This Sankey diagram depicts Netflix's Q2 FY25's financial statement which shows the way $11.1B in revenues across different regions is channeled through cost and operating expenses, in order to generate $3.1B of net profits (+46% YoY).
Produced using: SankeyDiagram + Illustrator
source: Netflix Q2 FY25 earnings report (Investor Relations)
I wish I had a 16% tax rate..
0.5B / (3.8B-143m) = 13.2%
Yeah my bad, tired brain took the wrong figure
More like 4,5%. You and I don’t have the luxury of being taxed on our profits only. You’re taxed on your “revenue” as a worker.
Many expenses undertaken for work are deductible from your income for tax purposes
Wish I could buy food & shelter with gross pay tbh
For most people it doesn’t outweigh the standard deduction
Which is still a deduction and thus individuals are not taxed on revenue either
Name them
If you have to buy a uniform, equipment or pay for travel that isn't just a regular commute - these are all incredibly obvious ones
The income streams are from various countries, I’m curious how that tax break down looks per country?
If you calculate your effective federal income tax rate (tax paid divided by taxable income), it’s probably similar unless you are making over $200k or so.
Yea mine is right about 15% on $125k including federal and state.
You too can have that if you want to operate like a business, leverage up to buy some assets that you use to generate income. The more debt financing you use to operate a business, especially if you use depreciable assets, the less tax you'll pay.
The issue is of course instead of taxes you'll be paying interest, this is why EBITDA is the measure of financial profitability, not net income.
I would be surprised if your effective federal rate is significantly different
Those profits will be taxed again at ~30% if they are distributed
Corporations are individuals under the law.
When I receive my salary and then use post tax dollars to hire a plumber, people don't cry
"But mah double taxation!!!"
It is money moving from one person to the next.
I will be more concerned about double taxation when we strip personhood status from c corps.
A more apt comparison would be you receiving your salary taxed before then taxed again when you withdraw it from the bank account and then hiring a plumber.
Sorry, this is wrong.
When you invest in a partnership or s corp, the proceeds of that investment flow through directly to you, no double tax, because you and your interest in these entities are one and the same.
You are not the same as the c corp.
I cannot sue you, tesla stock holder, when my grandma's tesla locks all the doors and drives into her pool with her locked inside.
If it was a partnership or s corp, i can.
That’s wrong, employee compensation is deducted at the corporate level. It’s pre-tax dollars
That’s the entire argument behind double taxation. Distributions to shareholders are taxed twice, while compensation is only taxed once
Yeah, that was a conceptual misstep on my part.
Employee salaries are an ordinary and necessary expense, so they are deductible at the corporate income tax level thus making them pre-tax dollars. You seem very confident about something you clearly don’t know much about
Also, I don’t understand what point you’re trying to make with the whole suing the company thing? You absolutely are able to receive damages from a C corp, but yeah the owners have limited liability. The same is true, however, for the owners of an LLC, or the limited partners in an LP, or owners of an S corp. I have no idea what you think you’re saying
True
Revising
First of all, you aren’t paid with post tax dollars, wages are an expense of the company and come out of revenue not profits.
Second of all, I’m not making the argument that that is what actually happens, my argument was to present the double taxation thing in a way you can understand.
I personally believe corporate tax should be zero, the tax burden should just be shifted to capital gains. We lose so much of the revenue to lower corporate tax areas like Ireland, Caymans, Bermuda, etc.
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I don't know who "we" is, but it certianly isn't a group of tax experts.
It absolutely does matter. It absolutely is what "we" the tax experts think of when we consider c corp taxation.
Corporate personhood goes far enough to be the crux of the citizens united decision.
Corporate personhood shields the actors within the corporation and the investors from liability beyond that of any other vehicle.
It creates such a distance that it is necessary to tax the corporation.
This is tax theory 101.
C Corporations are taxed as entities because of corporate personhood. That is the fundamental basis.
This is not some fringe shit i cooked up, it is the culmination of legal thought since the advent of the corporation.
Double taxation is generally avoided in our tax code. The special status of c corporations forces a compromise that is somewhere between single and double taxation.
Read the 1911 Supreme Court decision Flint v Stone Tracy Co.
Feel free to read up on it, or...be pushy w your ignorance.
I'd settle for only paying taxes on my profits.
You have the exact same corporate tax rate as Netflix.
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Ireland has similar corporate tax rates.
But money that is paid to employees, contractors, and shareholders is also taxed.
But Ireland is the EUs tax haven
Just as a reminder for everyone, who remits the tax (hands it to the government) and who pays the tax aren't necessarily the same. When you raise taxes on a company, they have some ability (dependent on circumstances) to control who pays, either by increasing prices on customers, reducing spending on employees (layoffs, reductions in raises/bonuses), or passing the cost to shareholders. Part of the reason economists don't like corporate taxes is because they don't actually guarantee that rich people are the ones paying the tax. If a corporation has two viable choices between reducing shareholder profit or raising prices on customers, which do you think they'll pick?
You could, just pay more for your work things out of pocket, and then deduct it.
You most likely do though
Big companies play a different tax game credits write offs and global structure make that rate possible regular people never see that side
How is the tax that little? Owners are always bitching about how the government takes half and that’s like one eighth
The US corporate tax rate is 21% after the Trump tax cuts and I would be surprised if there isn't a bunch of deductions that they qualify for, which pushes down the taxable income. Just like how the lowest federal income tax bracket is 10%, but you get a lot of deductions that means you don't pay that on everything you make
I always thought the “deductions” were their operating expenses, interest, depreciation. What else could a company claim as a deduction to reduce their tax liability on the operating profit? I guess this chart doesn’t show depreciation expense.…?
There's an 0.8B spend on R&D, which can be used to reduce taxes. That's just looking at the outline.
Looking internationally, there are well-known schemes such as the "Double Irish" and/or the "Dutch Sandwich" that essentially shield income from higher rates of taxation.
The Irish Dutch loopholes have been reducing in the last decades although there's probably a lot of more loopholes that are not publically know.
Generally that's it. There are timing differences in when these are recognised in accounts and for taxation, also brought forward losses, tax credits etc
The tax could be 1% and companys would still moan "Man we cant create 10 million jobs with these damn taxes".
So this chart was made using the companies financial statements. The companies financial statements use rules called GAAP (generally accepted accounting principles).
According to GAAP, Tax Expense on the income statement is the sum of 1. Current tax expense and 2. Deferred tax expense. These numbers are not what Netflix actually paid to the IRS, these are what accounting nerds (like me!) have determined is the best way to present the current and future effects of income tax, so as to best tell a story on the financial statements. However, the IRS doesn’t use GAAP for taxable income, they use a different set of rules, so the two are not directly comparable.
The statutory rate on C corporations, which is what Netflix is, is 21%. So the company as a separate entity is taxed 21%, but if any of the owners of the company want to use that money to buy a yacht or bribe their kids’ favorite university, the money has to be distributed from the corporation to the owners. This is in the form of dividends, which is also taxable to the individual. If the dividends are “qualified,” they are taxed at a max rate of 23.8% (20 + 3.8). If the dividends are not qualified, the top rate would be 40.8% (37 + 3.8).
So you have a statutory rate of 21% at the corporate entity level, 23.8% at the individual level, and then most states have implemented an income tax which varies, lets say maybe around 5-10%. Some cities have then also implemented an income tax, like NYC and Philadelphia
Because in order for the shareholders to receive profit they have to pay an additional dividend tax.
It’s $500 million in a 3-month period
It’s not about the dollar it’s the percentage. As a human being I get taxed ~28% at the REVENUE level (with like 0.0003% of their revenue mind you) and have to claw back scraps via tax return meanwhile there’s a faceless conglomerate accumulating billions of dollars paying like 14-16% on operating profit.
Not saying the govt would do better for humans if they collected more tax money from companies but why the absolute fuck is 28% coming out of my pocket when they could just take 0.0001% more from the company’s revenue?
Just venting sorry :(
Assuming you’re talking about the U.S., individuals are not taxed on revenue. We have above the line and below the line deductions. Additionally, if you’re 28% income tax then you’re fairly well off
And they still increase up the subscription cost like crazy.
can you explain this logic? It really puzzles me for as long as I can remember being on reddit (20 years?). Like are companies not suppose to make more money after a certain point of money? Like if you were a person, do you go, "hey I make 100k a year, I'm all set, just gonna say no to that 120k promotion! no thank you!"
how does this logic work? I really want to know.
Corporate interest and consumer interest are opposite. Corporates want to raise prices to make more money while consumers want to pay less. Assuming you are a grown adult who’s been on Reddit for a while, I feel like this isn’t that hard to understand.
What’s hard to understand is why you are on the side of corporates who have opposite interest to yours.
In your same example, if you are so bent on ensuring corporates making more and more money, then shouldn’t they pay you, their employee, less and less?
You make a $100k a year. You ask for $120k promotion. Corporates say No, cause they need to make more money. Isn’t that your point? Well, not giving their employees a raise is one way to make more money.
If you cared so much about corporate making more money, you can ask to slash your salary in half so your paycheck can go into corporate profit. Why not do that? Seems like you care a lot about corporates making more money at your own expense.
Consumer interest being opposite to corporate interest is naive position at best and dishonest at worst. Netflix has created a service that consumers really want and are still willing to pay for even though they are raising prices. World isn’t always so simple that other side bad, my side good.
Im not on either side, I dont give a shit if corporate makes more money. They make more money because that's the way how corporation work. You literally said it in your second sentence. Corporation wants to raise prices to make more money. They always want to make more money. What is there not to understand?
What my salary is dont matter, its an analogy. Use another one if it confuses your brain. If you mom gave you $10 pocket money a week, and decided to raise it to $12 next week. Do you say no? There. Why cant redditors brain function in these scenarios? Can you explain?
Is there a sub reddit with serious discussions about the sides
So if you already knew the answer, why even asked the question?
Your question is “Why shouldn’t corporations want to make more money ”
And the answer is “Because that goes directly against the consumers, aka everyday people, and they don’t like it”
Maybe YOU need brain check if you needed to ask Redditors such obvious questions and demand some sort of answers beyond that.
Are you experiencing (early?) dementia or something? YOU asked the question so I think YOU are the confused one here.
The dude has a point. The original post was someone confused as to why a corporation would want to make more money, and /u/yalag pointed out why this is such a silly thing to be confused about. It's a corporation, of course they want to make money.
Does pointing out someone's greed mean you care about that person? Heck no. You're just pointlessly arguing and insulting someone because you misunderstood
The original post literally has nothing to do with being confused or whatever about why corporation would want to make more money. Where are you seeing that?
Word for word “And they still increase up the subscription cost like crazy.”
Please read it, and then read it again.
This person was simply stating that they didn’t like that Netflix keeps increasing prices. I don’t see any confusion here. Everyone knows it’s greed.
So your entire logic you typed out was based on… uhhh Idk lacking reading comprehension or mental gymnastics I guess?
YOU misunderstood here.
I don’t have the answer. I still wish to know why redditors cannot understand this. It’s some kind of brain block. You still have not provided answer. Please provide it.
What is there to not understand? That corporates are greedy? You don’t think people know? Wow really?
Maybe every day people don’t like that they are on the receiving end of corporate greed? Did you also figure that out or do you also need to be told?
Besides that. You do understand that there’s a point where continuously raising prices pisses off enough customers that they either stop using the service and/or switching to a different service? There’s a value proposition to a service and when enough people feel like they aren’t getting enough value for their money they will quit en masse which means less revenue overall. Again, feels like common sense here but you seem to be allergic to it so far.
are you even reading? Or is that too much to ask?
The original comment is:
"And they still increase up the subscription cost like crazy."
The question is:
Why do redditors not understand (never has), that corporation will increase price to boost profits
It's like asking, "why do dogs chew on bones?". For 20 years straight.
Why?
Are YOU even reading?
The original comment never mentions why they don’t understand why corporates want to boost profit? It wasn’t even a question. Is reading comprehension too much to ask? Why do you assume people don’t know it’s greed?
You think you alone poses the genius level intellect to know that corporations are greedy and no one else knows??
Sure, it's not s question. But the sentence is a critique of some kind with the intent to express surprise. Like something shouldn't happen has happened, oh wow!
Corporations are suppose to make money. The maximum amount of money. What's surprising here. I still want to know after 20 years.
The original comment is calling out that Netflix’s price increases are excessive when you consider the amount of profit they’re already making. Nobody is questioning why they’re doing it. To me it seems like English isn’t your first language and you’re interpreting the original comment as them being confused or asking a question when they’re not.
Thats actually fantastic graph to show why in EU we need high digital tax on American corporations. Its fucking crazy how much money is sucked from market without reinvesting in European economy. They have high margin and money is actually exported straight to US.
Why is it that American companies are able to thrive in Europe but Europeans ones cannot?
Thats completely different problem, unrelated to reason why digital tax is necessity. I wish EU leaders had spine.
That a complex question. I see it a modern day slavery
Those engineers in the US earning $190k as a minimum are slaves?
No, no, those Europeans paying €10-20 a month to Netflix are slaves!
(Or something like that. I defer to /u/buildersunstable 's undoubted brilliance and insight here.)
Digital service taxes ultimately get paid by the EU consumers
You can say this about literally any tax.
The entire company is ultimately "paid for" by consumers, since that's the source of their revenue.
The point is that they don't have an unfair advantage over local companies. Not to save customers money.
If it was about unfair advantages, then the EU wouldn’t have exempted most of their own tech companies from the DSTs
Netflix would need to eat big part too. Still its better than allowing to export money to US.
Netflix films a ton of stuff in Europe
You don't realize problem.
Lets imagine Ford is not present in EU and decided to start operating in EU. They need to build factories and hire tens of thousands people. They also need to buy a lot of products so even more jobs are created in companies working or even created only to satisfy Ford needs. It means that impact of our car manufacturer is really big in EU. They are making profit but also need to use a lot of cash for business to keep flourishing. This money circulated in economy and creating ripple effect for economy.
On the other hand services are high margin. Smaller portion is reinvested in economy and bigger goes straight to pockets of shareholders. And thats where problem lies - because this money simply leaves economy. Its not ideal but still ok for US market as money is not directly reinvested but still stays in USA, but terrible for other regions. Thats exactly why a lot of countries consider digital tax and why American presidents try to pull every string to pressure countries to abandon those plans.
Its not about how much costs Netflix has in EU. Its all about fact that thse costs are low compared to income and money leaves economy.
France has actually requested SVOD companies to invest a certain percentage of their catalogue on French media.
VODs are doing this anyway as this makes their service more interesting to local consumer.
Yh, it supports the local economy and boost company revenue. So it’s a win win.
Do they or does it sit in an Irish subsidiary until they’re able to move it into the Us for less than 10% like how Apple does it
I explained it many times already.
Its not about tax.
Maybe EU needs to stop using US products?
There’s nothing beautiful or interesting about a sankey diagram in 2025 - it represents the absolute minimum effort version of an r/dataisbeautiful post.
I love sankey for my own personal spending reports, but they get extremely tiring on reddit. You seen one quarterly report, you seen them all.
I hope we eventually get around to banning these on this sub. If you've seen one, you've seen them all. And I've seen so so so many.
Absolutely - I used to get even more mad about them, but then eventually I just sort of realized I was yelling at a cloud. They are so low effort and they're constantly used by the worst kind of business/ai/bot spammer accounts to build karma.
I mean I'd say like 1/50 posts that get popular here are actually good, interesting, remotely novel ways to present data.
Where is the production cost?
cost of revenue
Couldn’t make another season of mindhunters because it would have eaten into their 30% profit margins.
How is this graph made? Can I do this in excel?
So if we extrapolate that their profit was about 6.2b for the year…. How on earth are they trying to buy WB for 80+????
Probably with stock
You have to check there cash on hand and what is their debt to equity ratio and how much banks can’t loan them
that sweet sweet KPop Demon Hunter money..........
These companies invest their money. Income from non-operating profit is missing?
A cool $1 billion a month in profit.
This is why they’re making Squid Game: American Edition and why I sail the high seas