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.
I can even give them all my tax money, but if I also give them a list of items they deem to be a tax deduction, they will give me my money back. I don't even need to really ask for it except by putting it in the paperwork. I don't need to say "and therefore I believe I have overpaid by £X".
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)
Which they probably aren't, half the time, but news services wants you to think they might, because your rage is their ad revenue.
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
Yes, people are naturally social and naturally enforce social norms. But this natural ability doesn't scale beyond a tribe (see also: Dunbar's numbers). Our natural social patterns only work when everyone in the group knows everyone else and they all interact frequenlty.
Laws didn't invent morality or punishing antisocial behavior. Laws are what allows them to scale and support societies of millions, where most of your daily interactions are with strangers you'll probably never again see in your life.
‘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.
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 $5M in taxes and then moan that it was expensive, remember to factor in the price of the minuscule violins other tax payers will be needing.
Unequivocally my experience.
> The tax break dates to the first year of the Reagan administration, when Japan...
It seems to me that there could be a lot more discussion and analysis on what led to the laws, who was involved, efforts since to amend them, etc.
More generally, I'm not sure that an analysis of a particular set of laws, loopholes, amendments, etc is all that valuable for a general audience. The reality is there is an ~infinite number of these things. It's actually much more important to understand the intensity of effort and sophistication that goes into finding and exploiting them.
As they say, "No war except class war", I think we are perfectly justified in being upset with the names in the headlines.
Seriously though, while I agree it's all ultimately class war, I'd pay attention to the fact that everyone's just getting enraged because some news source says you should, and we all know that news publishing is an absolute paragon of truth and accuracy.
The actual truth here is probably just: working as intended, for perfectly good, mundane reasons, and you would even think it's wise if you read about it in an econ book, but because it says "${AI company}" and "data centers" and is a news headline, everyone is suddenly full of rage.
I'll remember this next time I get cheated on. After all, cheating is legal, so why should I be mad. Thank you.
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.
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!"
We are. It is their class that is in charge of the legal system. The loopholes exist for them because they are rich and rich people own the government. To pretend that there is a meaningful distinction between Mark Zuckerberg and Chuch Schumer just because one is "in government" and the other is a "private citizen" is absurd and naive. Chuck Schumer and the rest of the legislature work for Zuckerberg, et. al.
It's like saying "you can be mad at OJ's lawyer, but not OJ". OJ hired the lawyer, his actions are for OJ's benefit.
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.
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
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.
it moves liability off of the tax filer onto them and one can also add another layer with the tax lawyer
but the liability does exist, so they have to weigh their compensation with the weight of the government
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...
The tax evasion label is a handy shibboleth for [b|t]illionaire cohort.
No ruleset can cover every edge case, eventuality. Is hacking the tax code honoring the spirit of the law? Is it fair, just, good citizenship?
IANAL but I think there's a legal term for abiding by the obvious intent of the ruleset, public good, social norms.
PS- A take cut for me is a tax hike for thee (and your children's children). All this neoliberal supply side voodoo economics nonsense a) does not grow the economy and b) creates deficits which condemn our children to lives of unending usury.
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?
I agree we should not let the rich and powerful corrupt our government. I don't know your mind, but I have heard this argument before, usually by folks who consider such efforts to be government overreach. This also ignores the placement of burden in such a corrupting influence; that it is the fault of government allowing itself to be corrupted, not the "selfish striving" person/business/organization. I guess amoral sociopathic behavior is permitted behind the corporate veil and there is nothing that can or should be done about it.
[0] From Ron Chernow's biography of Alexander Hamilton.
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.
(Claims that a company is breaking the law are also very much not unlawful.)
Have I ever mentioned that it's unlawful to think that that someone is guilty?
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.
ironically, it's especially easy for non-rich blue collar workers to avoid income taxes. Anyone who has ever hired a contractror/mechanic etc and then found they only accept zelle, cashapp, or something similar knows this. Another way to spot this is when someone whips out a roll of 100s to pay at the grocery store. If you only deal in cash and don't have a w2 the IRS has no way to know how much income you have and therefore no way to know how much tax you owe.
This is also how kids get basically free rides to college when their household income is actually high enough to deny any need based financial aid. None of it is reported to the IRS.
edit: i guess another way to think about it is imagine asking your local weed dealer how much revenue is set aside to pay for their income tax at the end of the year.
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.
(And yes I say this knowing full well how disregarded entities and whatnot currently work. So please no "well ackshuallies" that merely bake in assumptions from current tax law)
Even if you taxed corporate profits at 100% (which of course, takes the stock market to zero and effectively ends the economy, but ignoring that) you have a huge gap.