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.
Public shame and malice towards individuals who violate expected norms is actually a fairly good deterrent toward would-be bad actors. I'm sure there are many millions of instances per day where people decide not to do untoward things because they care about their reputations.
But on the flip side, you are also correct. It's important that public attention also be directed towards the systems that incentivize and enable bad behavior, and the people who create those systems. Patching laws, shaping incentives, and empowering a distributed system of judges and courts to handle violations is ultimately much cleaner, fairer, predictable, wide-reaching, and (therefore) more effective than disorganized mob-led shame campaigns.
Unfortunately, several things work against this:
1. It requires much more time, education, intelligence, and emotional self-control to care about system design over simply shaming others. These four things aren't abundantly common in most populaces.
2. Lawmakers and politicians have their own incentives to redirect public attention away from themselves. And they can take advantage of #1 to do this, which is basically what demagoguery is.
3. Similarly, media companies have their own incentive, which is to increase clicks and shares and subscribers. And appealing to base emotions with strong headlines works 100x better than discussing complex laws and systems. Research shows that the #1 emotion that leads to sharing online is outrage.
In this case, the established norm is for a business to legally avoid paying as much tax as possible. It's more than just a norm. It is extremely unusual for any business owner to do otherwise. It's 100% up to the government whether they approve this tax break.
This. I'd be surprised if there were software/tech companies that didn't actively use the R&D provisions in the tax regulations.
The problem is two closely related issues, IMO... First, these rules are probably too broad/vague and easily abused. And second, it's too difficult/costly for the IRS to successfully challenge when a company does abuse these regulations.
I would say that we get the one (public outrage at specific companies/people) but not the other (focus on the legislation). Unfortunately, the latter has the controlling direct effect.
Simplified messaging can perhaps work. I have come to the conclusion that taking money out of politics is the only way out. "Hate the game, not the player" only works when the player doesn't get to set the rules of the game. Shame those who have enough money to influence politics and either are known to "donate" (bribe) politics or donate darkly (with more money/power should be more transparency). And shame anyone who perpetuates money in politics.
> Public shame and malice towards individuals who violate expected norms is actually a fairly good deterrent toward would-be bad actors. I'm sure there are many millions of instances per day where people decide not to do untoward things because they care about their reputations
I do agree for most people. But the problem is that the worst people have no shame. People like Musk, Bezos, Zuckerberg, etc., used to try to fake humility and act like normal people, but that ship has sailed and now they seem to take glee in acting like shitbags and getting away with it. Which is why we need laws.
Especially here. If there ever was such a thing as an expected norm in how a multibillion dollar company handles its finance and taxes (a pretty complicated topic that’s quite far removed from normal life), it’s probably exactly what FB is doing.
You are the CFO of Meta and you have have a choice to make in your tax reporting: option A and option B. Both are esoteric and don’t relate much to how a normal person pays tax or thinks about finance, both are legal, but option B leads to billions of dollars less in your bill. Would HN posters really choose option A?
If there’s a problem it’s that there is so much complexity and so many legal but complicated choices you can make that change how much tax you pay, and only the very rich, and very large corporations, have the ability to explore those options (of course the law is also skewed towards giving them loopholes and tax breaks that don’t apply to a normal person)
It is perfectly fine to be upset about certain lawful behaviors because lawful does not mean good. This does also not exclusively apply to companies, people can be law abiding assholes. And it works in the other direction, too, sometimes unlawful behavior is good behavior.
But GP comment is not about how you feel about it. It is about where you direct that anger. If you dislike what a powerful entity does, well, we the people are supposed to have a recourse in our representatives. Why precisely is it that we feel like we do not?
I expect everyone to behave nicely even in the absence of laws. The reason that I am not killing people left and right is not because it is illegal to so but because it is immoral. The law is a last resort to disincentivize certain behaviors or hold you responsible after the fact, it is not what should exclusively guide anyone's behavior.
And, carry that forward, what do you expect to happen to people who do not act according to your definition of nice? You either accept they are different, or try to prohibit the activity.
Jumping from "money making via tax breaks" to "murder" is quite a jump, also. These are along a spectrum of choices.
But companies are not part of "everyone". Companies are amoral. They have no concept of morality, only legality. If doing X produces Y profit and is legal, they will do X. If doing X produces Y profit, but is illegal and the fine times the probability of getting caught is Z, then they will do X if Y > Z. Shame and morals have nothing to do with the equation.
Not necessarily. Humans aren't really capable of living entirely solo. We rely on a society - even a small tribe - to provide resources that we struggle to make. We evolved for tribes and tribalism to support our survival.
People who commit murder wantonly are generally untrusted and/or shunned. Being banished is really dangerous, so people tend not to go on more killing sprees even without formal laws
People like to believe they live moral lives, unlike animals. But when the system breaks down, people quickly start behaving like animals - the ones who don't gets killed rather quickly.
This has been presented in fiction countless times, and those fiction is not made up from thin air.
All human behavior, including the way humans universally have a sense of right and wrong, is the result of evolution and natural selection on some level. Morality isn't some concept cooked up by aliens, it's a naturally emergent behavior and not just in humans.
A system is also composed of its pieces. There's plenty of blame to go around. Trying to blame entirely the system and absolve the company of its immorality is nihilistic. Stop thinking that companies aren't to blame just because they take advantage of a bad system.
I was with you, but no, this is where you lost me:
"If folks are mad about actions that are legal, it makes zero sense to be mad at the actor."
There are people with mindset "I will try to be an overall decent human being and maintain some awareness and empathy of others", and there are the "I will be as much of a selfish asshole as the legal system allows me to, and wreak untold damage in the endless game of whack-a-mole".
I think in fact more of us should be gunning after the second kind :). To paraphrase you, It makes zero sense for me to be OK with fundamentally anti-social, anti-humanity humanoids.
I think you're both right, it depends a lot more on the specific situation. For example if Corporation A finds a loophole that allows them to dump toxic waste in the river, let's be pissed at both sides. If Corporation B reacts to incentives in the tax code to build an AI data center, you can be mad at data centers if you believe they poison the earth and waste resources, but you should also be mad at the government who created those incentives in the first place.
Consider also that in the US, corporations have an outsized influence on the law. In your example, Corporation B may not only be taking advantage of incentives in the tax code, but it may have had a hand in creating them as well.
1. By being upset at a behaviour, we can start the machine / process to amend the laws. The laws are not permanent, universal, absolute, or same as morality/utility. Noticing undesirable behaviour and raising a stink is how the laws get amended.
2. BUT/AND... laws will forever play a game of catchup, particularly in modern fast-paced technology environment. So I disagree with the "Tech exploiters are heroes, be mad at the law that allowed them to create torment nexus" - no, thank you. Let's in fact not worship emotionally-unintelligent semi-sociopathic assholes (pardon my language:) who misunderstood all the Scifi they read as kids - they crave that worship and praise, so let's withhold them please. Same goes for corporations - it's unbelievable how many people shrug their shoulders and go "well the purpose of corporation is to make profit above else" - corporation is not some universal external law, "a corporation" is a human construct and thus also malleable by humans and it's up to us to figure out what equilibrium is optimal :).
In relationships between people one interacts with directly, I agree: there are "social contracts" that aren't laws that people in the USA generally follow. Knowing about them and not following them makes someone a jerk.
Wreaking "untold damage" sounds like something where a law should exist to prevent it unless there's some incredibly important counter benefit.
The problem is that law is a malleable mater and not all interpretation and use should be accepted, there is the spirit and the letter (don't know if it's an usual expression in english).
Dunno muchabout the US tax code but in the french tax code when there is a tax break there are practical conditions and an information intention / context by the legislative assembly in the law project. If french deputies create a tax break to incentivize research and you use it to get a tax break given investment in infrastructure not at all linked to any research, even if you match the practical conditions it's considered an abuse/diverting of the law and the french tax administration can completely cancel your tax break and you'll have to sue them in our administrative justice branch to change their decision.
"spirit and the letter (of the law)" is a common phrase in English. For the next part IANAL.
It appears in the US that generally the letter of the law matters more in legal proceedings than the spirit of what was written. Though there is sometimes debate (especially around the constitution) as to what the words meant at the time the law was written which give a little legal freeway to the spirit. From what I have seen though these cases generally deal more with rights/civil liberties than laws which affect corporations/tax codes/processes/etc. There is greater freedom to interpret the spirit of the law in criminal cases (e.g. jury nullification).
That sounds like a nightmare for the business owner, and a huge boon for the legal industry (aka lawyers). Uncertainty/ambiguity in law is poisonous for someone trying to operate in the law, and that goes for everyone from big corp to individuals just trying to function in society.
These are called "General Anti-Avoidance" rules. The UK calls theirs a "General Anti-Abuse" rule but it's the same idea, probably better branding. The consequence of not having them is that huge corporations just don't pay your taxes because hey, what do you mean you wanted us to pay taxes, if you provide any means by which I can avoid that surely I must be intended to avoid it, right ?
It's not a "nightmare" unless your goal is to avoid paying taxes or the rule was very incompetently drafted. If you want to spend $5M figuring out how to avoid paying $5M in taxes and then moan that it was expensive, remember to factor in the price of the minuscule violins other tax payers will be needing.
It's a nightmare because one prosecutor may think that building out infrastructure for a technology that really might not be worth the cost is a perfectly valid research expense and a different one may not. Similar to how one person might think that the social safety net is for someone who lost the ability to provide for themselves through no fault of their own, and another might think that the social safety net is for anyone who doesn't want to work. These things need to be written down clearly expressing the intent so that society can understand and make choices appropriately. Like, if the tax code said you can have a 401k account and put a reasonable amount in it per year, then some people might think they can dump $400,000 tax free per year into their 401k while another thinks $16,500 is a reasonable amount.
Which is why people write articles like this... to draw attention to these ambiguities and how much of a boon they are for businesses with lots of resources to navigate and exploit them.
I see the article as almost obsessively focused on the details and intricacies about how Meta is attempting to avoid taxes, what the timelines are, who's involved, etc. It seems written to be read like a thriller almost: to what lengths could this evil corporation go to further their schemes? There seems to be exactly 1 paragraph about when, why, and how the laws in question came to be:
> The tax break dates to the first year of the Reagan administration, when Japan...
It seems to me that there could be a lot more discussion and analysis on what led to the laws, who was involved, efforts since to amend them, etc.
For better or for worse, keeping someone's attention is a prerequisite to giving them information.
More generally, I'm not sure that an analysis of a particular set of laws, loopholes, amendments, etc is all that valuable for a general audience. The reality is there is an ~infinite number of these things. It's actually much more important to understand the intensity of effort and sophistication that goes into finding and exploiting them.
In the EU it's typical to keep to the spirit of the law, not necessarily to the letter. It makes it less game-able. If the tax break is for research and you use it for research and not "well, technically it could be considered research if you squint hard enough", you'll be fine.
There is also a third perspective to this: explicit tax loopholes and breaks are usually introduced for a reason, and that reason is almost never to incentivize bad behavior, at least not overtly (if it is, you have a much different and more acute problem on your hands). It's typically to counterbalance some burden[0] or incentivize behavior desired by the policy makers.
So the question to ask is, what behavior is this trying to incentivize?
And now the controversial part that's always missed: could that behavior be, in fact, good for society and the very reason for the loophole to exist? Could this - or any other case with similar headline - be just a "WONTFIX, works exactly as it should"?
I ask that because a headline that has "${AI company}" and "data center" in it already blinds most readers in tech circles with rage and shuts down their critical thinking.
--
[0] - Possibly introduced by the same legislation - it's often better to pass a broad rule and special-case some specific exceptions, than try to predict and itemize every corner case in detail.
Do you want a caste system and monopoly or free markets and democracy.
If you want free markets and a voice in society then you should have a little outrage that the system is designed to concentrate and confer advantages. It’s not that avoiding taxes is illegal, it’s that it’s a bad policy choice
But then I remembered it's not like companies get these tax breaks fair and square, through pure chance, or through an arm's-length evaluation of the benefits of encouraging/discouraging these activities for the country. They get them through influencing legislators via lobbying, campaign contributions, etc.
So: no, the blame very much boomerangs back on them. If they merely happened to be eligible for tax breaks they had no hand in, it would absolutely be unfair to blame them, but that's not how such multi-billion-dollar corporations generally work.
Important context to add is that those who benefit from such tax breaks turn around and fund with their disproportionate, ill-gotten gains the very candidates who you say we should really be upset with. They also fund the media companies, both social and traditional, that are the propaganda for the status quo. They don't benefit from these laws that create loopholes in a vacuum - they're the very reason the laws continue to have loopholes in the first place!
As they say, "No war except class war", I think we are perfectly justified in being upset with the names in the headlines.
Why have you posted this comment on this article? This article is about something Meta is doing that the author considers illegal. Maybe IRS and courts will agree, maybe not, but either way your comment is simply irrelevant to the situation being reported here.
I suspect the commenter didn’t actual read the article, but is inferring from past articles.
Some of the NYT’s past articles on accounting practices have been… strange to say the least.
This one from the last year on SpaceX was one of my favorites, with one of the experts claiming without evidence that carrying forward operating losses was only ever intended for companies struggling in difficult times:
"A Federal Law Gray Area Allows Meta a Potentially Massive Tax Break."
... or something similar.
The focus could be less about Meta and more about the law. It's not like there's something special about Meta. The vast majority of corporations would do this if it was profitable.
I wouldn't say the author thinks it is illegal. I think the author is reporting on Meta's tax approach that is "untested" and possibly will be challenged by the IRS.
Regardless, the overwhelming majority of the article is about Meta's actions: when, why, how. Very little of it is about the laws governing the taxes, who passed them, when, what's been proposed to amend them, etc.
You must be new here. When has a Hacker News ever commented anything related to the article itself? Just be gracious that the top comment isn’t a dear diary comment that so frequently appears.
Betting on people not reading the article (can you blame them? It’s behind paywall) and will just subscribe to the vaguely agreeable (to some) view they’re presenting, in order to sweep the substantial story under the rug. And it’s working.
"Hey, don't discuss the substance of the article. Let's talk about something only slightly related, and I'll write it in a controversial manner and with lots of unnecessary text so everyone gets off track and nobody remembers that Meta has gotten caught — once again — being bad for society!"
You read the whole article and think the authors concluded it was legal? you have to read between the lines when they write "aggressive tax strategies." Frequently newspaper legal departments do not want journalists to use the word "fraud" because that is actionable under libel laws.
In the absence of a willing regulatory body we poison public sentiment against these massive companies not paying their fair share. Both approaches are valid.
A pattern I notice in well-educated, intellectual people seems like the habitual equivalent of blaming winners at a casino, and using that to give the casino more power.
To an extent it's depressing to see people being so average to create apps or platforms and then become very sharp at distorting the latest tech for .. financial optimization.
Yes, that's what I mean. That said - Meta is likely knowingly breaking rules, which is unethical, they deserve blame as well, but the framing should be more holistic.
I disagree, this is an article about Meta’s finance department being full of risk averse accountants and that being used as validation, when they shouldn't be
The IRS does enforce this credit
Moving beyond that, its super easy to rationalize how these are used for experiments
People post framework after framework every day here that eeks more performance out of the same inference hardware
That will satisfy the experiments over operations need easily
The IRS isn’t the authority when they disagree, the courts are. And in court you can tell the IRS to pound sand and tell reporters to take it up with Congress
-- Meta's accounts are not 'risk averse' - if they were, they wouldn't be claiming the credit.
-- ""People post framework after framework every day here that eeks more performance out of the same inference hardware
That will satisfy the experiments over operations need easily""
No, not even remotely.
The easiest way to measure would be 'training vs inference' - and almost all training is R&D and almost all inference is Ops.
If we had to do something crudely.
The implication that 'the product itself is a market experiment' is absurd.
That's not the kind of R&D that gets tax credits.
This is a very simple story: Corporate entities stretching the tax code in ways it was not intended, until the authorities tell them not to. The authorities are manipulated by politics.
Yes, the move causes 'concern' with the 'finance department' because it's probably illegal.
Surely they are themselves as individuals risk averse, they usually all are, I mean to imply this action is not one of 'risk aversion' obviously, it's the opposite.
Surely Zuck is the one pushing his CFO to do this.
Its not clear, the IRS will presumably decide if, for example, Zuck gets an R&D tax deduction from his salary because he contributes to code, which no other large tech company has tried to claim.
Meta is the what makes this more interesting. It tells the story of a single company highlighting the overall problem. This is journalism 101. Anyone reading this is going to understand the issue isn't that Meta is breaking a law, but rather that the laws are setup in such a way that Meta can use them like this, and probably has undo influence to get it written this way.
Further, while they are doing this, it might not be what lawmakers intended.
Sorry, but this is all basic journalism going back decades.
Benefits of being able to pay a lot of smart people good salaries to lower your tax obligations.
This example just happens to use a handful of things that are in the current zeitgeist of concern (max eyeballs). Meta + Data Centers + AI + Billions + Tax = great ad dollars.
I have to imagine that NYT has an internal metric ad dollars / article. I'd be curious to see the top 10 money makers.
Why do you think the IRS is structured the way it is? Zuck and his cohort regularly contribute to defang the IRS. Or did you miss the part where he donated to the president and then the IRS became significantly less capable of going after the largest tax avoiders?
> This is not about Zuck it's about the IRS and probable political interference.
This is not about Zuck, it's just about the probable political interference that Zuck funded.
The puppet on the left hand isn’t to blame, it’s the puppet on the right hand! No, it’s definitely the left. Let’s ask them…wait, they each blame each other.
It's just fraud, but they just know the current government will not prosecute so it's 'legal'. If they do, eventually, get held accountable the fine will likely be less than the savings.
>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.
I hate to break this to you, but it’s the same people. Zuck pays lobbyists to pay off his politicians, who write in the loopholes Zuck wants. The US is considered a “flawed democracy” for a reason. The current tax system is designed plutocratically.
I will call out cronyism when I see it, regardless of whether bought politicians have decided it’s legal or not.
> If folks are mad about actions that are legal, it makes zero sense to be mad at the actor.
Why not? Society is filled with norms we expect others to follow, from letting pregnant women sit on public transport to open the door for people in wheelchairs, or what not.
Not sure why it's so different about how you pay taxes or what you do with your money? If you're rich and live better than others, it's usually a (good) norm that we expect these people to give away more of their wealth compared to people live paycheck to paycheck.
It also makes sense to get mad at people who break the societal norms about taxes, where the point is that we all fund our society together, and some people pay more, some people pay less, not based on who has the most lawyers to find loopholes, but based on who can actually afford to pay more.
Musk volunteered to illegally fire a bunch of federal employees on the grounds that gosh darn it, the deficit's too damned high, we need to get these troglodyte federal employees off the payroll and whip this place into shape and run it like a for-profit business because those are never ever inefficient.
If he's going to leave a bunch of people without a paycheck and health insurance through arbitrary firings because we're too deep in debt as a country, then he can also recognize that there's never been a business that has turned around a deficit without increasing revenues.
Zuck's not a part of the firings but seems to at least humor such downsizing efforts while existing in the MAGA orbit.
Trump himself may very well have committed tax evasion when he claimed a write-off for a casino that he had an interest in while also taking a benefit from the process.
They all do it with the same excuse: money in private hands is better at creating economic growth than money in government hands. There's a point at which this is no longer true, especially when you take into account government debt.
If people just paid their g*ddamned taxes we're in a much shallower fiscal hole as a country than we are now. We're talking hundreds of billions in revenue each year [0]
This is a weird comment in relation to this article.
> yes TFA implies that Meta is breaking the law, I'm not talking about situations where entities break the law
Right, so what is the point of your comment? The article is noting that Meta is really, really pushing the limits, claiming capital investments are "R&D". It is most certainly outright tax evasion, though we all know the US is so hyper-corrupt and busted now that Zuck just needs to call Trump and tell him how great he is and nothing will be done about it. That's ignoring that the IRS was so hollowed out, purposefully, that everyone is going wild with tax evasion because they know it not only won't be caught in the first place, it would never be enforced.
The US is fully and completely into the kleptocracy stage, so some very strange rant about how companies can lawfully use deductions seems perverse.
Did you read the article? Meta themselves aren't confident that what they're doing is legal, and they're very clear about the fact that it might be clawed back by the IRS because they're abusing a tax credit intended to be used for experimental research by putting their massive data centre build out into that "experimental research" bucket.
If a company's accountants and lawyers are concerned enough to bury disclosures in their securities filings to cover themselves, but the company leadership is brazen enough to proceed anyway, I'd say that's plenty of justification for people to be mad at the executive leadership.
> If folks are mad about actions that are legal, it makes zero sense to be mad at the actor.
Why does it make zero sense to be mad about immoral behavior from greedy people? If I see somebody come into my grocery store and grab every sample on a sample tray and stuff them in their pockets, I'm going to be upset at them, not that there aren't any laws against sample hoarding.
Laws can't hope to account for every single action we want to discourage people from doing. In the meta case, they do account for it, and they're likely breaking the law.
> 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.
Spend millions on taking Amazon to court -> Spin months getting congressional support for law change -> two years later, Amazon pays a settlement and the government buys 200 MOABs, Amazon now does a double dutch/ irish/ Cayman islands tax evasion. The game continues.
For these companies, it's totally worth doing illegal tax shit. Even if they are forced to pay, they pay it years down the line, so the current cost of capital starts to come into play.
To satisfy the experiments vs operations criteria, all they have to do is deploy a software update to the inference library for slightly higher tokens per second, and compare, you know, in an experiment
This is something we all do
pitchforks down, its the reporter and the non technical accountants that are wrong and both groups should be replaced
There's nothing good about taking from people who work hard to give to people who live off other people's hard effort while contributing nothing to society.
You sound like you’ve never lived without money. Most people drawing welfare payments are working full time or multiple part time jobs that fail to pay a living wage. Taking money back from people who work hard to exploit and extract value from everyone beneath them merely rights a power imbalance. It’s also incredibly narrow minded to believe that the only measure of contributing to society is a person’s income.
> Yeah... as a US citizen and taxpayer I think I'd like that $4 billion back.
It was never yours in the first place. It was their money they kept, not money given to them by the government. I don’t know why this distinction is so difficult for people.
Your tax burden is a responsibility to society, and not paying your share is benefiting from systems without carrying your own weight, effectively stealing from the system.
> I don’t know why this distinction is so difficult for people.
It's only a distinction if you don't understand what the purpose of taxes are.
This. How many of us in this thread wouldn't take advantage of legal loopholes to pay less in taxes? How many corporations are doing the same?
I'd guess nearly every citizen tries to pay the least amount in taxes they possibly can.
The NYT article strikes me as disguised envy: "they make more money than us, so let's demonize them for doing something we all do: minimizing our tax burden."
It's not envy; the legacy media have a hate boner for social media because social media destroyed their monopoly on new information transmission and damaged their bottom line. I.e. an extreme conflict of interest.
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.
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
A B300 has 8 gpus, 2? xeon processors, and 2 fancy nics. Assuming all of those computer chips are equal value cause averages, that's ~ $4k per chip which fits the 'thousands per chip' pretty well.
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.
This article is pointing out that the practice is almost certainly illegal. These data centers are being used for production workloads, not experiments.
In the court of law, you are presumed to be innocent until proven guilty.
You are making the mistake of assuming Meta is already guilty without the outcome. Very unlawful and making decisions without metrics/outcome unlike sane engineers/scientists.
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.
bro it’s a data center. This is commodity hardware. Nothing innovative is happening here. Meta is abusing the tax code and hoping their lobbying efforts shield them
>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)"
"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.
We aren't expected to. We (or our elected representatives) passed a law saying that experimental spending gets tax breaks. And I don't really see an argument that LLMs aren't in an experimental phase.
I'm happy to make that argument. LLMs were experimental in 2023. It's 2026 now, and enormous numbers of people use them on a daily basis (ChatGPT has 1.2 billion weekly users now, according to Sam Altman at OpenAI DevDay).
They're only experimental in the way that computers are still experimental, since we continue to find new ways to use computers.
I mean this is clearly a huge stretch. Presumably the intent of this law is to incentivize novel innovation. In this case we incentivize nothing. Data centers are commodities.
LLMs are not and Llama did pretty much exactly what this type of program encourages. It was a pilot that made no money, was thrown away, and spurred a ton of independent research.
This is also a weird split brain with HN. Half the front page is mocking companies for throwing away money on AI. That Chinese models (which surely got a huge boost from LLaMa) are going to render all this investment a gigantic loss.
Most people don't pick up the bill. Anyone net tax-negative does not pick up the bill. Facebook definitely pays more tax than me, both as a corporation and from all the employees they employ.
Some training runs would qualify. I’m sure they are doing some qualifying research but that isn’t even what they claim to be using all these chips for. They are using them for production workloads and claiming that is experimental.
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.
That's not that true in the US. In fact, most US rich "avoid" taxes because their income is capital gains, NOT by avoiding taxes on cash income (this is why CEOs don't have high cash compensation).
He's French and used to the rich avoiding taxation by changing jurisdictions in Europe. Well, the US has global income taxation, for better or for worse, you are on the hook everywhere. It's a different world.
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.
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.
Public shame and malice towards individuals who violate expected norms is actually a fairly good deterrent toward would-be bad actors. I'm sure there are many millions of instances per day where people decide not to do untoward things because they care about their reputations.
But on the flip side, you are also correct. It's important that public attention also be directed towards the systems that incentivize and enable bad behavior, and the people who create those systems. Patching laws, shaping incentives, and empowering a distributed system of judges and courts to handle violations is ultimately much cleaner, fairer, predictable, wide-reaching, and (therefore) more effective than disorganized mob-led shame campaigns.
Unfortunately, several things work against this:
1. It requires much more time, education, intelligence, and emotional self-control to care about system design over simply shaming others. These four things aren't abundantly common in most populaces.
2. Lawmakers and politicians have their own incentives to redirect public attention away from themselves. And they can take advantage of #1 to do this, which is basically what demagoguery is.
3. Similarly, media companies have their own incentive, which is to increase clicks and shares and subscribers. And appealing to base emotions with strong headlines works 100x better than discussing complex laws and systems. Research shows that the #1 emotion that leads to sharing online is outrage.
The problem is two closely related issues, IMO... First, these rules are probably too broad/vague and easily abused. And second, it's too difficult/costly for the IRS to successfully challenge when a company does abuse these regulations.
I would say that we get the one (public outrage at specific companies/people) but not the other (focus on the legislation). Unfortunately, the latter has the controlling direct effect.
I do agree for most people. But the problem is that the worst people have no shame. People like Musk, Bezos, Zuckerberg, etc., used to try to fake humility and act like normal people, but that ship has sailed and now they seem to take glee in acting like shitbags and getting away with it. Which is why we need laws.
You are the CFO of Meta and you have have a choice to make in your tax reporting: option A and option B. Both are esoteric and don’t relate much to how a normal person pays tax or thinks about finance, both are legal, but option B leads to billions of dollars less in your bill. Would HN posters really choose option A?
If there’s a problem it’s that there is so much complexity and so many legal but complicated choices you can make that change how much tax you pay, and only the very rich, and very large corporations, have the ability to explore those options (of course the law is also skewed towards giving them loopholes and tax breaks that don’t apply to a normal person)
Jumping from "money making via tax breaks" to "murder" is quite a jump, also. These are along a spectrum of choices.
And if it wasn't illegal, some immoral entity would outcompete you by killing all of their rivals (including you).
The whole point of the law is to standardize morals so immoral actors don't gain advantage.
People who commit murder wantonly are generally untrusted and/or shunned. Being banished is really dangerous, so people tend not to go on more killing sprees even without formal laws
‘Everyone should be good because it’s the right thing to do, and making them not be murderous assholes is exhausting’.
Which hey, that would be nice, but it’s clearly not the case - as demonstrated by the non-zero murder rate all the time.
Evolution and natural selection does not care about morality.
Why should humans?
“because humans are better than apes” …? Weak argument.
Without some moral system, we would live like every other animal, and don’t mistake that for a judgement.
This has been presented in fiction countless times, and those fiction is not made up from thin air.
Because we don’t, our representatives work for companies like Meta, not ordinary people.
I think a better question is, how effective is that compared to legal requirements.
The general assumption should be that at least some people/corporations will do ANYTHING that is legal as long as it is profitable.
Don't worry, my anger is limitless and I can direct it at both corporations and corporations at the same time.
"If folks are mad about actions that are legal, it makes zero sense to be mad at the actor."
There are people with mindset "I will try to be an overall decent human being and maintain some awareness and empathy of others", and there are the "I will be as much of a selfish asshole as the legal system allows me to, and wreak untold damage in the endless game of whack-a-mole".
I think in fact more of us should be gunning after the second kind :). To paraphrase you, It makes zero sense for me to be OK with fundamentally anti-social, anti-humanity humanoids.
1. By being upset at a behaviour, we can start the machine / process to amend the laws. The laws are not permanent, universal, absolute, or same as morality/utility. Noticing undesirable behaviour and raising a stink is how the laws get amended.
2. BUT/AND... laws will forever play a game of catchup, particularly in modern fast-paced technology environment. So I disagree with the "Tech exploiters are heroes, be mad at the law that allowed them to create torment nexus" - no, thank you. Let's in fact not worship emotionally-unintelligent semi-sociopathic assholes (pardon my language:) who misunderstood all the Scifi they read as kids - they crave that worship and praise, so let's withhold them please. Same goes for corporations - it's unbelievable how many people shrug their shoulders and go "well the purpose of corporation is to make profit above else" - corporation is not some universal external law, "a corporation" is a human construct and thus also malleable by humans and it's up to us to figure out what equilibrium is optimal :).
Wreaking "untold damage" sounds like something where a law should exist to prevent it unless there's some incredibly important counter benefit.
Dunno muchabout the US tax code but in the french tax code when there is a tax break there are practical conditions and an information intention / context by the legislative assembly in the law project. If french deputies create a tax break to incentivize research and you use it to get a tax break given investment in infrastructure not at all linked to any research, even if you match the practical conditions it's considered an abuse/diverting of the law and the french tax administration can completely cancel your tax break and you'll have to sue them in our administrative justice branch to change their decision.
It appears in the US that generally the letter of the law matters more in legal proceedings than the spirit of what was written. Though there is sometimes debate (especially around the constitution) as to what the words meant at the time the law was written which give a little legal freeway to the spirit. From what I have seen though these cases generally deal more with rights/civil liberties than laws which affect corporations/tax codes/processes/etc. There is greater freedom to interpret the spirit of the law in criminal cases (e.g. jury nullification).
It's not a "nightmare" unless your goal is to avoid paying taxes or the rule was very incompetently drafted. If you want to spend $5M figuring out how to avoid paying $5M in taxes and then moan that it was expensive, remember to factor in the price of the minuscule violins other tax payers will be needing.
> The tax break dates to the first year of the Reagan administration, when Japan...
It seems to me that there could be a lot more discussion and analysis on what led to the laws, who was involved, efforts since to amend them, etc.
More generally, I'm not sure that an analysis of a particular set of laws, loopholes, amendments, etc is all that valuable for a general audience. The reality is there is an ~infinite number of these things. It's actually much more important to understand the intensity of effort and sophistication that goes into finding and exploiting them.
So the question to ask is, what behavior is this trying to incentivize?
And now the controversial part that's always missed: could that behavior be, in fact, good for society and the very reason for the loophole to exist? Could this - or any other case with similar headline - be just a "WONTFIX, works exactly as it should"?
I ask that because a headline that has "${AI company}" and "data center" in it already blinds most readers in tech circles with rage and shuts down their critical thinking.
--
[0] - Possibly introduced by the same legislation - it's often better to pass a broad rule and special-case some specific exceptions, than try to predict and itemize every corner case in detail.
If you want free markets and a voice in society then you should have a little outrage that the system is designed to concentrate and confer advantages. It’s not that avoiding taxes is illegal, it’s that it’s a bad policy choice
But then I remembered it's not like companies get these tax breaks fair and square, through pure chance, or through an arm's-length evaluation of the benefits of encouraging/discouraging these activities for the country. They get them through influencing legislators via lobbying, campaign contributions, etc.
So: no, the blame very much boomerangs back on them. If they merely happened to be eligible for tax breaks they had no hand in, it would absolutely be unfair to blame them, but that's not how such multi-billion-dollar corporations generally work.
As they say, "No war except class war", I think we are perfectly justified in being upset with the names in the headlines.
Some of the NYT’s past articles on accounting practices have been… strange to say the least.
This one from the last year on SpaceX was one of my favorites, with one of the experts claiming without evidence that carrying forward operating losses was only ever intended for companies struggling in difficult times:
https://www.nytimes.com/2025/08/15/technology/spacex-musk-go...
But yeah, this article seems to be pointing out something that may be legitimately wrong, and Meta has disclosed that as a risk.
> (yes TFA implies that Meta is breaking the law, I'm not talking about situations where entities break the law).
then
> The funny thing is that a more accurate title for these pieces would be, "Federal Government Allows [tax-paying entity] a Massive Tax Break."
The funny thing is more accurate titles for articles that are unlike this one is something unlike this one's title? Sure, whatever.
"A Federal Law Gray Area Allows Meta a Potentially Massive Tax Break."
... or something similar.
The focus could be less about Meta and more about the law. It's not like there's something special about Meta. The vast majority of corporations would do this if it was profitable.
Regardless, the overwhelming majority of the article is about Meta's actions: when, why, how. Very little of it is about the laws governing the taxes, who passed them, when, what's been proposed to amend them, etc.
It's a standard deflection tactic.
"Hey, don't discuss the substance of the article. Let's talk about something only slightly related, and I'll write it in a controversial manner and with lots of unnecessary text so everyone gets off track and nobody remembers that Meta has gotten caught — once again — being bad for society!"
The general assumption should be that at least some people/corporations will do ANYTHING that is legal as long as it is profitable.
This is not about Zuck it's about the IRS and probable political interference.
If this were merely a company using a regular tax deduction there would not be much of a story.
The story is that these GPUs are not being used for research but Ops and therefore should be subject to taxation.
The IRS does enforce this credit
Moving beyond that, its super easy to rationalize how these are used for experiments
People post framework after framework every day here that eeks more performance out of the same inference hardware
That will satisfy the experiments over operations need easily
The IRS isn’t the authority when they disagree, the courts are. And in court you can tell the IRS to pound sand and tell reporters to take it up with Congress
-- Meta's accounts are not 'risk averse' - if they were, they wouldn't be claiming the credit.
-- ""People post framework after framework every day here that eeks more performance out of the same inference hardware
That will satisfy the experiments over operations need easily""
No, not even remotely.
The easiest way to measure would be 'training vs inference' - and almost all training is R&D and almost all inference is Ops.
If we had to do something crudely.
The implication that 'the product itself is a market experiment' is absurd.
That's not the kind of R&D that gets tax credits.
This is a very simple story: Corporate entities stretching the tax code in ways it was not intended, until the authorities tell them not to. The authorities are manipulated by politics.
Surely they are themselves as individuals risk averse, they usually all are, I mean to imply this action is not one of 'risk aversion' obviously, it's the opposite.
Surely Zuck is the one pushing his CFO to do this.
okay
Further, while they are doing this, it might not be what lawmakers intended.
Sorry, but this is all basic journalism going back decades.
This example just happens to use a handful of things that are in the current zeitgeist of concern (max eyeballs). Meta + Data Centers + AI + Billions + Tax = great ad dollars.
I have to imagine that NYT has an internal metric ad dollars / article. I'd be curious to see the top 10 money makers.
> This is not about Zuck it's about the IRS and probable political interference.
This is not about Zuck, it's just about the probable political interference that Zuck funded.
The bias and side of arguing how the public good is being circumvented -- is that incorrect?
Well who paid them to put the loopholes in? It wasn't regular people like you.
This seems incredibly naive in light of what we’ve seen with the Epstein Files
...why not both?
I will call out cronyism when I see it, regardless of whether bought politicians have decided it’s legal or not.
Let’s not be naive here.
Why not? Society is filled with norms we expect others to follow, from letting pregnant women sit on public transport to open the door for people in wheelchairs, or what not.
Not sure why it's so different about how you pay taxes or what you do with your money? If you're rich and live better than others, it's usually a (good) norm that we expect these people to give away more of their wealth compared to people live paycheck to paycheck.
It also makes sense to get mad at people who break the societal norms about taxes, where the point is that we all fund our society together, and some people pay more, some people pay less, not based on who has the most lawyers to find loopholes, but based on who can actually afford to pay more.
Edit: I stand corrected[0]
0: https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...
https://corpgov.law.harvard.edu/2012/06/26/the-shareholder-v...
Just low-trust society things.
Musk volunteered to illegally fire a bunch of federal employees on the grounds that gosh darn it, the deficit's too damned high, we need to get these troglodyte federal employees off the payroll and whip this place into shape and run it like a for-profit business because those are never ever inefficient.
If he's going to leave a bunch of people without a paycheck and health insurance through arbitrary firings because we're too deep in debt as a country, then he can also recognize that there's never been a business that has turned around a deficit without increasing revenues.
Zuck's not a part of the firings but seems to at least humor such downsizing efforts while existing in the MAGA orbit.
Trump himself may very well have committed tax evasion when he claimed a write-off for a casino that he had an interest in while also taking a benefit from the process.
They all do it with the same excuse: money in private hands is better at creating economic growth than money in government hands. There's a point at which this is no longer true, especially when you take into account government debt.
If people just paid their g*ddamned taxes we're in a much shallower fiscal hole as a country than we are now. We're talking hundreds of billions in revenue each year [0]
[0] https://bipartisanpolicy.org/explainer/the-tax-gap-what-it-i...
It is valid to be frustrated _both_ with the billionaires for bribing the government into having these rules _and_ the government for doing it.
It is borderline insanity to admonish people for criticizing the powerful entities who are the reason the loopholes exist.
> yes TFA implies that Meta is breaking the law, I'm not talking about situations where entities break the law
Right, so what is the point of your comment? The article is noting that Meta is really, really pushing the limits, claiming capital investments are "R&D". It is most certainly outright tax evasion, though we all know the US is so hyper-corrupt and busted now that Zuck just needs to call Trump and tell him how great he is and nothing will be done about it. That's ignoring that the IRS was so hollowed out, purposefully, that everyone is going wild with tax evasion because they know it not only won't be caught in the first place, it would never be enforced.
The US is fully and completely into the kleptocracy stage, so some very strange rant about how companies can lawfully use deductions seems perverse.
If a company's accountants and lawyers are concerned enough to bury disclosures in their securities filings to cover themselves, but the company leadership is brazen enough to proceed anyway, I'd say that's plenty of justification for people to be mad at the executive leadership.
Why does it make zero sense to be mad about immoral behavior from greedy people? If I see somebody come into my grocery store and grab every sample on a sample tray and stuff them in their pockets, I'm going to be upset at them, not that there aren't any laws against sample hoarding.
Laws can't hope to account for every single action we want to discourage people from doing. In the meta case, they do account for it, and they're likely breaking the law.
> 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.
For these companies, it's totally worth doing illegal tax shit. Even if they are forced to pay, they pay it years down the line, so the current cost of capital starts to come into play.
This is something we all do
pitchforks down, its the reporter and the non technical accountants that are wrong and both groups should be replaced
Also I’m confused, do you want a regressive tax system?
It was never yours in the first place. It was their money they kept, not money given to them by the government. I don’t know why this distinction is so difficult for people.
> I don’t know why this distinction is so difficult for people.
It's only a distinction if you don't understand what the purpose of taxes are.
I'd guess nearly every citizen tries to pay the least amount in taxes they possibly can.
The NYT article strikes me as disguised envy: "they make more money than us, so let's demonize them for doing something we all do: minimizing our tax burden."
How many of us in this thread can afford lobbyists to bribe lawmakers to change the law to benefit ourselves?
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.
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.
“Thousands.” Yes, in the same way that the earth is thousands of years old. 4.5 million thousands, but still, thousands.
"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.
In the court of law, you are presumed to be innocent until proven guilty.
You are making the mistake of assuming Meta is already guilty without the outcome. Very unlawful and making decisions without metrics/outcome unlike sane engineers/scientists.
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.
Look at Europe for the opposite, and the disastrous consequences there.
bro it’s a data center. This is commodity hardware. Nothing innovative is happening here. Meta is abusing the tax code and hoping their lobbying efforts shield them
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)"
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.
They're only experimental in the way that computers are still experimental, since we continue to find new ways to use computers.
2023-09: "Meta AI is a new assistant you can interact with like a person, available on WhatsApp, Messenger, Instagram" - https://about.fb.com/news/2023/09/introducing-ai-powered-ass...
2024-04: "You can use Meta AI in feed, chats, search and more across our apps" - https://about.fb.com/news/2024/04/meta-ai-assistant-built-wi...
2024-09: "You can now use your voice to talk to Meta AI on Messenger, Facebook, WhatsApp and Instagram DM, and it’ll respond back to you out loud" - https://about.fb.com/news/2024/09/metas-ai-product-news-conn...
I agree that at some point it stopped being a pilot and started being a product. So not that interested in arguing exactly when that happened.
This is also a weird split brain with HN. Half the front page is mocking companies for throwing away money on AI. That Chinese models (which surely got a huge boost from LLaMa) are going to render all this investment a gigantic loss.
Companies get a tax break on risks. If they pan out, they keep the profits and the tax break.
Neoliberalism is a scourge.
You can argue that they should be paying those taxes under the current law, but it's not a subsidy.
Hint: you pick up the bill
Can we think of an example of computing hardware/software that would qualify for this tax credit?
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.
He's French and used to the rich avoiding taxation by changing jurisdictions in Europe. Well, the US has global income taxation, for better or for worse, you are on the hook everywhere. It's a different world.