IRS considers taxing perks at Google, other tech firms(mercurynews.com)
mercurynews.com
IRS considers taxing perks at Google, other tech firms
http://www.mercurynews.com/business/ci_22982220/irs-is-looking-into-whether-free-meals-at
59 comments
> If you don't do that then the optimum financial endgame for a company like Google is to basically turn into some mega corporation that pays its employees almost minimum wage, but provides "free" meals, housing, food, transportation etc. which they don't have to pay any taxes on because it's not being sold to anyone and can all be written off as internal costs.
What I find interesting about this is that that seems to be the route Google was going anyway. I remember reading a while back about Google building housing near Mountain View to house employees.
In a way, it's not too different from the old company towns of the industrial revolution (see Pullman Strike) and there is a certain logic to it:
If you want to retain people, hire them right out of college and drop them into a situation that is very much like the university experience. Long hours, lots of work, but free food and you can more or less walk to work and see your friends on a regular basis. It could be pretty attractive to someone straight out of college.
What I find interesting about this is that that seems to be the route Google was going anyway. I remember reading a while back about Google building housing near Mountain View to house employees.
In a way, it's not too different from the old company towns of the industrial revolution (see Pullman Strike) and there is a certain logic to it:
If you want to retain people, hire them right out of college and drop them into a situation that is very much like the university experience. Long hours, lots of work, but free food and you can more or less walk to work and see your friends on a regular basis. It could be pretty attractive to someone straight out of college.
Right, except the IRS has included perks such as housing, automobiles, even frequent flier miles[1], as "income" for over 60 years.
I think the outcry here is that government has much bigger fish to fry than hounding taxpayers over a few thousands bucks worth of free food every year. Your slippery slope argument isn't too far fetched though: this same sort of tax policy is exactly how the U.S. ended up with its ridiculous employer-paid health insurance scheme.
[1] In some cases. See 91 F.3d 72
I think the outcry here is that government has much bigger fish to fry than hounding taxpayers over a few thousands bucks worth of free food every year. Your slippery slope argument isn't too far fetched though: this same sort of tax policy is exactly how the U.S. ended up with its ridiculous employer-paid health insurance scheme.
[1] In some cases. See 91 F.3d 72
>I think the outcry here is that government has much bigger fish to fry than hounding taxpayers over a few thousands bucks worth of free food every year.
I know the article repeatedly talks about employees paying additional tax, but at glance such taxes would seem to be paid by employers?
Also, to go off on a bit of a tangent - I've noticed that the perceived size of the "fish to fry" has a way of changing in line with the predilections of the source of the outcry.
Present the same person with the same dollar value as tax increase/break, spending cut/increase and watch their impression of the relative size and opinion of the change turn on a dime.
I know the article repeatedly talks about employees paying additional tax, but at glance such taxes would seem to be paid by employers?
Also, to go off on a bit of a tangent - I've noticed that the perceived size of the "fish to fry" has a way of changing in line with the predilections of the source of the outcry.
Present the same person with the same dollar value as tax increase/break, spending cut/increase and watch their impression of the relative size and opinion of the change turn on a dime.
> I know the article repeatedly talks about employees paying additional tax, but at glance such taxes would seem to be paid by employers?
It would be paid by the employees. Such expenses are tax deductible by employers regardless of whether it’s a taxable benefit or just a cost of doing business.
Of course the incidence of the tax may be different, for example if, due to market forces, employers have to give people raises to cover the increased tax liability.
It would be paid by the employees. Such expenses are tax deductible by employers regardless of whether it’s a taxable benefit or just a cost of doing business.
Of course the incidence of the tax may be different, for example if, due to market forces, employers have to give people raises to cover the increased tax liability.
I'm sure the IRS has a few bigger fish to fry, but this one seems pretty big. A few thousand dollars a year multiplied by several thousand employees, multiplied by hundreds of companies adds up pretty fast.
Where do you draw the line? No free stationery? No free coffee? What about company events?
Stationary is directly used in working, it isn't a perk. Coffee and company Christmas parties seem completely reasonable to tax; they are part of the compensation that the company is giving you, not an intermediate product or tool used to achieve work. Reasonably the company should cover the tax just like they are covering the base purchase price.
If you do work and you only get paid in room and board you currently have to pay income tax based on the value of that room and board. I don't really see how this is different; these generally don't sound like working lunches but rather only a form of compensation.
If you do work and you only get paid in room and board you currently have to pay income tax based on the value of that room and board. I don't really see how this is different; these generally don't sound like working lunches but rather only a form of compensation.
When I'm a contractor and I go out to lunch with my clients I get to write that off as a business expense and it is effectively untaxed. Same for travel. However, the company paying for my meals or travel to and from work should be taxed? This argument goes well behind just a few large corporations.
The line for when something is business related and when it isn't is very blurry. I probably socialize a lot more with my coworkers because the company provides us free food and a place to socialize. Previously, when I worked at companies that did not provide meals I ate a significantly higher number of meals at home, alone, or with non-company friends. These meals have a business value to the company, so aren't they a cost of doing business? You could argue that the company also gives me a computer that is more powerful than strictly required to do my job and I can even use it for browsing HN during breaks. Should that be taxed as a perk then?
The line for when something is business related and when it isn't is very blurry. I probably socialize a lot more with my coworkers because the company provides us free food and a place to socialize. Previously, when I worked at companies that did not provide meals I ate a significantly higher number of meals at home, alone, or with non-company friends. These meals have a business value to the company, so aren't they a cost of doing business? You could argue that the company also gives me a computer that is more powerful than strictly required to do my job and I can even use it for browsing HN during breaks. Should that be taxed as a perk then?
You make it sound like everything is so cut and dry.
Do you really think every corporate event is a perk? One friend of mine was just bemoaning the beginning of baseball season because he has to spend so much time at games with his bosses (tickets paid for by the company). Declining the invitation is considered rude and politically unsound.
As far as room and board go, someone staying at an "extended stay" hotel or apartment paid for by the company owes income taxes on it? It certainly isn't compensation from the employee's perspective.
Even your view on coffee is ridiculous- it is clearly a product or tool used to achieve work.
Also, how does the company just "cover the tax" as you so simply put it? Did you consider that not every employee is in the same tax bracket? What if Joe, in bracket A, drinks 4 cups of coffee a day and Jane drinks none at all?
Do you really think every corporate event is a perk? One friend of mine was just bemoaning the beginning of baseball season because he has to spend so much time at games with his bosses (tickets paid for by the company). Declining the invitation is considered rude and politically unsound.
As far as room and board go, someone staying at an "extended stay" hotel or apartment paid for by the company owes income taxes on it? It certainly isn't compensation from the employee's perspective.
Even your view on coffee is ridiculous- it is clearly a product or tool used to achieve work.
Also, how does the company just "cover the tax" as you so simply put it? Did you consider that not every employee is in the same tax bracket? What if Joe, in bracket A, drinks 4 cups of coffee a day and Jane drinks none at all?
Companies like Google already give their employees an estimated amount to cover the taxes of holiday gifts. The amount it's presumably sometimes less than the actual taxes, but employees get to deal with the difference (or they can decline the perk).
I don't see your other complaints as relevant to taxes. Just because you prefer to do less work and get less compensation doesn't make something not compensation. Using your line of argument, if you ask your boss to go golfing because you think it will l help your career, you should deduct that from your taxes.
I really cannot see the rational argument that says a migrant worker who is being paid in room and board should pay income tax but someone else doing the exact same thing while also collecting a salary and paying for an apartment in another city shouldnt be taxed on the room and board. The hotel seems completely unambiguous as compensation to me.
About coffee being an intermediate product; you might be right.
I don't see your other complaints as relevant to taxes. Just because you prefer to do less work and get less compensation doesn't make something not compensation. Using your line of argument, if you ask your boss to go golfing because you think it will l help your career, you should deduct that from your taxes.
I really cannot see the rational argument that says a migrant worker who is being paid in room and board should pay income tax but someone else doing the exact same thing while also collecting a salary and paying for an apartment in another city shouldnt be taxed on the room and board. The hotel seems completely unambiguous as compensation to me.
About coffee being an intermediate product; you might be right.
Did not know about Google's bonus for covering taxes. So they leave it to the employees to declare whatever they think the value of their holiday gifts were? I wonder if this leaves Google liable for underreported compensation like restaurants. [1]
"Just because you prefer to do less work and get less compensation doesn't make something not compensation."
I lost your train of thought. (Really, not trying to be facetious.)
"Using your line of argument, if you ask your boss to go golfing because you think it will l help your career, you should deduct that from your taxes."
Only if he's not really your friend. [2]
"The hotel seems completely unambiguous as compensation to me."
Your intuition and the law differ. The hotel is deemed an ordinary and necessary cost of doing business for the employer. Putting your employee in another place for a period of time is just the nature of the biz. For some reason, putting up a migrant worker is not?
"About coffee being an intermediate product; you might be right."
Really, I'm just trying to point out that taxes are an arcane, complex issue. Going with whatever you think is intuitive is not necessarily how they work.
[1] http://ledgerlink.monster.com/training/articles/102-irs-goin...
[2] http://www.irs.gov/pub/irs-pdf/i1040sca.pdf (see 4th point on page A-11)
"Just because you prefer to do less work and get less compensation doesn't make something not compensation."
I lost your train of thought. (Really, not trying to be facetious.)
"Using your line of argument, if you ask your boss to go golfing because you think it will l help your career, you should deduct that from your taxes."
Only if he's not really your friend. [2]
"The hotel seems completely unambiguous as compensation to me."
Your intuition and the law differ. The hotel is deemed an ordinary and necessary cost of doing business for the employer. Putting your employee in another place for a period of time is just the nature of the biz. For some reason, putting up a migrant worker is not?
"About coffee being an intermediate product; you might be right."
Really, I'm just trying to point out that taxes are an arcane, complex issue. Going with whatever you think is intuitive is not necessarily how they work.
[1] http://ledgerlink.monster.com/training/articles/102-irs-goin...
[2] http://www.irs.gov/pub/irs-pdf/i1040sca.pdf (see 4th point on page A-11)
It's probably best to not get lost in the details. The solution to this is real simple and can be very effective and hassle-free for everyone. The IRS will hardly care about the coffee or water or the private phone calls you are allowed to make on your company phone. The easiest solution to this is to just have a reasonably high cutoff point for such perks, like "companies can only spend $150 per month per employee on such perks and leave them tax free".
Problem solved. Now most companies offering only small stuff that has traditionally been offered to many employees (coffee, water, ...) are no longer affected and only those who offer substantial perks are included. This is also less work both for the companies and tax collection agencies.
Problem solved. Now most companies offering only small stuff that has traditionally been offered to many employees (coffee, water, ...) are no longer affected and only those who offer substantial perks are included. This is also less work both for the companies and tax collection agencies.
I don't know if you could say the IRS will hardly care about coffee if they are considering caring about lunches. What is a lunch a day, $10? How much do a few "barista" coffees a day cost? I actually don't know, I'm not a coffee drinker, but I can see that easily topping $10/day.
Well, if it’s “barista” coffee then the IRS has every right to care about it. I’m talking mostly about coffee out of one of those machines. That can’t cost much more than ¢50 per cup or something like that, even if you have a fancier machine.
Chairs with wheels, AC, guest wifi...
Yeah, honestly it makes sense. Right now firms in CA are incentivized to provide perks as compensation to employees in lieu of cash because it isn't taxed. Implementing a tax on these perks will probably reduce perks, but it should have the result of higher wages.
Right.
This is pretty much the conclusion I came to when trying to figure out why this would make sense.
This is pretty much the conclusion I came to when trying to figure out why this would make sense.
the optimum financial endgame for a company like Google is to basically turn into some mega corporation that pays its employees almost minimum wage
The pay for Google engineers is certainly not trending towards minimum wage.
The pay for Google engineers is certainly not trending towards minimum wage.
It's called double taxation. In your examples, Google is paying the house and alcohol sales taxes when they purchase them.
If you're interested in what the IRS actually has to say about the taxability of meals and other perks:
http://www.irs.gov/publications/p15b/ar02.html
Meals on Your Business Premises
You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests.
They are furnished on your business premises.
They are furnished for your convenience.
This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals.
Assuming AmaGooFaceSoft have prominent, enforced "These meals are provided to be consumed on the premises" signs, they're golden. (I assume that if they don't, they will shortly.)
http://www.irs.gov/publications/p15b/ar02.html
Meals on Your Business Premises
You can exclude the value of meals you furnish to an employee from the employee's wages if they meet the following tests.
They are furnished on your business premises.
They are furnished for your convenience.
This exclusion does not apply if you allow your employee to choose to receive additional pay instead of meals.
Assuming AmaGooFaceSoft have prominent, enforced "These meals are provided to be consumed on the premises" signs, they're golden. (I assume that if they don't, they will shortly.)
I don't entirely understand the arguments against taxing the perks made in the article. On one hand they're talking about how incredibly valuable to the company the free meals are, and on the other talking about how taxation would lead to these perks being killed.
If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees.
If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees.
"If the meals really do provide that value, the company can trivially pay the tax on behalf of the employees."
How exactly? You could estimate that meals were valued at $250 a month and then bump the salary of every employee by $250*(marginal federal + marginal state)taxrate so that when their W2 came they would owe tax but they would have the money. But what about people that withhold 10% for a 401k, so the money you bump up has 10% of it contributed to the 401k so you have to bump it an additional 10% to make sure the employee cost hit is neutral. So now you're providing funding to the 401k effectively. And then there are employees who bring their meals and then don't incur the cost but they get the paybump, do they file for a reduction in gross income because they didn't eat the meals, and then just pay marginal tax on the income bump? What about when their spouse came to visit and they ate a meal too, extra bump in income? extra tax? discount?
It isn't "trivially" possible to do anything except kill the benefit. That is "trivially" possible. And the people pushing for this aren't the IRS it's the companies that don't give their employees free food. I believe the free soda perk cancellation at Apple was before the web so it doesn't show up in archives but at one time all the soda machines on the Apple campus were free, and the IRS swooped in and told them to pay tax on them, and the soda was then "not free." I was at Sun (where food and soda was not free) but beer busts were, and thought that would help with our co-workers being poached. And it was part of the reason Sun killed the beer busts according to Crawford Beverage (no lie, that was his name!) who was the VP responsible.
Do you follow through and tax free laundry? sports equipment? medical visits? store discounts? swag at product launches? If you really wanted to nitpick it you could kill a lot of stuff at Google. You don't think some "not Google" company wouldn't prefer to level the playing field a bit?
How exactly? You could estimate that meals were valued at $250 a month and then bump the salary of every employee by $250*(marginal federal + marginal state)taxrate so that when their W2 came they would owe tax but they would have the money. But what about people that withhold 10% for a 401k, so the money you bump up has 10% of it contributed to the 401k so you have to bump it an additional 10% to make sure the employee cost hit is neutral. So now you're providing funding to the 401k effectively. And then there are employees who bring their meals and then don't incur the cost but they get the paybump, do they file for a reduction in gross income because they didn't eat the meals, and then just pay marginal tax on the income bump? What about when their spouse came to visit and they ate a meal too, extra bump in income? extra tax? discount?
It isn't "trivially" possible to do anything except kill the benefit. That is "trivially" possible. And the people pushing for this aren't the IRS it's the companies that don't give their employees free food. I believe the free soda perk cancellation at Apple was before the web so it doesn't show up in archives but at one time all the soda machines on the Apple campus were free, and the IRS swooped in and told them to pay tax on them, and the soda was then "not free." I was at Sun (where food and soda was not free) but beer busts were, and thought that would help with our co-workers being poached. And it was part of the reason Sun killed the beer busts according to Crawford Beverage (no lie, that was his name!) who was the VP responsible.
Do you follow through and tax free laundry? sports equipment? medical visits? store discounts? swag at product launches? If you really wanted to nitpick it you could kill a lot of stuff at Google. You don't think some "not Google" company wouldn't prefer to level the playing field a bit?
In most of Europe meals are a taxable benefit. There are various ways that a company can deal with that. What Google does is exactly what I described. You badge in for lunch/dinner, and the accounting department makes sure that the net effect to the Googler is $0. (The badging is there just to make sure that Google doesn't need to pay the tax for the people who don't eat). This is of course made in a way that ensures no effect on any "automatically pay x% of salary to a pension insurance" schemes.
Now, I'm sure that your tax system is much more dysfunctional than that, and an ignorant European couldn't possibly appreciate all the subtleties of it. But somehow Google manages to nullify the tax effects when doing things like giving fancy consumer electronics as christmas gifts.
Now, I'm sure that your tax system is much more dysfunctional than that, and an ignorant European couldn't possibly appreciate all the subtleties of it. But somehow Google manages to nullify the tax effects when doing things like giving fancy consumer electronics as christmas gifts.
> How exactly?
On December 31st, you gross up everyone's pay by say $10k, and pay taxes that are the marginal rate for YTD income.
Of course this doesn't fully cover the taxes for dual income high earners, and it can create some additional taxes for employees that have other income, because now their base is $10k higher. In this case, the change will cost these employees up to a few hundred dollars.
A tax change that may cost someone a few hundred dollars, pretty quickly get's lost in the noise when you are talking about multi thousand dollar raises and bonuses.
On December 31st, you gross up everyone's pay by say $10k, and pay taxes that are the marginal rate for YTD income.
Of course this doesn't fully cover the taxes for dual income high earners, and it can create some additional taxes for employees that have other income, because now their base is $10k higher. In this case, the change will cost these employees up to a few hundred dollars.
A tax change that may cost someone a few hundred dollars, pretty quickly get's lost in the noise when you are talking about multi thousand dollar raises and bonuses.
"you gross up everyone's pay by say $10k"
It's nice to pretend that it as easy as waving your hand and saying everyone got $10k worth of perks, but what about people who didn't? Really, not everyone is eating the corporate food every day. Not everyone is going to the corporate happy hour. It is not fair, or possibly even legal, to just amortize the costs across everyone.
When faced with the accounting and legal overhead, companies are going to throw these perks out the window.
It's nice to pretend that it as easy as waving your hand and saying everyone got $10k worth of perks, but what about people who didn't? Really, not everyone is eating the corporate food every day. Not everyone is going to the corporate happy hour. It is not fair, or possibly even legal, to just amortize the costs across everyone.
When faced with the accounting and legal overhead, companies are going to throw these perks out the window.
And people wonder why some people think the government is basically a bunch of brainless fuckups who couldn't pour water out of a boot if the instructions were on the heel.
This is, simply put, one of the most absurdly brain-dead stupid things I've ever heard in my life. And I've heard some really stupid ideas in my life.
Whether this goes through or not, it's a perfect example of why we need to end the income tax and eliminate the IRS.
This is, simply put, one of the most absurdly brain-dead stupid things I've ever heard in my life. And I've heard some really stupid ideas in my life.
Whether this goes through or not, it's a perfect example of why we need to end the income tax and eliminate the IRS.
Why is it a stupid idea?
Company A pays an employee $100 per day, and provides a lunch which costs the company $10.
Company B pays the employee $110 per day, but the employee has to provide her own lunch.
Is it really fair that Company B has to pay more tax than Company A? Compensation is compensation, whether in kind or in cash.
Company A pays an employee $100 per day, and provides a lunch which costs the company $10.
Company B pays the employee $110 per day, but the employee has to provide her own lunch.
Is it really fair that Company B has to pay more tax than Company A? Compensation is compensation, whether in kind or in cash.
The cost of the lunch is $10, but is the value to the employee $10?
The problem with taxing a product is that the actual value is unknown. In your example, taxing the lunch as $10 of income is actually giving the benefit to Company B due to the "reverse inequality of exchange". IE if you buy a $10 lunch, you actually value it more than the $10.
The problem with taxing a product is that the actual value is unknown. In your example, taxing the lunch as $10 of income is actually giving the benefit to Company B due to the "reverse inequality of exchange". IE if you buy a $10 lunch, you actually value it more than the $10.
Sure, but the cash has the value of being flexible. For example, if you were looking to save money, you could brown bag a lunch from home and pocket the extra $10.
That flexibility might be more valuable to the employee than the nice lunch.
That flexibility might be more valuable to the employee than the nice lunch.
You could say the same thing about $10 - the value of a $10 note to (eg.) a millionaire is a lot less than it is to most people. If the employee is hungry, then they'll value lunch more.
For accounting purposes though, it's $10.
For accounting purposes though, it's $10.
I agree, eliminate the taxes on company B.
> it's a perfect example of why we need to end the income tax
I don't follow what this has to do with income tax, it's presumably a different benefits tax
> and eliminate the IRS
Well no. It's an example of one thing that the IRS can do. If you think it's silly (and I agree), it's an example of a silly thing that the IRS can do. But it's hardly evidence that the whole taxation system is broken.
Assuming a government needs to be funded, I don't think eliminating the income tax would even get rid of the IRS, since it would still need revenue of some sort.
I don't follow what this has to do with income tax, it's presumably a different benefits tax
> and eliminate the IRS
Well no. It's an example of one thing that the IRS can do. If you think it's silly (and I agree), it's an example of a silly thing that the IRS can do. But it's hardly evidence that the whole taxation system is broken.
Assuming a government needs to be funded, I don't think eliminating the income tax would even get rid of the IRS, since it would still need revenue of some sort.
Meh... I was about to reply to this and just realized I let myself get drawn into another political debate. I enjoy this as much as anybody, but HN really isn't the place for it. Let's just say I have radically different ideas about the proper nature and scope of government than a lot of people.
free lunch is treated as compensation and is taxed as income.
Bureaucracy's main purpose is to create more bureaucracy.
As a side effect, they collect taxes or issue you your driver's license, it is just a means to the end of self-perpetuation.
Eliminating the income tax and going to a much more transparent method like higher fuel taxes (everyone pays them because everyone uses transportation) or some other broadly based consumption tax, would be excellent.
As a side effect, they collect taxes or issue you your driver's license, it is just a means to the end of self-perpetuation.
Eliminating the income tax and going to a much more transparent method like higher fuel taxes (everyone pays them because everyone uses transportation) or some other broadly based consumption tax, would be excellent.
Please.
There is a reason why most reasonable people don't actually seriously consider implementing such tax schemes.
I know it's hard for people with good lives and great salaries to understand why, but please ask the people who clean your desks next time you see them what would happen to him/her, if fuel was taxed higher.
There is a reason why most reasonable people don't actually seriously consider implementing such tax schemes.
I know it's hard for people with good lives and great salaries to understand why, but please ask the people who clean your desks next time you see them what would happen to him/her, if fuel was taxed higher.
My favorite reform would be an end to the difference between business and personal expenses. I would like to see a tax code where all expenses were 100% deductible and only savings were taxed after an annual threshold was reached (similar to the current IRA rules).
Allowing all expenses to be tax deductible would reduce accounting overhead incredibly, and would incentivize consumption and trade.
Allowing all expenses to be tax deductible would reduce accounting overhead incredibly, and would incentivize consumption and trade.
This seems backwards from what we actually want to do, but also has significant compliance concerns.
It's obvious how to tax consumption. It's (fairly) obvious how to tax income. How would you tax savings?
Is buying stock in a company "saving" or "consuming"? Is buying Bitcoins "saving" or "consuming"? What about gold coins/bars? What about guns and ammo? What about a collector car? Artwork? What about a house for personal residential use? What about a house for rental/income use? What about just holding suitcases of $100 bills?
It seems like there would immediately spring up a system of "not treated as savings" savings mechanisms. I seriously doubt that you'd accomplish your intended accounting simplicity...
It's obvious how to tax consumption. It's (fairly) obvious how to tax income. How would you tax savings?
Is buying stock in a company "saving" or "consuming"? Is buying Bitcoins "saving" or "consuming"? What about gold coins/bars? What about guns and ammo? What about a collector car? Artwork? What about a house for personal residential use? What about a house for rental/income use? What about just holding suitcases of $100 bills?
It seems like there would immediately spring up a system of "not treated as savings" savings mechanisms. I seriously doubt that you'd accomplish your intended accounting simplicity...
I think "savings" is probably the wrong word - "profit" might be better.
If I have a car to drive to work, then I should be able to claim some proportion of it as a deduction. Currently that's not allowed (at least in Australia, where I'm from).
If I have a car to drive to work, then I should be able to claim some proportion of it as a deduction. Currently that's not allowed (at least in Australia, where I'm from).
Homes are routinely taxed. They are also routinely taxed at different rates depending on whether they are owned for personal use or for renting out.
There are even countries that have a modest tax on bank accounts.
There are even countries that have a modest tax on bank accounts.
Care to explain why?
For more reasons than you can shake a stick at, not the least of which include the fact that not every employee receives the same value from this "benefit", and the fact that valuing it is ridiculously subjective. Add in the deleterious effect it would have on companies (who would probably just scrap free lunches altogether if this goes through) and it's hard to see it as anything other than totally brain-dead stupid.
I have heard that when Google negotiates salaries, they often chime in about the value of the perks, and that employees should be willing to take a lower base bay because of the perks.
Google tells the IRS it is non-compensation, but tells prospective employees to value it as compensation.
Google tells the IRS it is non-compensation, but tells prospective employees to value it as compensation.
This seems similar to touting "You get a Macbook Pro as your work laptop!" in recruiting materials (which I've seen countless times in recruiting pitches), even though that's undeniably a work expense when dealing with the IRS. This isn't a zero-sum game; just because a free meal at Facebook may be a net gain to Facebook (employees don't need to go off campus to work and thus can be more productive) doesn't mean the employee gets no benefit out of it and shouldn't consider it as a plus.
That should say "go off campus to eat", rather than "go off campus to work"
Is the shuttle necessarily a perk, though? It may just be compensating for the negative effect of their location on employees who would rather be in SF than Mountain View.
These meals are actually profitable. Because I have free and good meals at Google, I always have my lunch there instead of leaving office and spending an extra ~30 min to go some place near (NYC office so I have that option), wait for service etc. My pay rate for this half-hour is higher than the cost of any meal that I would buy, regularly with my own cash; so I fail to see how Google is "spending". Not to mention the days when thing are busy enough so I take the food to my desk and eat it while working [instead of eating it at my desk while reading HN as usual :)]. It's also common for coworkers to have lunch together, or having visiting customers for lunch and other "business" scenarios.
Also, I know how much $ Google spends with food per employee, and it's a significantly lower number than what I would pay for the same amount and quality of food anywhere -- a small part of that due to no sales tax, but the bulk of savings comes from big economies of scale, very efficient operations, and no profit margin.
I am a Brazilian, and there most companies provide complimentary compensation as food coupons that are subsidized by not paying income or payroll taxes (both are very high in BR). Even higher-salaried employees get these coupons, usually in a value that's proportional to the salary; for an engineer that's high enough you can feed your whole family... when I lived alone I couldn't hope to spend all my coupons, so whenever I had a lot of accumulated excess I'd donate that to a charity. Now THAT is an obvious loophole to increase wages at the expense of taxes. Compared to this, the free food in companies like Google is available only to the employee, only at office, and it has no relation to your salary -- everybody gets the same food and other office perks.
There's an important element of healthcare too. Companies that can afford to provide free lunches are always also, companies that subsidize most or all of their employee's health insurance, which is a huge cost. The company has interest in managing employee health to minimize costs of insurance and sick leave; and Google certainly does that, they use lots of tricks and tactics to promote a healthy diet.
To summarize, this is much more complex than just "giving freebies" like some other posters think.
Also, I know how much $ Google spends with food per employee, and it's a significantly lower number than what I would pay for the same amount and quality of food anywhere -- a small part of that due to no sales tax, but the bulk of savings comes from big economies of scale, very efficient operations, and no profit margin.
I am a Brazilian, and there most companies provide complimentary compensation as food coupons that are subsidized by not paying income or payroll taxes (both are very high in BR). Even higher-salaried employees get these coupons, usually in a value that's proportional to the salary; for an engineer that's high enough you can feed your whole family... when I lived alone I couldn't hope to spend all my coupons, so whenever I had a lot of accumulated excess I'd donate that to a charity. Now THAT is an obvious loophole to increase wages at the expense of taxes. Compared to this, the free food in companies like Google is available only to the employee, only at office, and it has no relation to your salary -- everybody gets the same food and other office perks.
There's an important element of healthcare too. Companies that can afford to provide free lunches are always also, companies that subsidize most or all of their employee's health insurance, which is a huge cost. The company has interest in managing employee health to minimize costs of insurance and sick leave; and Google certainly does that, they use lots of tricks and tactics to promote a healthy diet.
To summarize, this is much more complex than just "giving freebies" like some other posters think.
Anyone know if the IRS serves free coffee in its break rooms?
I'm in DoD and we don't. Actually I'll take it a step further, I'm in the NAVY, where we joke that the whole Navy runs on coffee, and we make the government employees bring in their own snacks/coffee/etc.
Some random employee brought in their Keurig machine and lets the other employees use it. That what passes for "perks" for the rank-and-file.
Some random employee brought in their Keurig machine and lets the other employees use it. That what passes for "perks" for the rank-and-file.
I'm reminded of the government's TP Pool Regulations [1] in Neal Stephenson's Snow Crash.
[1] http://soquoted.blogspot.com/2006/03/memo-from-fedland.html
[1] http://soquoted.blogspot.com/2006/03/memo-from-fedland.html
I actually did almost buy TP the other day after an unpleasant encounter with the new post-sequester personal hygiene equipment. But I forgot as soon as I sat down at my desk and apparently the bad TP was an accident and not actually due to the budget crunch.
But yeah, the memo is spot-on in many respects (15.62 exact == smartass) but unrealistic in others. For example I haven't seem this many words correctly spelled in a memo since I was on submarine duty, and no one here would be able to figure out how to word logic as twisted as that described.
Instead they would probably omit major details that need deciding while repeating minor details, slightly differently each time so that you can't be sure whether it's a unique requirement or not...
But yeah, the memo is spot-on in many respects (15.62 exact == smartass) but unrealistic in others. For example I haven't seem this many words correctly spelled in a memo since I was on submarine duty, and no one here would be able to figure out how to word logic as twisted as that described.
Instead they would probably omit major details that need deciding while repeating minor details, slightly differently each time so that you can't be sure whether it's a unique requirement or not...
Certainly not this kind of coffee: http://bit.ly/10Qh0rr
That's from a barista at Google.
That's from a barista at Google.
I'd be curious to see how much revenue this would generate for the government. I can't help but wonder if this is only a target because of its visibility. Even if this brought in an extra $1,000 per each of 10M IT workers in the US, that's only $10B. However, it's likely to not even be close to that. Meanwhile, the 0.0034% transaction tax only brings in less than $2B in revenue from financial trades. The proposal to increase that tax to 0.5% would bring in as much as $200B. I might be bias, but it seems like Wall Street should pay more taxes before silicon valley.
http://en.wikipedia.org/wiki/Financial_transaction_tax#Unite...
http://en.wikipedia.org/wiki/Financial_transaction_tax#Unite...
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In China, we get something like 20 RMB a day for lunch; this is a government-specified benefit that the company can give us tax free, which is why Microsoft, which doesn't otherwise offer free food in Redmond, will give us this benefit in China.
On the other hand, we must pay tax on our health insurance, as the PRC laws on this subject are still too ambiguous.
On the other hand, we must pay tax on our health insurance, as the PRC laws on this subject are still too ambiguous.
So the IRS wants Google to get taxed to buy the food and then the employees to get taxed for eating the food?
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Given how mean my employer is I'd be in line for a substantial rebate!
Don't have enough money for the payments on your house? No problem, just offer to take a pay cut and move into a "free" house provided by your employer. Alcohol sales tax too high in your state? No problem, just open a bar with "free" alcohol and charge an entry fee to the premises at the door.
In The Netherlands where I reside my employer provides "free" meals but they have to charge me 2 EUR for each one as a matter of law. In some other countries if you give out "free" beers to people you have to pay a mandatory minimum fee for each one etc.
If you don't do that then the optimum financial endgame for a company like Google is to basically turn into some mega corporation that pays its employees almost minimum wage, but provides "free" meals, housing, food, transportation etc. which they don't have to pay any taxes on because it's not being sold to anyone and can all be written off as internal costs.
Compensation isn't just handing someone a dollar bill.