Few industries benefited from the global COVID-19 pandemic and remote-work culture as much as the videoconferencing software sector, with Zoom leading the pack. While the company made $663.9 million in pre-tax profits in the US in 2020 (versus $16.3 million the previous year), it paid $0 in federal income taxes according to its filings with the Securities and Exchange Commission.
The Institute of Taxation and Economic Policy pointed out Zoom’s gains in a news release, noting that the company made “lavish use of executive stock options” to cut its worldwide income taxes by $300 million.
Noting that “virtually every tech giant in the last decade” has made use of this method, the ITEP report says companies compensate leadership with stock options allowing them to write off huge expenses for tax purposes.
The ITEP also said that accelerated depreciation (where businesses write off the cost of investment in equipment faster than the equipment wears out) and research and development tax credits also helped Zoom reduce its tax liability.
Reactions to Zoom’s tax revelation were critical.
"If you paid $14.99 a month for a Zoom Pro membership, you paid more to Zoom than it paid in federal income taxes even as it made $660 million in profits last year - a 4,000 percent increase since 2019. Yes. It's time to end a rigged tax code that benefits the wealthy & powerful," tweeted Vermont Senator Bernie Sanders on Sunday.
