives.
“Biden’s proposal to nearly double the corporate tax rate underscores just how disastrous 4 more years of Bidennomics would be. The United States does not now, nor has it ever, had an income problem. We have a rampant spending problem. The cost of living for most Americans is up nearly 30 percent under Joe Biden while real wages and income are down nearly 6 percent. The notion that increasing the financial burden of America’s largest employers will somehow result in a higher quality of life for the vast majority of our citizens is laughable,” he wrote in a statement to The Epoch Times.
According to The White House, President Biden’s  FY2025 budget proposal will “lower costs for families, protect and strengthen Social Security and Medicare, and reduce the deficit by making the wealthy and corporations pay their fair share and cutting wasteful spending.”
In addition, President Biden’s plan to elevate the highest individual ordinary income tax rate to 39.6 percent is anticipated to generate $245.9 billion within a decade. Concurrently, the proposal to subject capital gains income for affluent individuals to standard rates is forecasted to yield $288.5 billion over the same period.
Moreover, the envisaged 25 percent “minimum income tax on the wealthiest taxpayers” is expected to accumulate $502.6 billion over ten years. According to the Treasury Green Book explanation, this proposition entails imposing a minimum tax on specified high-income earners, encompassing unrealized capital gains, if their net wealth exceeds $100 million. Payments under this minimum tax scheme would function as prepayments applicable to subsequent taxes on realized capital gains, preventing double taxation of the same gain.
Mr. Gross said there is only one model that will work to get the American economy back on track: the “America First” model.
“We need to: One, Reelect President Donald J. Trump and end the disastrous Biden administration that has caused more damage to the U.S. Economy than any prior administration in American History. Two, cut unnecessary regulations on U.S. businesses and allow them to compete in a true, free market system. Three, unleash American Manufacturing and Energy Independence. Stop buying stuff from nations who hate us.
“And finally, and most importantly, DRASTICALLY shrink the size and scope of the U.S. Federal Government. The administrative state is destroying our quality of life and bankrupting the country at a rate far faster than ever before. We cannot afford this much government, and we don’t need this much government.”
However, Ms. Hope noted, “Although some stockholders may have concerns about the potential impact of President Biden’s proposed measures, such as disallowing tax deductions on high executive salaries, it is essential to consider the broader economic implications. The aim of these reforms is not to harm stockholders or the economy but rather to promote fairness and address systemic issues in the tax system.”
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Jessamyn Dodd

Jessamyn Dodd

Author

Jessamyn Dodd is an experienced TV news anchor, reporter, and digital journalist covering entertainment, politics, and crime.

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