BTW…on the tax thing, it’s not a Tesla thing it’s a Us tax loophole thing in 2 different ways so I’m not sure why this Anders guy doesn’t say that. And it’s a loophole that Congress should look into to fix if possible on the booking of overseas profits. The past losses write off I’m fine with.
"That defies common sense, but it does not defy the US tax code," said Martin Sullivan, chief economist for Tax Analysts, a nonprofit tax publisher, and an expert on US corporate tax practices.
Moving profits overseas — on paper
Sullivan said he believes the $130 million loss on its US operations is most likely due to a common practice for US multinational corporations: structuring their operations so that overseas subsidiaries are the ones reporting income, leaving the US operation to have little or no taxable income to report.
For example, a company can assign its intellectual property to one of those foreign entities, and charge its US unit a fee for using that property. And thus, the foreign operation is very profitable, while the US company — burdened with "costs" to the company itself — reports either a loss or very little income.
"It's a US multinational thing. It's very common. It's almost malpractice not to do that," said Sullivan.
A recent report from the US Department of the Treasury found 61% of the international profits of US multinational companies are booked in seven small countries -- Bermuda, the Caymans, Ireland, Luxembourg, the Netherlands, Singapore and Switzerland -- known as tax havens. It's a practice that many elected officials and the Biden administration have vowed to crack down on.
Considering the substantial financial help that Teslahas long received from government support for its electric cars, the company doesn't have to use a shell game of offshoring its profits to avoid paying taxes. Instead, it could use past losses to shelter its current income from any tax bill.
ech companies that lose money for years before turning a profit — such as Amazon (AMZN) — have used this technique. So have old line companies that have financial problems, such as all US airlines, which will probably not have to pay taxes for years to come after recording billions of dollars in losses during the pandemic — despite receiving billions in federal help.
Similarly, Tesla's US automaking competitors lost so much money in the first decade of this century that General Motors (GM) and Chrysler needed government bailouts. Despite those bailouts, neither company paid taxes for several years once they were again profitable