Feeds

Facebook IPO to stuff $2.5bn in California tax coffers

Zuckerberg & Co. bail out Golden State

The Essential Guide to IT Transformation

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? ®

The Essential Guide to IT Transformation

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Sonos AXES support for Apple's iOS4 and 5
Want to use your iThing? You can't - it's too old
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.