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by iforgot22 497 days ago
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.
2 comments
kjksf 496 days ago
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.

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Dylan16807 496 days ago
> 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.

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iforgot22 494 days ago
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.
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Dylan16807 493 days ago
> 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.

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