No Such Thing As a Tax-Free Lunch At Google? 631
theodp writes "In search of the best corporate cafeteria in the world, Gourmet Live's Tanya Steel visited the Googleplex, where she found Petaluma chicken cacciatore, porcini-encrusted grass-fed beef, whole-wheat spaghetti pomodoro, and Parmesan-creamed onions on the menu in one of the search giant's 25 cafes. So, must all good things come to an end? The WSJ's Mark Maremont reports that it's debatable whether Silicon Valley's daily fringe-benefit meals are taxable, and the issue is now on the IRS's radar. 'What would a food tax on Google's meals look like for the average employee?' Maremont asks. 'Assuming a fair-market value of between $8 and $10 per meal, a Googler chowing down two squares a day could get dinged for taxes on an extra $4,000 to $5,000 a year.' That'd be just fine with UF tax-law Prof. Martin J. McMahon. 'I buy my lunch with after-tax dollars,' said McMahon. 'And I have to pay taxes to support free meals for those Google employees.'"
slow news day? (Score:4, Insightful)
Re:slow news day? (Score:5, Insightful)
Well Google's searches obviously provide a benefit to us as users and we pay nothing for them, therefore we are getting income, which by the same argument should be taxed. Does that mean we owe the IRS every time we do a google search?
Re:slow news day? (Score:5, Funny)
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The issue isn't our relationship with Google, but Google's relationship with its employees. If Google pays it employees in cash, this is obviously taxable. Can Google pay its employees in "free" lunch? If employees buy their own lunches, they can't deduct it from income. In effect, providing lunch to its employees is a form of tax-free compensation. In an ideal world, my employer would pay all my bills directly, and I would be taxed only on the remainder. Of course, that can't work.
By the way, we pay
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> So in your world would firefighters be required to pay for
> meals and housing while they stay at the fire station and
> have that reflected in their income tax statements?
Unless exempt in-kind payment is taxable.
The law says that meals and/or housing provided "for the convenience of the employer" (i.e., you can't really do your job unless you eat and/or reside there) are not taxable income. The same applies to vehicles. This clearly does not apply to Google and their free meals should always hav
Re:slow news day? (Score:5, Insightful)
How on earth is Google supplying free meals not "for the convenience of the employer"? Having free meals on-site means more employers will stay on-campus, rather than leave the campus for probably lengthier lunch breaks, plus they're more likely to share meals with other employees, discussing work issues. You think Google is giving out free meals out of pure generosity?
If corporations could convince employees to forgo living in their own houses, and instead live on-campus in dormatories, they'd do it in a heartbeat. It's exactly what they do in China. You get more work out of people when they don't have a personal life outside of work.
So, by your crazy logic, should smaller companies that have free sodas and coffee for employees require employees to account for every single cup of coffee they drink there, and pay taxes for it? How about companies that provide elevators for employees? Should non-disabled employees be required to pay taxes for every elevator ride they take, since they could after all just take the stairs instead? How about companies with parking lots? Should employees be required to pay taxes for the luxury of being able to drive to work instead of taking the bus, and not have to pay for parking?
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You might, but there's a greater chance that someone leaving campus for lunch could meet with someone else, or just go by themselves, and not talk to coworkers about work-related issues during that lunchtime. Plus, having to leave campus and go elsewhere takes extra time, which they could be spending at work instead (we're talking about salaried employees here). So it's to the employer's benefit to encourage employees to stay on-campus for lunch and only socialize with immediate coworkers, and offering fr
Re:slow news day? (Score:5, Insightful)
Those things aren't permanently given to employees.
Irrelevant. Those are services provided which have a monetary value. There's lots of places where you have to pay $5 or $10 a day to park your car. Elevators cost money to operate, if for no other reason than the electric power needed.
Never worked anywhere where soda was free, I even worked in places where coffee/tea were not gratis.
There's tons of tech companies where sodas and other drinks are available for free; this was particularly true during the dot-com boom, probably less so now.
There's tons of places where there's coffee pots available to use, as well as microwave ovens. These are free even if you bring in your own food items to use in them, but that costs the company money for the electricity.
But these costs (coffee/tea/water) are almost negligible compared to lunch.
Wrong: a coffee drink at Starbucks can cost $4. You might say that Starbucks is overpriced, but that's irrelevant: someone obviously thinks a coffee drink is worth $4, and that's a large fraction of a lunch. It could be argued (by the IRS) that those free coffees are also worth $4, and employees should be paying taxes on them.
But an additional difference: lunch is personal time.
No, it's not. There's no such thing as "personal time" when you're a salaried employee.
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no, quite relevant. We are talking about taxable compensation. Google isn't "giving you" the property they own that constitutes a parking space. They are allowing you to park your vehicle on their property as long as you're an employee. The service has monetary value, but it is not compensation for your work any more than "providing electricity to power your computer" is compensation for your work. It is a precondition of you being able to work, and it is provided for work purposes by your em
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So in your world would firefighters be required to pay for meals and housing while they stay at the fire station and have that reflected in their income tax statements?
Housing No, Food Maybe.
Firefighters are required to be on the premise and the housing is functional and minimal. It’s not like a firefighter could bring up their family on the premise. To extend, off shore oil workers get free housing because transport to/from the mainland is impartial. On Shore workers have to pay for their own.
For fo
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Re:slow news day? (Score:5, Informative)
As a Googler, I can tell you we ARE taxed for meals, to the tune of $4,650.00 in 2012. The company then pays a 'gross up' to make it a non-event for the employees. So all this complaining about 'free lunches' is entirely off-track, and this Professor of Law has demonstrated he doesn't know how to do basic research before talking.
Re:slow news day? (Score:5, Informative)
As a Googler, I can tell you we ARE taxed for meals, to the tune of $4,650.00 in 2012. The company then pays a 'gross up' to make it a non-event for the employees. So all this complaining about 'free lunches' is entirely off-track, and this Professor of Law has demonstrated he doesn't know how to do basic research before talking.
I can confirm this. My understanding was that the IRS negotiated an agreement which required taxes to be paid on meals at the smaller campuses, because on larger campuses the time it would take for Googlers to go off-campus to eat was accepted by the IRS as sufficient business value to justify it as a business expense. But that may be incorrect, or maybe the IRS changed its mind later.
In any case, I work in the Boulder office and I do pay income taxes on my meals, and Google then offsets it with a grossed-up payment so the tax doesn't impact my income.
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It all depends on what kind of taxation entity you are.
If you are a non-employee, there are a lot of things you can deduct. If you are a business entity, then the tax code is created in your favor.
Re:slow news day? (Score:5, Funny)
If you drive a car, I'll tax the street
If you try to sit, I'll tax your seat
If you get too cold, I'll tax the heat
If you take a walk, I'll tax your feet
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If Google successfully defends this case, then perhaps I can offer free lunch to my employees and reduce their pay. That way I'll be giving them a form of compensation that they won't have to pay income taxes on. I already provide life insurance coverage up to $50k tax free, and health insurance coverage as a means of compensating them without them having to pay taxes on the compensation.
Dollar for dollar I can compensate employees more efficiently with these other benefits $1 worth of health insurance cove
It isn't taxed already (Score:3)
They didn't pay tax already on the money used to purchase them in the sense that they paid corporate income tax on the funds. Because the expense of buying the food and preparing it and cleaning up afterwards etc is written off as a business expense and thus isn't all Google's profit ... some of it is (depending on what tax bracket Google is paying) but some would be tax money that could pay for all the infrastructure Googlers and the rest of us use every day.
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I thought we valued people paying their fair share of taxes.
The Googlers are certainly in the top 5% of earners in the US, many of them are probably in the top 1%.
Why wouldn't you want them paying their fair share?
Are we going to go after schoolchildren that trade desert cups at lunchtime because one has a higher value than another and can be called taxable income? If I pay the check for a date does that mean she has to declare it on her taxes?
Any company that provides free (to the employee) lunch is eating the cost, pardon the pun. If the issue is whether the lunch benefit is taxable, perhaps buying the food from a supplier should already pay the tax. I have no idea if it does right now or not, or what tax arrangeme
Re:slow news day? (Score:5, Insightful)
Are we going to go after schoolchildren that trade desert cups at lunchtime because one has a higher value than another and can be called taxable income?
Do you think its worth the IRS's time to pursue 8 year olds for capital gains made by trading dessert cups on the underground schoolyard dessert cup markets? Why they might have dollars of undeclared income! Couple that with their allowance... /faceplam
If I pay the check for a date does that mean she has to declare it on her taxes?
When you say date do you mean prostitute? If so, she an independent contractor. Is the meal a business meeting? It may be a deductible expense for you.
Otherwise, you may want to look into gift taxes but your likely in the top 1% of the top 1% if you are running into your annual exclusion limits taking someone out on a date.
If the issue is whether the lunch benefit is taxable, perhaps buying the food from a supplier should already pay the tax.
That's not the point. If a valuable benefit is being provided to the employees, then the value of that benefit is counted as income, and income taxes are due. If you get a company car and you use it for personal driving then its a taxable benefit.
The only question is whether providing lunch is "work related" in the same way that providing you office supplies is "work related". If the company brings in pizza on a night everyone is working late... then no the pizza shouldn't be considered a taxable benefit. But pretty much everything with taxation works on limits and exclusions and thresholds. A gourmet cafeteria could easily cross the threshold into taxable benefit territory.
And lets say that it does. Its still a screaming good deal.If eat out $5000 worth of restaurants in a year... then I'm out $5000, plus I pay another $1000 or so in income tax on the money. I'd be delighted to not have to pay the $5000 and just have to pay the $1000. Hell, I wouldn't blink at taking a $3000 dollar reduction in income for a $5000 perk like that.
Crying over income tax on taxable benefits is nuts.
Re:slow news day? (Score:4, Insightful)
Yeah, health care should definitely be eliminated as an employer benefit. That's what's caused the entire healthcare debacle in the first place: employers pay for health because it's a pretax benefit. You end up to a place where "insurance" just means paying for everything, and has no meaning anymore. And also hugely expensive.
Buy your own health insurance for cheap (for the small chance you'll have a heart attack or other catastrophic health care problem that a few percent of the population have). For the other stuff (colds and whatnot), just pay out of pocket. It would be cheap if everyone didn't have Cadillac health programs.
Re:slow news day? (Score:4, Insightful)
Yeah, health care should definitely be eliminated as an employer benefit. That's what's caused the entire healthcare debacle in the first place: employers pay for health because it's a pretax benefit. You end up to a place where "insurance" just means paying for everything, and has no meaning anymore. And also hugely expensive.
Buy your own health insurance for cheap (for the small chance you'll have a heart attack or other catastrophic health care problem that a few percent of the population have). For the other stuff (colds and whatnot), just pay out of pocket. It would be cheap if everyone didn't have Cadillac health programs.
Close, but not quite. Unless you decide that anyone who can't pay for medical care should die, health care becomes a shared cost to society. A single payer health care system would free employers from the burden of providing health care, allow entrepreneurs to pursue their own business goals without fear of losing health coverage, and provide massive cost savings by allowing everyone to receive preventative care rather than having the 50 million uninsured people end up in the ER once their condition has deteriorated to the point where they can no longer ignore their illness.
Re:slow news day? (Score:5, Insightful)
A single payer health care system would free employers from the burden of providing health care, allow entrepreneurs to pursue their own business goals without fear of losing health coverage, and provide massive cost savings by allowing everyone to receive preventative care rather than having the 50 million uninsured people end up in the ER once their condition has deteriorated to the point where they can no longer ignore their illness.
The role of an emergency room as a health care center is there because they are required by law to not refuse treatment and that many people somehow figure out how to avoid paying for medical costs. It is skewing the way that people seek health care assistance when
The real "solution" is to simply let doctors be entrepreneurs and for them to charge reasonable professional rates for services rendered in an open competitive marketplace where the patients are the customers. All of the messes in the health care industry are precisely because this doesn't happen and the government trying to meddle into that client-practioner relationship.
Thank goodness engineers aren't paid by insurance companies and government agencies to build homes and businesses.... at least in most cases. Even more so, that such activity is seem as "essential to life" and deemed something that should be nationalized with all engineers encouraged to become government employees.
I like how you edited out this part of my comment:
Unless you decide that anyone who can't pay for medical care should die, health care becomes a shared cost to society.
You and I disagree fundamentally on whether or not someone should die because they're broke. I don't think they should, you clearly think they should.
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http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States [wikipedia.org]
According to Wikipedia:
Arkansas, Georgia, Illinois, Missouri, North Carolina, Tennessee, Virginia, and West Virginia are the only states that levy sales tax on groceries. So, yeah, Americans don't generally pay sales tax on food used to prepare meals seems about right.
Re:slow news day? (Score:5, Insightful)
Employment relationship? Are you fucking stupid? Since when is taxation based on employment only? The government wants to tax any and every transaction where net GAIN occurs. Win the lottery? Pay up. Found hidden treasure in the backyard, pay up. The school children example is absolutely relevant. If a child has a net gain by trading his dessert cup, that's GAIN and therefore technically taxable.
And since when do software engineers opt to take their salary in the form of food? Meals are a fringe benefit designed to keep employees happy. Will you tax free on site gym usage as well? How about fancy, office chairs? Or how about taxing free legal advice that some companies offer? How about taxing employee discounts on the products the company sells? Company holiday parties? Tax that bitch. You know what, you and IRS can go eat a bag of dicks. Stop taxing everything under the sun.
Sure, we can stop taxing everything. As soon as a bunch of people decide that we shouldn't be giving food and money to people who don't work or are disabled, provide fire and police protection, build highways, and a bunch of other shit that people keep asking the government to provide.
CEOs have to pay for their company cars if they use them for personal use. It's not unusually for people that own a business to have the business pay their bills, so why shouldn't that payment be taxed?? Obamacare has decided to tax overly generous health care plans.
If a benefit becomes a significant source of savings for employees, such that salary could be reduced because the benefit makes it worthwhile, why shouldn't it be taxed?? When the government raised income taxes, companies switched to options and benefits to compensate high-salary employees because it became cheaper.
Google providing food to it's employees is a method to retain workers without having to pay them more, and may encourage employees to hang around the office and work more. So Google gets the benefit of buying food, which they don't have to pay unemployment tax or medicare tax or medicaid taxes on and use that as 'payment' to work there instead of shelling out bigger paychecks.
There is a significant difference between providing a lunch every month of sandwiches, and providing free food every day. While I don't completely agree with taxing this as income on a personal level, it is consistent with existing taxes.
But, like the Occupy Anything hypocrites, feel scream out to tax everyone but me. Or feel free to scream out that taxes need to be cut without offering to reduce spending on social programs.
Re:slow news day? (Score:5, Insightful)
They (statistically as a group) pay far more of their "share" than most. Certainly more than the professor who complains about having to subsidize their lunch - especially ironic while he eats lunch at a state-subsidized university's cafeteria.
Re:slow news day? (Score:5, Informative)
I have the option of eating at my state university's cafeteria, but I get charged for the privilege at least as much as the students do.
Re:slow news day? (Score:5, Insightful)
How about we bitch about cutting spending rather than finding new ways to make people pay more to our genocidal government?
Re: slow news day? (Score:4, Insightful)
I pay an average of 52% taxes, with a 67% tax on the "last dollar". After which I pay 25 VAT ("sales tax") on pretty much everything I Buy with the exception of my house and my children's daycare. Don't even get me started on my car, which is taxed by more than 180% !
And you know what? I am happy to pay my fair share. Hell, I would pay a couple of percent more if I wasn't the only one to do so.
The problem is that the richer you get the easier it also gets to dodge taxes. The more corporations and shell companies you can wrap around your spendings the easier it is to avoid taxes. And it just so happens that most wealthy people use such schemes to avoid paying their fair share.
Yes, really. They do.
So the guy on the floor can't help but pay his fair share while the top directors never seem to do the same.
You may try to claim that only "people who have less" are bitching. But reality is: they're the only ones who have anything to bitch about. Because they can't ever use the same clever schemes to avoid their taxes (due to the simple lack of having their own full-time accountant and very large sums of cash).
The fact that "people who have less" are the ones bitching does not mean they don't have a case. Correlation != causation.
- Jesper
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Voluntary donations sounds like a fine idea. If it wasn't a tragedy of the commons [wikipedia.org] type of situation, that is.
If you based your taxes on voluntaring, then the economically best action for the indivdual would be to pay nothing and freeload of everybody who paid something. That doesn't sound like anything that could work in any society. Paying taxes only works because we are forced to do it (or find another country to live in).
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When you attend a company Christmas party..... do you have the amount of money spent on that party (perhaps pro-rated per employee) added to your paycheck as "income" to be taxed? Why not?
That is what is being talked about here. This is a business expense where employees are receiving a benefit (perhaps a lavish Christmas party.... or just a free meal at company expense if just once in awhile or on a regular basis doesn't matter) and it isn't considered "income" on the part of the employee. What is being
No you don't. (Score:5, Insightful)
I'm pretty sure that Google's advertisers pay Google to pay for the free meals for those Google employees. Without prejudicing any other case for equitable treatment, just because someone isn't paying taxes doesn't mean they're robbing you. It's the fruits of their own labor. In the absence of laws to the contrary, is Google not entitled to dispose of their money as they see fit?
Re:No you don't. (Score:5, Insightful)
Actually, since that Prof. McMahon is a Prof. at some U, his salary is paid from taxes. It's HIS lunches that are paid by tax dollars.
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Re:No you don't. (Score:5, Insightful)
his salary is paid from taxes. It's HIS lunches that are paid by tax dollars.
NO, the WORK he does for the University is paid for by tax dollars. He then chooses to spend them on lunch. His lunches are "paid from" his work effort.
If his lunches were "paid by tax dollars", that would mean he was eating for free. He's not.
Re:No you don't. (Score:5, Insightful)
And he doesn't support those 'free meals' for Google, Google does. Its not like the IRS is paying the bill for Google.
He's just a whining bitch.
Re:No you don't. (Score:4, Insightful)
Ultimately, the government is punishing everyone else unfairly because the IRS et al has a culturally reenforced entitlement complex about other people's money while the legislative branch refuses to operate within a balanced budget. This professor, probably suffering from the left wing tunnel vision found on most campuses, is just expressing faux 'outrage' at the schleps working 16hr days at google getting a few perks. Google probably treats it as a business expense, and it makes sense. Workers who stay on campus during lunch are more likely to be doing work than those who go out. Really, how does this differ from other perks given by other companies?
Seriously, with the deficit as high as it is, the IRS needs to quit going after the low hanging fruit and focus on people and organizations who truly are evading taxes on a massive scale. If they are targeting google for evasion, considering google's income, employee lunches can't possibly be the major issue.
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Google is both legally and morally correct in my opinion. They are employing people to cook, buy the raw materials legally and offer food to their employees. How would you like paying taxes for food you prepare at home?
You do. If you purchased goods for $10 that you turn into a meal, you probably used up $15 of your before tax income, of which you paid $5.
Re:No you don't. (Score:4, Insightful)
Google is undoubtedly considering free meals as a business expense and thus it's paying lower taxes (or in Google's case, getting more money back from the government) by providing free meals. So yeah, he - and I - and you - are helping to pay for those free meals.
Re:No you don't. (Score:5, Informative)
no, we're not. business expenses dont work like that for companies, and not on that large a scale.
the rules fro business expenses are quite stringent and clear cut. if that sort of thing could qualify, all goods and services would be dramatically cheaper because EVERYTHING is a business expense, and they would be writing EVERYTHING off.
doesnt work like that; free lunch is an expense, but not a deductible one.
"Section 162(a) of the Internal Revenue Code is the deduction provision for business or trade expenses. In order to be a trade or business expense and qualify for a deduction, it must satisfy 5 elements in addition to qualifying as an expense. It must be
(1) ordinary and (2) necessary (Welch v. Helvering, 290 U.S. 111, defines this as necessary for the development of the business at least in that they were appropriate and helpful). Expenses paid to preserve one’s reputation do not appear to qualify (Welch v. Helvering). In addition, it must be (3) paid or incurred during the taxable year. (4) It must be paid in carrying on (meaning not prior to the start of a business or in creating it) (5) a trade or business activity. To qualify as a trade or business activity, it must be continuous and regular, and profit must be the primary motive"
So providing free lunch (or really most employee benefits) at work is disqualified from deductibility just by the first two:
1- lunch is ordinary, but providing free lunch to employees is not ordinary. they could just buy it themselves
2- not necessary. again, can buy it themselves. and while labor laws say you much provide a lunch break, it doesnt say you much provide the lunch
Essentiall the question is can the business function without it? If yes, its not deductible. If no, then it is. An independent truck driver who pays for his own gas (diesel): the diesel qualifies for deduction. The same truck driver who outfits his truck with an expanded cab with a mattress and wants to write off the installation: Most likely not (debateable; some agents I've talked to would let it go as it saves him money on long hauls, but most agree his business can function without it cause he can just sleep in a motel..which ironically would itself qualify for deduction).
Free lunch is a benefit to the employees that helps with morale and retention.
But while it may be an expense to the company, it is not a deductible one.
Re:No you don't. (Score:5, Insightful)
It's the RIAA model applied to taxes. If someone is getting something for free, it must be coming out of my pocket.
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His tax money isnt paying for the lunches; Google's customers are.
How is this guy teaching tax law if he doesnt even understand basic taxes or business sense?
Re:No you don't. (Score:5, Funny)
Dude, it's not Google's money, it's all the government's money. Google should be grateful for being allowed to use it.
(Add sarcasm tags as needed)
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I was a majority owner of a software publishing business in the 80's. After we started making money, I decided to have the company buy health insurance for all the employees including myself. Treated the health insurance as an expense just like every other corporation did.
The difference was I was a majority owner of a privately held corporation. In 1989, the IRS decided that people in that situation should pay income tax on the health benefit. My employees weren't taxed, just the three officers/owners of
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Unless deficit spending were a good idea, and right now, it is.
Re:No you don't. (Score:5, Insightful)
Defecit spending is not a bad thing, in principle. But that relies on the premise that you are not over-extending yourself to a point that you cannot feesibly repay the debt. Having a credit card with a balance is not stupid. But it is stupid to have 10 credit cards all maxed out when you make $50k / year, and even more stupid to be applying for more. Our government is at that point.
No amount of taxation can close the gap if we do not cut spending. You could take every dime from the richest Americans and still be spending more than we take in. AND you wouldnt have the on-going capital in the economy that that richest Americans are responsible for.
Re:No you don't. (Score:4, Insightful)
Blame Regan... He started the insanity
No, blame John Keynes, he advocated what the various world governments started doing in the 1930s.
Re:No you don't. (Score:5, Informative)
Tax rates affect behavior.
Big deal (Score:2)
So, I can't imagine that most Google employees are eating TWO meals a day there - maybe a meal and a snack. So, the benefit is probably $2500/yr or so.
And that is gross income. Even if their marginal rate is 35% they'd only pay an extra $800 in actual taxes on that.
If you gave me a choice of paying for typical cafeteria fare at a typical fortune 500 at typical rates for cafeteria food (ie mediocre food at premium prices), or paying an extra $800 in taxes so that I could have gourmet food at lunch every da
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There is a cost that you are not measuring - I was fortunate enough to work somewhere where we also had some quite awesome food freely available at lunch time. Maybe not to Google standards, but it really was plentiful, fresh and very nice. Needless to say I then spent a small fortune on gym membership to bring my weight back down to almost normal levels.
Now I'm hungry again, dammit
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That's why you ride those employer-subsidized Google bicycles. Uh-oh.....
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So, I can't imagine that most Google employees are eating TWO meals a day there - maybe a meal and a snack. So, the benefit is probably $2500/yr or so.
And that is gross income. Even if their marginal rate is 35% they'd only pay an extra $800 in actual taxes on that.
If you gave me a choice of paying for typical cafeteria fare at a typical fortune 500 at typical rates for cafeteria food (ie mediocre food at premium prices), or paying an extra $800 in taxes so that I could have gourmet food at lunch every day (just grab whatever you want and stop by for ice cream in the afternoon if you have a craving), I think I'd take the gourmet food. I pay way more than $800/yr on lunches already most likely, and I don't eat like they do at Google.
A cheese steak, drink, and mushy fries at work costs me $7.50. Gourmet food for $3.50/meal in taxes - sign me up! Oh, and if your marginal rate is lower then it is even cheaper.
From my experience two meals a day seems reasonable. It's not particularly good, mind you - it's comparable to an average college dining hall - but it's free and convenient. It's also free and convenient for local homeless people, who seem to get into some of the cafeterias by being clean and walking through the door with a purpose. Last time I was in a Google cafeteria, at least, they were taking full advantage of the lack of authentication (and so was I).
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You touch on an interesting point.
If the meals are not reserved strictly for employees only, then it could be argued that the food doesn't even qualify as a fringe benefit to begin with since you don't have to work to get it.
Since when was Google Tax Supported? (Score:2)
I don't think this guy knows what he's talking about ....
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Google is directly paying the salaries for the employees preparing the food, as well as the raw food components and any related taxes. If the US finally has free public health care to some degree, the healthy food they provide probably saves on medical expenses as well. I can see it being taxable, but to nowhere near the 'full' value.
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In Professor McMahon's perfect world, Google would pay extra salary to each of their employees, who would be taxed on that as income, and they would then use that money to buy food, paying sales tax. By giving people food instead of money Google is skipping both taxes.
Assuming a marginal tax rate of 20%, plus an extra 10% in sales tax, those $10 meals would generate $3 in taxes. For two meals a day, with a working year of up to 250 days, that's $1500 per year in potential taxes which aren't being collect
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Don't forget the extra payroll tax and the extra SSI / FICA.
At some point, I'm going to trace $1,000 through the system to see how many hands it has to pass through for the government to have claimed at least $900 of it. (I'll assume a starting point of it being part of an average worker's salary.) Income tax takes a chunk, sales tax takes a chunk, the business counts some of it as income (which is taxes) and they pay their supplier who takes some of it as income, etc. I wouldn't be surprised if the gove
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I am 100% positive that Google will write of their entire perks program as an operating expense which is opposed to taxable earnings, hence its a tax break (though only the % of their tax rate's portion of the program).
What is missed as a taxible function would also be the value added to the food costs from aquisition, preperation, and service of said food, unless of course restaurant food isn't taxed on a state/national level.
Cost to prepare/serve versus prevailing cost? (Score:3)
I bring my lunch 80% of the time. When I buy my lunch I don't like spending more than $5, sometimes upwards of $7 if I don't have a lot of choice in the matter. When I bring my lunch it probably costs $1.
If Google has hired on-staff the food prep staff, it'd be more analogous to how school lunches cost, which is to say that an adult lunch in this school system for faculty is about $4.00. If Google doesn't generally allow just anyone to eat in their lunchrooms, then I don't see how they can be held to a full retail standard.
Jealousy of Google perks, nothing more (Score:5, Insightful)
So if I go home and eat my lunch ... no taxes since you don't get taxed on food (maybe in California, you guys are nutjobs ;).
But if I eat it at work, where a cook makes my meal instead of my wife ... that I get taxed for?
Lets see, whats better? Me driving home for lunch, wasting gasoline, road wear and tear and pollution ... or staying at work for lunch?
The UF tax law professor just needs to be shot. He's just a whining bitch. Its not like he has a real job, he's a fucking professor, he doesn't actually work anyway. Two classes a week that he sits in while his assistants do all the work or someone else lectures. String his ass up from a tree until he stops talking. No, I don't like lawyers, especially ones who like to whine about how they are treated unfairly while essentially doing nothing but draining otherwise useful resources from the world and our budget.
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There was a big to-do with a local bagel chain a couple years ago when it came to taxes. If they hand you a bagel and cream cheese, no tax because it's a food item. However, if they take the 20 seconds to slice the bagel and smear the cream cheese on it, then there's an 8% tax because now it's a "prepared food item". The bagel chain hadn't been charging that 8% extra for those 20 seconds of work.
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Yes, that's by definition what a benefit is. If I lived in Google-ville where the company paid for every single service of my daily needs and officially paid me half the wages I'd normally receive, you expect the gov to look the other way and say "meh"? Its not even a tax grab, its simply fair exchange. If the company gives you anything of value, that's taxible. New computer? Taxible. Corporate Jet for personal matters? Taxible. Most companies still stretch the bounds of what are considered perks vs work fu
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But if I eat it at work, where a cook makes my meal instead of my wife ... that I get taxed for?
When put that way, sure. You get taxed if you go out to a sit-down restaurant, don't you?
But that doesn't seem to be the angle here. It looks like the guy is saying that those "free" meals count as compensation, and are therefore taxable. Which given my limited understanding of the tax code, I can see that as being true.
Here in Canada ... (Score:5, Informative)
We (as a country, and yes, I'll speak for my country here) tend to tax things that employees receive as part of doing their job. Like, income. Company car usage on personal business. Certain types of business accommodation perks.
Unless google is willing to open their cafeteria to the world, getting "free" meals as part of your job is, well, part of your job. I think most people can agree that the US tax system has a few loopholes - but why is it crazy to expect people to pay taxes on their income?
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Taxes are typically a percentage, what are you taking a percentage of? The cost the of the food? Cost of labor? Cost of maintaining the cafeteria? Average market price of a certain dish?
Are you saying that I should have to pay tax on using the employee gym where I work too? What about the computer they have set up for employees' personal use?
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Onsite gym
Popcorn machine
Tea/coffee machine
Few other (small) nice odds and ends
Should I be paying taxes on what those items would cost me if I had to pay for them? I think not. I accept that those items cost my company money, which is results in a slightly smaller paycheck. Don't ding me twice by lowering my pay AND making me pay taxes for the value of these items.
Re:Here in Canada ... (Score:5, Informative)
"Should I be paying taxes on what those items would cost me if I had to pay for them?"
Yes.
Deminimis rules apply, but you are generally taxed-as-income on the compensation you receive in exchange for your labor.
That includes cash wages, health care benefits paid by your employer, 401k matching, car allowance if you are not driving miles for work purposes, $1,000/year worth of gym membership, or $5,000/year of food.
Would you do the job for only popcorn? Of course not. Would I take a lower wage if my employer paid my mortgage? Yes, and I should be taxed on that. Somewhere in between those extremes are what IRS Revenue Rulings define. And in this case, the IRS is taking a look at the changes in how companies provide food to employees, and is redefining the rules of what counts an "income".
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Of course where it starts getting hairy is if you actually want those benefits or not.
Yeah, that definitely seems like a tax problem and not an employer policy problem. Maybe we should burn down the house because we have ants, too.
Re:Here in Canada ... (Score:4, Informative)
In Canada, the rule is that if the employees don't pay a reasonable charge for a meal then it's a taxable benefit: Subsidized meals [cra-arc.gc.ca]
You don't pay EI premiums (employment insurance) on it but you deduct pay income tax and CPP premiums (Canada Pension Plan). If they only sporadically work overtime then providing meals for those times isn't taxable.
Tax funded lunches? (Score:2)
"'I buy my lunch with after-tax dollars,' said McMahon. 'And I have to pay taxes to support free meals for those Google employees.'"
How exactly do tax dollars go to fund the lunches at Google's cafeterias? Last time I checked, that money came from revenue earned by Google, through its business. You know, from working.
How would the government prove that a given employee is actually eating the meals? Do they have a swipe card that tracks them? What if they are bringing their own lunch?
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The argument is that because Google employers are not buying their lunch, then they're not contributing to the city/county/state tax revenue pool.
"Huh?" you say.
If Google's kitchens sold those lunches to the employees then the employees would pay tax on the purchase of those lunches.
Thus by not requiring people to purchase the food and thus pay tax on the purchase, they're depriving the city/county/state of sales tax.
From an IRS perspective, Google is effectively providing people a "fringe benefit." The ben
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It's the government. Who cares about tracking employee meals when you can just tax potential meals? They'll come up with some formula like dividing the number of hours worked per week by four, multiplying that by the average cost of the most expensive dish on the menu at the local five star hotel and then adding 10% to account for rounding errors.
Same as free parking (Score:3)
Technically, if you get free parking from your employee (i.e. you don't pay to park at a parking garage because they pay for the spot), that is considered a taxable event. You are supposed to report that on your taxes.
This would be a similar event. You are benefiting by your employer covering the cost.
Whether the final ruling on this matter is considered the same remains to be seen.
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Technically, if you get free parking from your employe[r] (i.e. you don't pay to park at a parking garage because they pay for the spot), that is considered a taxable event. You are supposed to report that on your taxes.
That is quite dumb. My employer also provides me with free water, electricity, heating, cooling, shelter from rain, several computers with which I do my work, etc. And I don't pay taxes on any of it. No one does because everyone gets these sorts of things from their employer including parking space unless you work in Manhattan or Chicago. Now if they gave me a parking space I could use when not working, I could see how that might be a benefit.
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Any fringe benefit you provide is taxable and must be included in the recipient's pay unless the law specifically excludes it. Section 2 discusses the exclusions that apply to certain fringe benefits. Any benefit not excluded under the rules discussed in section 2 is taxable.
If the recipient of a taxable fringe benefit is your employee, the benefit is subject to employment taxes and must be r
yes, let's tax free work lunches (Score:3, Insightful)
... and while we're at it let's tax free coffee, free snacks, hell even all that free water workers drink on break.
Even better, let's tax all time spent on break -- I'm sick of supporting lazy workers on break with my hard-earned-no-break hours!
Does the professor also pay for the water he uses? (Score:5, Insightful)
Say the professor prefers tea & fills his teapot from his university's tap. Does he have an individual meter so that his usage is not coming out of the pocket of the rest of the faculty or the students? If a corporate lunch is an untaxed benefit shouldn't he have one for his tea? Shouldn't he also have one for the toilets he uses? How is his use of these common resources any different from free lunches -- or is it just a matter of time until this becomes the norm as well??
No, because water is taxed...sigh (Score:3)
The university, unless it uses well water, pays for its water like everyone else via the water taxes.
By the way: $10 of water is an ENORMOUS amount of water. $10 barely gets you a nice cheeseburger or salad in many US cities. Typical US household water bill is $330/year, according to a quick search.
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The university, unless it uses well water, pays for its water like everyone else via the water taxes.
WTF??? That attempt at an analogy is a double miss:
1) No, there is no "water tax" that pays for water. The university pays for water, on top of which there might or might not be tax charged, depending on the locality.
2) Google pays for the food, and pays taxes on it.
By the way: $10 of water is an ENORMOUS amount of water. $10 barely gets you a nice cheeseburger or salad in many US cities. Typical US household water bill is $330/year, according to a quick search.
So? From that we can guess that an employee might use $50/year of water at work. So, why shouldn't that also be treated as a taxable benefit to the employee? Not to mention the cost of toilet paper and paper towels and (we hope) soap, which is
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If Google lunches were truly free, open to the public, then it can be argued it's not employment benefit/compensation - merely a charitable expense for Google. But if one needs to be a Google employee to get Google lunches, then the lunches are clearly compensation for employment, and it stands to reason that it should be taxable as such.
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That’s a good analogy, but then why do I pay taxes for my benefits, like my pension plan?
Simple answer, you shouldn't. Just cause government's scummy in one area, let's not invite it into others.
"I have to pay taxes to support free meals" (Score:3)
I have to pay taxes to support free meals for those Google employees
Only in the most roundabout way. It's not like they're getting state funded lunches, they're just not paying a tax. Just like I don't pay a tax when I eat some raspberries that grew on my land. Of course the commissaries at Google probably pay a tax on the foodstuffs when they buy the bulk ingredients.
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That's the same thing I was thinking. Not sure why this guy thinks taxpayers are paying for google employee lunches.
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The restaurant I buy my lunch from also pays taxes on their ingredients. That doesn't mean I get to use a tax-exempt part of my salary to buy lunches with.
Buy. Do you have to pay taxes for free samples at markets? What about soup kitchens? If the bums aren't paying taxes on their free meals, does that mean your tax dollars are funding the soup kitchens? And if the soup kitchens have a religious basis, are your tax dollars funding religion? It's an abuse of logic and the English language to say so.
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Why don't religions pay property taxes?
"That the power to tax involves the power to destroy ... [is] not to be denied" (Marshall).
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof" (US Constitution, Amendment 1)
Inaction by not taxing a thing is not the same as action to establish a thing, whereas action to tax a thing is the beginning step in prohibiting the free [exercise/use] of a thing (whether the further steps are taken or not).
You are subsidizing the marginal support of homeless people.
No, the soup kitchen is subsidizing the marginal sup
Missing taxes are still paid (Score:2)
"Cost the government"? Don't think so. (Score:4, Interesting)
I'm so sick of the expression "cost the government". It's a weasel expression intended to convince people that all money belongs to the government first and they let you have some only after they've spent whatever they want. Bulldinky. Every day you hear about how things have gotten too expensive. Food? Too expensive. Coffee? Too expensive. Air travel? Too expensive. Higher education? Too expensive. Gasoline? Too expensive. Electricity? Too expensive. Insurance? Too expensive. Rent? Too damn high. Healthcare? Too expensive. Why the hell isn't government too expensive? IMHO, if the government got rid of baseline budgeting and actually reduced expenses across the board, those of us who pay for all that crap might not be hell bent on looking for every write-off under the sun.
"Income from all sources" (Score:4, Informative)
The rules are clear if you are working on an oil rig or a deep-diving submersible --- any site so remote and secured that only your employer can keep you fed and housed and the costs are astronomical.
The five-star buffet in Mountain View?
That is taxable as income.
This is not a new issue. Although the concept of tech companies offering their employees gourmet catered dining is relatively recent, restaurants, hotels, bars, and other hospitality businesses have offered their staffs free meals since time immemorial.
In those cases, the US federal tax code allows a business to exclude the cost of meals from its employees' income only as long as the meals are eaten on the employer's business premises and they are provided "for the employer's convenience."
A company like Google might have a hard time proving the latter clause. A recent job posting for a "Food Experience Design Manager" would seem to suggest that mealtimes at the Chocolate Factory's over 120 cafes are designed as much for its employees' enjoyment as to bolster the bottom line:
As the Global Service and Experience Design Manager, you think about everything that goes into how Googlers interact with food. From our ever-popular micro-kitchens to multi-course meals at cafes, the design, layout and experience of eating at Google should promote healthy habits and social serendipity for Googlers. Our food venues need to support the healthiest, happiest workforce on the planet.
Similarly, Yahoo! started offering its employees free food last August, with a spokesperson telling El Reg that the move was "part of how Yahoo! looks after its talent." But meals offered as a recruitment or retention tactic don't count as being ''for the employer's convenience'' either, according to experts.
Tax man to take a bite of tech employees' free meals? [theregister.co.uk]
I'm a tad envious... (Score:4, Interesting)
Who says "No Thanks" to a meal that they didn't have to pay for? Any college student will tell you the best meal they had was "free" not because of the food quality, but because it was free. I'm assuming Google just has a cafeteria that employees can just walk into and get a meal or two during any given day while they are working, and that this is an every day occurrence. I can honestly say, I'm a tad jealous, but I see that as a perk of working for that company. If the IRS is going to tax lunches, CEOs across the nation will have to start paying taxes for their elaborate lunches. But wait, so would every college student who didn't pay taxes on food they ate. Oh and what about all those free day care services some places offer or exercise room, shouldn't those perks be taxable also? Wouldn't this then also impact me going over to a friends house and receiving a meal from a party? I didn't pay for it so I wasn't taxed on it.
This is a slippery slope, and one that if pushed as taxable then it opens up a whole new can of worms. If Google is paying the taxes on the food and upon purchasing the food for giving away, wouldn't taxing the employees be double - taxation?
I'd love it if I could reap such awesome benefits, but I do not begrudge a Google employee from enjoying the perks of working for Google. I'm happy to learn that a company that large is still so generous to their employees.
IRS LINK!!! (Score:5, Insightful)
Did he bother to google (heheh) the IRS Publication [irs.gov] for this? (warning, PDF). Scroll down and:
The fair market value of meals or lodging furnished to an employee by an employer may be nontaxable to the employee. IRC Â119 provides an exclusion for meals and lodging under certain circumstances. Cash provided for meals is not excludable under this Code section; however, under certain circumstances cash can be excluded as a de minimis fringe benefit. IRC Â119
And a few other paragraphs clarifying this seem to indicate that Google and all the other Valley companies that do this are following the rules just fine. Sheesh! I'm not even a lawyer and certainly not a friggin' professor of such.
What of restaurant workers? (Score:3)
I've worked many years in a restaurant as a waiter, and my wife has moved up from working as a server to a manager in the restaurant industry. Did you know many restaurant employees have employee meals? These are either discounted (50% typically) or free meals, and sometimes free fountain drinks also. If Google employees have to report the meal as income, does that mean the servers (who in my state make $2.33 an hour plus tips) have to report the 50% discount as income also? Additionally, almost every manager gets free meals during their work shift - so do they have to record those? What of free fountain drinks - do you charge one per shift, or is each soda refill a full drink charge?
I understand that some people are upset that they pay in post-tax dollars while others are getting a free perk. I don't get a company car - but should those that do be charged the lease value as income when they are provided with one? If a company provides you a uniform, do you pay taxes on it as if you earned the money to buy it? If you make personal printouts or use a company computer for personal activities, if you are provided a company mobile phone and free plan, or any other of the "perks" a job provides, does that have to be counted as income?
Again, I understand you are upset. However, if a company wants to give their employees a perk, I think it should be. If a company is required to report food given to an employee as income in goods to an employee, then it should apply to every little perk given and not just food. In other words, take a pen home, then be taxed on that income - which would mean a much more totalitarian system at work to monitor every little thing every employee does.
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RTFA
it says google uses grass fed beef which my wife buys at $7 a pound. good guess is that the rest of the ingredients are organic or similar quality. add in labor and the other costs of running a cafateria and $10 per meal is a good estimate
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Work breaks are already subsidized in the form of giving government workers a paycheck. You don't think those guys actually do anything, do you?
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Re:Another symptom of pro-corporate bias in Americ (Score:4, Insightful)
First is the blatant unfairness: why do Google employees get tax-free lunches when, someone else (say, for example, me) has to pay for my lunch with post-tax income.
Jeez, take it up with your employer. Why do people feel that if they can't get ahead themselves, they need to try to take others down?
Re:Another symptom of pro-corporate bias in Americ (Score:4, Insightful)
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"dinged for taxes on an extra $4000-5000 per year." Not "pay an extra $4000 to $5000 per year in taxes."
If they are given $4-5k in food by their employer over the course of a year, the argument is that this is a form of income, and thus they should be paying taxes on the value of that food.
Kind of a reasonable argument, actually. If "things" aren't taxable income, then can CEO's request to be paid in cars, jets, and yachts, and avoid all income taxes?
Re:typical (Score:4, Insightful)
Not charging employees income tax on an employer-provided lunch is "letting them walk off with the henhouse"? And coporations complying with tax laws in order to not pay more than they're legally required are "malefactors"? I'd argue that they'd be in dereliction of their duty to shareholders if they *didn't*.