Roblox’s CEO has apparently dodged millions in taxes using a ‘small business’ exemption loophole


In case you somehow still thought Roblox was one of the good ones after all those pieces about its exploitation of child labor, or perhaps if you thought maybe the gaming industry wasn’t just a pit full of tax and stock cheats, allow The New York Times to disabuse you of both notions. Earlier this week, the Gray Lady ran an expose of the finances of David Baszucki, the CEO of Roblox, and his family, who have apparently been exploiting a tax break in a “loophole-laden law” meant for helping small businesses, all to avoid paying “millions” in capital gains taxes. Roblox, of course, is worth $60B and hasn’t been a small business in over a decade.

“The tax break is known as the Qualified Small Business Stock, or Q.S.B.S., exemption. It allows early investors in companies in many industries to avoid taxes on at least $10 million in profits. The goal, when it was established in the early 1990s, was to coax people to put money into small companies. But over the next three decades, it would be contorted into the latest tax dodge in Silicon Valley, where new billionaires seem to sprout each week. Thanks to the ingenuity of the tax-avoidance industry, investors in hot tech companies are exponentially enlarging the tax break. The trick is to give shares in those companies to friends or relatives. Even though these recipients didn’t put their money into the companies, they nonetheless inherit the tax break, and a further $10 million or more in profits becomes tax-free.”

“Stacking” and “peanut-buttering,” as it’s called, is apparently how a lot of these folks are dodging taxes, the multibillionaire Roblox boss and his broad family among them. One expert professor on tax law estimated the law would cost the US as much as $60B in the next 10 years, without even counting the ongoing effects of stacking.

Incidentally, the piece does include commentary from one CEO and founder whose company is worth $4B; she was advised to exploit the loophole to infinity and didn’t because it sounded “shady” and because “paying taxes is an act of patriotism.”

This is literally one of the reasons why we can’t have nice things.

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