Roblox Evades Taxes Using Questionable '90s-era Tax Law Aimed At Helping Small Businesses
CEO hands out stock to family members to "spread" the wealth among multiple entities.
Roblox is worth billions of dollars. Much of that money is made off the efforts of underpaid content creators, many of them minors. So it probably comes as little surprise, in the year 2021, that the Roblox corporation pays less in taxes than you might expect a multi-billion-dollar company would, because of course it doesn't.
As Kotaku explains, via the New York Times, a 1993 tax exemption law aimed at startups, the Qualified Small Business Stock exemption, says that an entity that's worth less than $50 million can qualify for reduced taxes. When Roblox was founded in 2004, it qualified for this exemption, and CEO David Baszucki has repeatedly gifted stock to family members to shield their portions of the company from taxes, while still essentially maintaining control over the whole thing.
As Kotaku points out, this is all perfectly legal as the law is written, though "stupid," as the U.S. tax system is "a loophole-laden exemption that would eventually be so abused that participating in it would be considered a right-of-passage [sic] for Silicon Valley’s ultra-wealthy."
Nevertheless, it's all a bit shady and fits the motif of Roblox, which is looking like an increasingly shady company with every passing day -- but it's also hard to say that any of us wouldn't do the same, given the opportunity. That's why the ultra-rich have armies of accountants to find these kinds of loopholes, since paying them a token fee is much cheaper than paying actual taxes.
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About the Author
Jason Winter is a veteran gaming journalist, he brings a wide range of experience to MMOBomb, including two years with Beckett Media where he served as the editor of the leading gaming magazine Massive Online Gamer. He has also written professionally for several gaming websites.
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No corporation, business, or individual can help countries they reside in economy by using loopholes and dodging taxes.
Its awful to watch and to understand that with BILLIONS and billions you can do all this and turn around and not pay your bit for the country that helped you.
This action shows contempt and ignorance of the game companies own government system and the overall community loses because of these disgraceful actions.
I would of thought Amercia would toughened tax due the a dope called Donald Trump who never paid a tax dollar and admitted to doing so but still got in presidency through Russian intervention of giving him more votes and to see that was no of no interest in why he got power and why he don't taxes because he knows all the loopholes and so does every other corporation.
To now see game devs doing this with BILLIONS is disgraceful and they the game company should never of able to become game companies, because game companies are supposed to be for fun and not " lets ALL rip off their our country" of desperately needed funds.. shameful and sad in times like these..
There should be one tax and got to pay it no matter how rich you are.