It’s time once again for The Future American’s FAIL OF THE WEEK! Every Saturday, I name a person or group who has spent the past seven days behaving in a particularly idiotic way. Since it’s my belief that idiocy knows no politics, nobody is safe.
This week’s fail was brought to you by Facebook. Some of you probably linked to this column after I posted it on Facebook, so you know my perspective on the site as a whole isn’t generally anti. But there are times when their business practices are very worthy of an anti perspective, and their initial public offering yesterday was one of them. Not because it fell flat. Not because social media obsessers believed it was a good investment. Because of this. The company has granted who knows how much money in stock options to its employees – and thanks to a perfectly legal loophole, they will save $16 billion in taxes on it.
Already this week we’ve had to deal with co-founder Eduardo Saverin being accused of timing his immigration to Singapore conveniently enough to avoid paying taxes of his own. (Note to self: Never trust a litigious person with a business degree. Think of how much the Whine-klevosses would have avoided paying if they had an argument!) But these are the people who are living and working in America. I don’t think they set out to bilk anyone; after all, as mentioned, this is legal. They saw an advantage in the tax system and took it. You probably would.
On the one hand, much of the fail is on the shoulders of this stock option tax loophole. I defy anyone to justify this on the grounds of economic benefit. It enables them to take home more money and spend it on products made by other Americans? Ha. These people are buying BMWs and vacationing in Fiji. And I hardly think Facebook skimps on salaries and benefits, given its profits.
So why did I name Facebook as the bringer of the fail? Because, frankly, I have no clue where their valuation is coming from. How exactly do they make money? Selling ad space? Selling information about users to advertisers? Both? They’ve never put a high premium on transparency, so if we do find out, it may very well be at a congressional hearing. I strenuously predict that future historians will scoff at the idea that social media was ever worth investing in.
If you’re going to bother taking advantage of loopholes like this, at least have a real product or service to show for it. As much time as I spend on Facebook throughout the day, ultimately it’s just a distraction from the real world. It’s the businesses that can actually prove their value on paper that deserve to save on their taxes.