[Aurornis]

> In what world is a massively profitable company paying almost nothing in taxes polarizing?

I mean they didn't just decide not to pay taxes. They followed the tax law. They accelerated some depreciation to take it now at the expense of a higher tax bill later. They took advantage of some government credits.

Corporate taxation is only one point of taxation. They pay payroll taxes, they pay sales tax on equipment they purchase at their factories, their employees pay taxes when they get paid.

Low corporate tax rates are unpopular because the optics are bad, but it doesn't actually mean that money is flowing through the company and into their employees without taxation anywhere. As soon as they do nearly anything with that money other than buy more parts to sell, taxes are being paid.

[tzs]

> they pay sales tax on equipment they purchase at their factories

Most states exempt equipment purchased by manufacturers from manufacturing their products from sales tax. I believe many also exempt raw materials that go into those products.

That Tax Foundation says [1] that both California and Texas (which I believe are the states where Tesla has factories) are states with such an exemption, although I'm seeing other sources that say that California's is just a partial exemption.

[iforgot22]

Something is wrong with the tax law if this is an accounting trick that only a few companies can use this effectively, which I suspect it is. I also suspect that the CEO of Tesla supposedly being placed in charge of federal agencies will somehow reduce that future tax bill. Corporate tax doesn't have to be a thing, but if it is, it needs to be applied fairly.

[kjksf]

Depreciation schedule is arbitrary to begin with.

Say a company spends $1 billion in 2024 to build a factory.

What is the "right" number of years (depreciation schedule)? 10? 5? 3? 1?

Whatever number N you pick, tell me why it's more "right" than N+1 or N-1.

[Dylan16807]

> Something is wrong with the tax law if this is an accounting trick that only a few companies can use effectively, which I suspect it is.

Yes only a few companies could use this, but the main factor here is not really a trick. Any other company that sells electric cars and has 0-3% profit could do the same thing.

If you get a small tax credit per sale, and your taxes are 21% of 3% of your sales revenue, and that makes your taxes smaller than the credit, then you don't have to pay taxes.

[iforgot22]

I was referring to the advanced depreciation, not the EV tax credits. Tesla's profit margin is more than 3%. Per the calculations someone else did here: https://news.ycombinator.com/item?id=42893563 Tesla supposedly got $300M in tax credits, which is much less than 21% of their profit.

[Dylan16807]

> I was referring to the advanced depreciation, not the EV tax credits.

The advanced depreciation only knocked out .5 billion from the 2.3 billion, and they'll have less depreciation in the next few years because of it. I'm not very worried about that being an exploit.

> Tesla's profit margin is more than 3%.

2.3 billion out of 97.7 billion revenue is less than 3 percent.

But another page is saying 2.3 billion is from the quarter, not the entire year? Then that changes the math some and you can counterbalance a bigger single digit profit with those credits. But if your actual worry is the depreciation then it's not worth analyzing this much further.

> Tesla supposedly got $300M in tax credits, which is much less than 21% of their profit.

It's not much less, it's a little bit off but we're using very rounded numbers to start with. When all the numbers are rounded to the nearest .1B, the napkin math being off by 78M just gets a shrug from me.