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Zoom Paid $0 in Federal Income Taxes on 4,000% Profit Increase During Pandemic: Report

The U.S.-based online video chat platform Zoom has seen its profits skyrocket by 4000% during the Covid-19 pandemic thanks to the growing reliance on remote work and schooling, but an analysis by the Institute on Taxation and Economic Policy finds that the company didn't pay a dime in federal corporate income taxes on its 2020 windfall.

The reason, according to ITEP senior fellow Matthew Gardner, lies mainly in Zoom's "lavish use of executive stock options," a common tactic of big corporations looking to skirt their federal tax obligations.

"Zoom's success in using stock options to avoid taxes is neither surprising nor (currently) illegal." 
—Matthew Gardner, ITEP

"Companies that compensate their leadership with stock options can write off, for tax purposes, huge expenses that far exceed their actual cost," Gardner explained. "This is a strategy that has been leveraged effectively by virtually every tech giant in the last decade, from Apple to Facebook to Microsoft. Zoom's success in using stock options to avoid taxes is neither surprising nor (currently) illegal."

Zoom reported $660 million in pre-tax profits in 2020, a massive leap from its 2019 pre-tax profits of $16 million. Eric Yuan, Zoom's founder and CEO, accurately described 2020 an as "unprecedented year" for the nine-year-old company in its latest earnings report.