Despite a hefty profit in 2012, social networking site Facebook paid no taxes but will receive a refund owing to a tax reduction for executive stock options.
World's No. 1 social networking site, Facebook, made a hefty annual profit of $1 billion last year. However, reports state that the company paid no taxes. Despite this, Facebook will receive $429 million refund on account of a tax reduction for executive stock options. According to a report by Fox News, Facebook will continue to receive tax breaks in the coming years and the amount could add up to more than $3 billion.
"The employees cash in stock options, and at that point there is tax deduction for the company," Robert McIntyre, of watchdog group Citizens for Tax Justice, said in an interview with Fox News Channel. "Because even though it doesn't cost Facebook a nickel, the government treats it as wages and they get a deduction for it. And usually it doesn't wipe out companies whole tax bill, although many companies get big breaks from it."
The announcement was made after President Barack Obama expressed his opinion to put an end to such tax breaks. According to the President, if such tax breaks ended, the U.S. could "save hundreds of billions of dollars by getting rid of tax loopholes and deductions for the well-off and well-connected."
Facebook, refused to comment on the recent tax break news. Obama has been criticized for double standards when it comes to taking example for this policies.
"The president certainly has a double standard when it comes to picking out examples that help advance his policies agenda," Curtis Dubay, a senior tax policy analyst with conservative think tank Heritage Foundation, said to Fox News. "He often points to oil and gas companies as taking corporate deductions that are perfectly legal under the law. But he leaves out others like Facebook, which is perfectly legal. But he doesn't point them out and make them an example the same way he does an industry like oil and gas."