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Facebook earned about $1.1 billion in their first year as a public corporation. The corporate income tax rate is 35%. That means Facebook should have forked over about $385 million in taxes, but instead is getting a tax refund of about $429 million.

In order to pay for that $814 million subsidy, the Federal Government would have to fire more than 10,000 workers.

To put this in perspective, Facebook employs about 3500 workers.

When the government writes a check to Facebook for $429 million, that is government spending. How come this spending isn't on the chopping block?

While I'm at it, let's examine why Facebook gets this tax refund. It is because they handed out massive stock options to executives, the value of which they get to deduct when exercised.

It is true that exercising stock options creates a taxable event for the executive, but that income is a capital gain taxed at the rate of 15% for 2012. So the executive gets to pay only 15% (assuming they have no way of avoiding, which I wouldn't necessarily assume given Mitt Romney's $100 million IRA) on the value of the options, but the corporation gets to deduct that same value at a savings of 35% on their tax bill. So, the act of a corporate executive exercising a stock option creates an obligation on behalf of taxpayers to pay a net 20% of the value of those options to the issuing corporation. Pretty sweet deal!

To pay for this sweet deal, Republicans propose we fire government workers, cut services and income to the poor and the elderly, and literally take food out of the mouths of hungry children.

Worse still, they are getting away with it.

1:23 PM PT: Comments suggest the value of stock options are taxed as ordinary income, not capital gains. My bad. I dispute the concept of the value of stock options being a company expense. That is an accounting trick. There is no expense to the company, other than the time it takes accountants to make entries on a keyboard. The value of stock options is wealth created out of thin air, becuase the market price for a stock happens to be more than the option price.

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