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Facebook raking in cash, not paying taxes?

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    Report: Social network not paying federal, state taxes

  • Duration 2:49
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And that FaceBook is raking in the cash.

And paying almost no taxes.

I'll explain the group citizens for tax justice says the company is reporting.

More than a billion in pretax profits.

While likely paying zero in federal or state taxes and I -- are it's not illegal or wrong -- Apparently they may even get a tax refund.

Of some 429.

Million bucks.

Senior economic writer with the Wall Street Journal sees more and president of Penn financial group Matt McCall gentlemen great to see you -- you.

-- to talk about maker's mark quickly at the end but I this is pretty serious Steve how does this happen.

Well look everyone knows that our corporate income tax system -- is -- colossal failure we have the highest tax rates in the world and it doesn't collect much revenue now in the case of FaceBook what happened was that FaceBook.

Gave away.

Has huge amount of the compensation that it gives.

To its workers and executives is through these stock options I happen to think stock options are form of compensation that should be expands and essentially what they did was.

They've loaded up on the stock options and though is those stock options are reduce their tax liability to zero.

When you exercise those options -- they could be if you -- after we get them the equivalent of cash went aren't they taxable.

When -- taxable to the employees -- receive them once they sell -- you have -- -- realized gain on that if we got with the cost basis was then you know that employee will have to pay taxes on that compensation that as Steve said it's just something in lieu of actually paying out cash two employees I'd like this as well because it gives -- -- -- to work harder because the harder they work.

The more that companies worth the -- to share price and the better for everybody for shareholders and everything you know I'm a shareholder person of faith but just put that out there so.

I think there's actually great -- what bothers me is reading up on research and it's this morning.

9% of people are bashing FaceBook why did bashing basement bashing US armored for having a bad tax code if you don't like this is it time to rewrite it fanned Matt.

Oh absolutely this tax -- needs to be -- done.

And another thing that blows my mind if Obama went and -- you know he's going after the wealthy people sending -- to pay more the same time there's so many loopholes out there for these large corporation.

Go after these we both of you -- his face -- tax code.

That this is about -- by the way -- to get out go ahead Steve.

-- had just gonna say it's just not -- -- I -- -- that's it's it's every that President Obama has had three.

Commissions and blue ribbon panels that he has a point that that -- -- came to the same conclusion Paul Volcker the former chairman of the Federal Reserve said.

That art and that our corporate tax system is stationed jobs out of America that the rates are too high it's making America on come out of that it's almost unpatriotic.

And -- use that -- -- unpatriotic.

To support this corporate tax system that is sending jobs abroad.

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