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.
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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