Editor’s Note: Last week Death and Taxes contributor Aram Bajakian noticed that Facebook’s $429 million tax refund for 2012 is roughly equivalent to the $424 million cut that will cause 14,000 teachers to be laid off as part of the budget Sequestration. With Congress having yet to reach a compromise with the president and the budget cuts set to kick in on Friday, we’re re-running this article today as a reminder of skewed national priorities: Something’s not right when we’re giving Facebook a refund (despite $1 billion in profit) while cutting off 70,000 kids from access to Head Start teachers. Check here to see how many teachers your state will lose thanks to the Sequestration.
A couple days ago I came across a BusinessWeek story explaining how Facebook, through perfectly legal yet clever accounting, will probably pay $0 in taxes this year and instead get a $429 million tax refund despite earning a profit of $1 billion in 2012, its first year as a publicly traded company.
And the real kicker? Most of the savings comes from tax deductions the company gets to claim by handing out executive stock options and share rewards to a lucky few.
While I understand that businesses need to be given incentives and tax breaks to spur economic growth, invention and ultimately job creation, the amount of this tax refund quite frankly disgusted me.
I was a teacher in the NYC Public School system for three years after receiving my Masters in Education. After 3 years teaching I quit and became a real estate agent, realizing that there was no way I would be able to afford to raise a family in NYC on a teacher’s salary.
So when I see massive tax breaks for corporations like this, it really hits home. I often ask myself, What if this money went to increasing the salaries of public school teachers instead?
The Gods of Irony struck as I read this New York Times Op-Ed about the sequester budget cuts scheduled to take place on March 1 that will eliminate jobs and services in virtually every sector.
Once the cuts take place, 14,000 teachers will be laid off and 70,000 children will lose access to the Head Start program thanks to sequester cuts to education. The savings? $424 Million.
So now I ask: What good is Facebook really bringing us? Is it worth it to take quality education for that many kids and trade it instead as a tax refund for a social media website? Granted there’s no causal relationship here, but the tradeoff does illustrate a stark contrast in priorities.