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Meta Uses A.I. Data Centers to Avoid Billions in Federal Taxes

Meta Uses A.I. Data Centers to Avoid Billions in Federal Taxes

gmays

Comments (203)

  • snorrah
  • djoldman
    It often strikes me as quite the biased and one-sided take when a tax-paying entity is called out by the press for tax avoidance (NOT tax evasion, which is illegal). (yes TFA implies that Meta is breaking the law, I'm not talking about situations where entities break the law).Previously we've seen "The Secret IRS Files" from Propublica as well as other coverage of tax avoidance that never resulted in tax evasion charges. Coverage wide enough that it's arguably safe to assume that no laws were broken because there was quite the demand for an enforcement response.The funny thing is that a more accurate title for these pieces would be, "Federal Government Allows [tax-paying entity] a Massive Tax Break." And then the piece would be all about how the senate, congress, and president either explicitly wanted there to be this extreme tax loophole or was incompetent and allowed something they didn't mean to allow.Folks are continually getting upset and riled up about players in the economic system instead of who and what makes the rules.An analogous example: everyone got cranky about Martin Shkreli, mostly because he raised prices on Deraprim, although also because many would label him a brash jerk. But he went to jail for finance stuff, not raising prices. Why? Because raising prices in the way he did wasn't something the feds thought was illegal or wasn't something they thought he could be convicted of.Folks get mad at Musk, Zuckerberg, etc... if they're doing something illegal, ok yea that makes sense. If folks are mad about actions that are legal, it makes zero sense to be mad at the actor. Be mad at the people/entities who created the legal loopholes and laws.
  • simonw
    > Under a tax credit created in the 1980s to spur innovation, companies can get a rebate for supplies, but only if they are being tested in an experimental effort, not standard business operations. Meta is claiming that the costly A.I. computer chips it buys from companies, including Nvidia, are entitled to a taxpayer-provided discount as part of the experiment. [...]> The company started claiming the credit for the data centers two years ago. Since then, Meta’s savings from the credit have soared, trimming almost $4 billion off its tax bill last year, filings show.Yeah... as a US citizen and taxpayer I think I'd like that $4 billion back.
  • nimish
    I think a fun exercise would be for the Times to ask their own accountants how they classify their own engineering employees for the R&D tax credit.
  • fuzzythinker
    And why not, it's basically near zero risk save billions in tax. The worst case is they fight this for months, lose, and pay minor fines that acts as low interest rate loan.
  • exabrial
    When people are evading taxes, we need to blame the taxes, not the people.We pay an enormous amount of dumb taxes that are simply funneled into* government "Contractors". Aka the 1%, or the people that are golf buddies with your legistators* wars. Which ultimately ends up in #1's pocket.
  • orliesaurus
    It's crazy that some of these facts incentives for smaller businesses are abused by multinational conglomerates. I think the laws should set some sort of limits on who can take the tax breaks, like hello?! This isn't about not paying taxes through some weird schemes. This is literally abusing the system to the next level in my opinion
  • sgarland
    > One of the biggest expenses of any A.I. data center was computer chips, which are made by companies like Nvidia and cost thousands of dollars each.“Thousands.” Yes, in the same way that the earth is thousands of years old. 4.5 million thousands, but still, thousands.
  • yipinwong
    The article reads like a propaganda to have media to have general people to make fuss about Meta's tax practice regardelss it is legal or not."Trend in tax break" in the article does not mean jack shit so long as it's legal. There are myriad of factors why the trend happens. Meta stock went up, more revenue in, thus more tax break as they pay more, the higher the tax percentage etc.
  • rf15
    When people sit down to ask: Is sunk-cost really a fallacy if it saves you taxes?
  • christina97
    A huge reason for the US strength in tech is the R&D tax credit, and its entire purpose is to spur investment in next generation technologies. It doesn’t seem like an insane stretch to classify investments in AI hardware as R&D, especially given their high risk nature.Taxes are also not a zero-sum game: more innovation increases the pie for all, including the government.I feel like this is mainly yet another anti-AI hit piece.
  • mmaunder
    Reminds me of my younger australian cattledog. It's not about what he's getting. It's about what my other dog is that he could be getting. So the whole time he's got a full bowl in front of him, he's death staring my other dog in case he abandons his bowl.It's fascinating watching the wealthiest country in the world get butthurt over a company that employs 70,000 W2 employees who has paid around $39 billion in taxes in the past 5 years - and that's just federal and excludes e.g. property taxes and payroll. That's more than the GDP of Iceland or Honduras. Them legally avoiding a few billion only matters if you're a nyt journo out of news worth printing.
  • GardenLetter27
    It's working as intended? Meta invests in innovative infrastructure, and the country benefits.Look at Europe for the opposite, and the disastrous consequences there.
  • sigmar
    >Meta said the research tax credit shaved $2 billion off its taxes in 2024, and then $3.9 billion in 2025.Infuriating.Was meta thinking about this like a hedge against them failing at AI? ie they thought "let's do tax fraud, and we'll probably get called out on it. but if our AI ambitions fail completely, we will have a better argument in court that this was an "experiment" when the government tries to take the money back (like what the article describes about the claw back of the 2013 tax break)"
  • _8L34K
    "Meta is claiming that the costly A.I. computer chips it buys from companies, including Nvidia, are entitled to a taxpayer-provided discount as part of the experiment."Why do these schemes always involves these private companies siphoning money from taxpayers? It's "communism" (or whatever) to subsidize public health, yet we are expected to subsidize experimental AI companies.
  • axus
    At some point AI was experimental for companies, clearly it's being used for business operations in 2025 and 2026.Can we think of an example of computing hardware/software that would qualify for this tax credit?
  • ChrisArchitect
  • bpodgursky
    The actual solution here is to eliminate the corporate income tax and capture the money via higher capital gains and dividend income taxes.All of this boils down to politicians knowing (even if they can't say it publicly) that the corporate taxes are badly structured and tax incentives are often revenue-positive (since in reality, every economist knows you should not be taxing business inputs, and in fact European VATs are structured around this idea), but being unable politically to do the sane thing and capture the income at a point it can't easily be gamed.
  • hnacobsxph
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  • farceSpherule
    [dead]
  • g-technology
    So all these companies wanting to build data centers are pushing for approval saying they bring income and jobs to the community. Then they do everything possible to not pay any taxes and never mention that data centers require almost no staffing once they are setup and running.