Feeds

Facebook IPO to stuff $2.5bn in California tax coffers

Zuckerberg & Co. bail out Golden State

High performance access to file storage

California state budget analysts report that Facebook's impending IPO will bring the state a tax windfall of nearly $2.5bn.

"Facebook's possible IPO ... [is] likely to generate substantial capital gains and other income for a small number of Californians and, in so doing, generate additional state tax revenues over the next few years," concludes a recent report from the California Legislative Analyst's Office (LAO).

You know that you're an important US company when the state with by far the highest GDP in the country lists you as a line item in its projections for personal income tax:

Facebook's IPO impact on California's personal income tax revenues

The Facebook IPO – more influential to short-term state revenues than the Bush tax cuts (click to enlarge)

That ginormous chunk o'change will be delivered to the Golden State's taxmen thanks to newly minted Facebook millionaires and billionaires paying capital gains taxes when they exercise their stock options.

The LAO cautions against the uncertainties of the market, and notes that it's impossible to plan any Facebook windfall with any precision. That said, the report advises that "given that an IPO clearly would benefit state revenues, we believe it is appropriate for policymakers to incorporate this into their budgetary discussions."

Although the report's projections assume a $100bn market cap for Facebook at the IPO, the LAO's analyst, Mac Taylor, was clearly crossing his fingers as he typed the report.

"If the IPO results in a market capitalization of well over $100 billion and/or Facebook's stock price climbs significantly above its IPO level (particularly in the first 6 to 12 months after the IPO)," he writes, "the state revenue benefit could be $1 billion or more over the level we assume, spread across a few fiscal years."

Ah, Mark Zuckerberg, how does it feel to hold the fate of 38 million Californians in your 27-year-old hands? ®

Top three mobile application threats

More from The Register

next story
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Record labels sue Pandora over vintage song royalties
Companies want payout on recordings made before 1972
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Number crunching suggests Yahoo! US is worth less than nothing
China and Japan holdings worth more than entire company
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
prev story

Whitepapers

SANS - Survey on application security programs
In this whitepaper learn about the state of application security programs and practices of 488 surveyed respondents, and discover how mature and effective these programs are.
Combat fraud and increase customer satisfaction
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Top three mobile application threats
Learn about three of the top mobile application security threats facing businesses today and recommendations on how to mitigate the risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.