
Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes - djoldman
https://itep.org/amazon-in-its-prime-doubles-profits-pays-0-in-federal-income-taxes/
======
Twirrim
Hmm.. the chart at the bottom puts things in an interesting perspective.
Amazon has been paying federal taxes fairly regularly. It's just the last two
years that it has had negative effective tax rate. There's probably a bunch to
dig in to there to understand why, exactly.

The way that article reads, it seems like at least for the last year it's
entirely due to the tax cut legislation congress passed last year. Essentially
the legislation did exactly what it was designed to do. Amazon hasn't really
done anything dodgy there.

This article really just emphasises the need to hold congress accountable for
their actions.

~~~
bilbo0s
> _This article really just emphasises the need to hold congress accountable
> for their actions..._

That's hard though, because ideology gets in the way. Everyone has this,
almost "quasi-religious", devotion to their politicians. So it becomes a lot
easier to say, "Hey, look at all these rich banks and wealthy companies taking
advantage of all their tailor made tax laws!", than it is to say, "OK guys, we
have to sit down and get a list of everyone who voted for these advantageous
tax laws that these rich companies are using."

The one is more "sound bite"-y. It's easier to get people behind such a
twitter storm. The other requires a performance review of each of our
political leaders, which is just not the way we as Americans have typically
operated. Not to mention the fact that it requires further action. You have a
list, now what do you do with it? For instance, game theoretically speaking,
it may be better to hold it over the current politician's head, than it would
be to get rid of him/her immediately? Or maybe we just want to send a message,
and get rid of all these men and women as soon as the law permits? I mean, it
just opens up a lot of questions about how best to proceed.

The other option, you know how to proceed. You just join in on the twitter
storm so to speak.

~~~
JDiculous
Yea I've always found it odd when people blame bad legislation on corporate
lobbyists. Lobbyists don't pass laws, politicians do. Directing your anger
towards lobbyists is literally giving your politicians a free pass. If a
politician accepts a bribe, the politician should be the one taking the heat
(along with the system that enabled this to happen), not the one giving the
bribe.

For example, tax filing in the U.S. could be as simple as you verifying the
information they already have on you, saving you from the time and hassle of
having to fill everything out yourself (often through software like TurboTax
that costs money). Many countries already do this. But anytime I read an
article on the subject, the narrative is that we're stuck with the status quo
because companies like TurboTax with a vested financial interest in making tax
filing difficult have fought tooth and nail to keep your tax filing difficult.
Uh...no, this is not why we don't have simpler tax filing, it's because
crooked and/or clueless politicians aren't voting it through Congress.

~~~
senderista
I disagree. Politicians, like everyone else, simply respond to incentives. As
long as the incentives aren't changed, it doesn't matter much who's in office.
Changing the incentives in this case means limiting corporate contributions to
politicians, for starters.

------
ghobs91
A big part of it is that they reinvest a large portion of revenue back into
the company in the form of growth. So while they're not paying income tax
because of lack of profit, they're building fulfillment centers and hiring
like crazy. This means income tax for all those new employees and property tax
on all the centers they're building.

~~~
kentosi
Is there any way of proving this? My skeptical mind says they're stockpiling a
large portion of that money in banks/stocks and getting massive returns with
interest/dividends.

~~~
ghobs91
If they stockpiled revenue in banks, it would be counted as profit and taxed,
which is clearly not the case.

------
latencyloser
I'm really sick of articles like this. Amazon or $insertCompany that isn't
paying taxes didn't do _anything_ illegal. Don't hate the player, hate the
game. If shit like this bothers you, write your local representatives and ask
them to change it.

~~~
Diederich
> If shit like this bothers you

It does.

> write your local representatives and ask them to change it.

Done and done.

Here's the problem: my voice, plus the voices of all of those who agree, have
far less of an impact on the beahviour of the politicians than Amazon does.

~~~
skookumchuck
Amazon doesn't elect politicians, voters do.

For example, Hillary outspent Trump 2:1, yet still lost.

~~~
akhilcacharya
In addition, she also won 3 million more votes and still lost.

Seems a little bit more relevant here.

~~~
chriogenix
the game wasn't played to win the popular vote. if the rules of the game are
different, the game is played differently.

------
aaronbrethorst
ProPublica published an article that is related to this a couple months ago.
It's worth a read: [https://www.propublica.org/article/how-the-irs-was-
gutted](https://www.propublica.org/article/how-the-irs-was-gutted)

Furthermore, one of the authors was just on a truly excellent episode of the
podcast _Why is this Happening?_ , which does a great job of summarizing the
article and offering additional insights.
[https://www.nbcnews.com/think/opinion/can-we-tax-rich-
jesse-...](https://www.nbcnews.com/think/opinion/can-we-tax-rich-jesse-
eisinger-explains-ncna970581)

------
dovetailcode
Do you have to have the heft of an Amazon to take full advantage of loopholes,
etc.?

Can the existing tax law be fed into some software which will outline an
appropriate path to owe $0? Its all just a bunch of rules, sub-rules, etc.,
likely with thresholds. If it is similar to personal taxes (e.g. claim medical
costs if total is over 7% of adjusted gross) then this is something software
should be able to handle.

Or is corporate tax law an area that only can be done with a large team of
humans?

~~~
monocasa
My understanding is that the problem space is too big to automate, and most
loopholes only make sense at the scale where a large tax staff is both a drop
in the bucket from a resources perspective and arguably needed either way just
to stay in compliance.

------
mises
There's no reason to demonize companies that try not to pay tax they can
legally avoid paying. Many of us do the same: take available deductions,
possible tax harvesting (if we invest), etc.

Companies are legally obligated to get the best "deal" financially for their
shareholders they can. Purposely paying tax would be in breach of their
fiduciary responsibility. Blame stupid politicians, not companies.

------
komali2
Good for Amazon and Netflix for helping to draw attention to broken tax law by
taking full advantage of it. I hope this pushes more people to engage with the
government to close ridiculous loopholes and simplify the tax code.

~~~
onlyrealcuzzo
Serious question: almost every economists thinks we shouldn't have corporate
taxes. So why can't we just get rid of them and properly tax money as it
LEAVES companies in the form of dividends or imports?

Recently, stock buy-backs are causing people to get around income tax, so we'd
have to fix capital gains, too.

Taxing companies seems like a cop-out. It doesn't seem to have any impact at
all on inequality. And it just makes American businesses less competitive.

~~~
maximente
excuse me? "almost every economist"?

taxes serve as both revenue and incentive generation. turns out that when you
have 0% corporate tax you lose the ability to incentivize corps via taxes.
there are externalities e.g. pollution that one can no longer incentivize via
taxation.

you're also bound to hear the same excuse, can't afford to pay the labor now
that their tax rates are higher, guess we'll move somewhere else!

~~~
skookumchuck
Taxing pollution has nothing to do with income taxes. Taxing pollution is
"internalizing the externalities", not "they made some money let's take a
slice."

~~~
maximente
it does in the sense that if corporations pay 0% income taxes then there is no
money that can be offset from e.g. pollution tax breaks. think about how the
mortgage deduction influences homebuying behavior for private individuals.

~~~
tracker1
Well, if you're charged roughly X per kwH for energy, and Y for each # of
waste your company produces, this encourages cutting those costs beyond the
costs of those parts alone. This would have a more direct effect than simple
income tax incentives and be more direct.

There's still an incentive, it's just it's not tethered to income which has
_MANY_ ways to work around in other ways with the current structure and the
companies wind up not reducing pollution and waste.

------
anonymous5133
For those wondering how amazon is able to do this it is from using excess
stock-based compensation deductions and accelerated depreciation deductions.
They also have $600 million net operating losses being carried forward and
$1.4 billion in tax credits resulting from R&D spending. The operating losses
and tax credits can be carried forward to future years but eventually they
will run out of them.

~~~
jostmey
And despite these losses Jeff Bozo is the richest man in the world. Clearly
these companies are abusing the tax laws to avoid paying their share of taxes.

Amazon depends on the roads that our tax dollars fund. Amazon depends on
intelligent people to run its business, funded by the US government through
various mechanisms such as research grants. Amazon depends on the protection
of the US military. Amazon and companies like Amazon need to pay their share

~~~
ChrisLomont
And Amazon pays billions in property tax, SS taxes, and all sorts of other
taxes, and generates billions more in income for workers.

Their “share” is what the law says.

I doubt many posters here pay more than required by law, and take tax breaks
when applicable, from mortgage deductions, healthcare deductions, schooling
deductions, etc.

------
tvanantwerp
Second ITEP article on HN recently that bemoans a tech giant not paying taxes,
without any substantive discussion of why. Corporations don't just decide to
not pay tax; Amazon is operating within the law.

It's nothing but punditry to decry Amazon's tax rate without seriously
discussing why it's so low and whether that underlying reason is good policy
or not.

------
0xmohit
Reminds one of:

Amazon's electricity rate discounts have pushed up utility costs

Source: [https://www.bloomberg.com/news/articles/2018-08-20/amazon-
is...](https://www.bloomberg.com/news/articles/2018-08-20/amazon-isn-t-paying-
its-electric-bills-you-might-be)

------
tracker1
Personally, I don't mind corporations not paying taxes. Companies aren't
people, and eliminating taxes should be done in conjunction with restricting
political support.

Corporations should either give dividend and/or diversify/expand. If paying
dividends, shareholders can then pay income taxes. Amazon has a growth model.
What I'm against is corporations holding on to unutilized or underutilized
assets in a longer term.

It's the spending and changing hands of money that promotes a healthy economy,
having cash or capital sitting unused doesn't really help anyone all that much
imho.

That's just my take on it... I'm not in favor of corporate protectionist
policies and would rather see a lot of it be torn down to an effect of both
reducing corporate power as well as the influence of tax incentives.

------
jakelarkin
another clickbait article from this organization. "${TechCo} paid X% in taxes
but it should have paid Y% * Current Year Net Income".

What specifically is ITEP arguing for? GAAP profitability is not Taxable
income is not Net Cash flow. The IRS has different multi-year schedules for
various asset amortizations/depreciation than GAAP so of course the tax rates
can be significantly different if the company is investing in growth.

------
poorman
I find it interesting that (some of) this community complains about companies
taking advantage of the same deductions that many of it's members I'm sure are
take advantage of. That is the capital loss after their stock/options for
their startups fall below the value they were issued or the deductions from
losses they incur while gaining momentum in their startup.

------
gok
This is blog spam. They publish this exact same article about different
companies every time one of them reports earnings.

------
throwaway-1283
Anyone hit hard this year by the new $10k limit on State and Local Tax (SALT)
deductions?

------
costcopizza
When I see headlines like this, which isn't the _rarest_ thing, I wonder why
we even bother with a corporate income tax.

The companies that can afford to engineer out of it, will, making it oddly
regressive in certain circumstances.

------
thedangler
Well if corporation are people then why not tax them like people. have
marginal tax rates with no loopholes.

------
jostmey
Any politician promising to raise corporate, capital, and estate taxes
_automatically_ has my vote

------
clamprecht
How much capital gains tax has been generated due to appreciation of AMZN
stock sales?

------
alasdair_
I am surprised we don’t have the equivilent of AMT for corporations.

~~~
airstrike
Except we did, and decided to do away with it for a variety of reasons.

[https://doeren.com/tax-reform-individual-amt-corporate-
amt/](https://doeren.com/tax-reform-individual-amt-corporate-amt/)

------
exabrial
To quote someone else on HN:

> Why is it desirable to transfer money from job-producing companies and
> investors to the government?

The government is a money pit. We're long past "essential services". I'm happy
to see companies paying 0 tax into the waste pit.

~~~
komali2
Come on.

Who guarantees amazon isn't immediately overwhelmed with ten thousand copycat
sites with similar URLs?

Who built the roads upon which employees drive to get to HQ? Upon which
delivery drivers drive to get packages to customers?

Who ensures Amazon doesn't need someone riding shotgun, with a shotgun, with
every delivery driver?

I'm not even scraping the surface here. Libertarianism, I presume? The free
market would have done a better job at building a sovereign system in which
Amazon could thrive?

~~~
umanwizard
Out of your points, only the first (trademark litigation) is handled at the
federal level, and extremely inefficiently at that.

Roads and police are (mostly, with some exceptions) controlled by the states.

~~~
komali2
Which are governments, which levy taxes...

~~~
umanwizard
The thread is about how much federal income tax Amazon paid.

~~~
komali2
I don't follow. The state exists only as an aspect of the federal government.
If the federal government didn't exist, the state would just have its own
taxes to fund the education system, judicial system, military, etc.

~~~
umanwizard
Yes that's true, but there is no a priori reason to assume that they would be
as outrageously wasteful and inefficient as the US federal government, which:

(1) spends about as much per capita on healthcare as other OECD countries,
with dramatically worse coverage,

(2) spends about 10x the world average on military, per capita,

(3) has a political system that is set up to make meaningful reform almost
impossible,

and so on...

------
known
Tax it's income, not profits

------
jdhn
>the Trump Administration and its congressional allies included lavish new
giveaways such as immediate expensing of capital investments.

So this is obviously considered a bad thing by the author, but wouldn't the
cost to the government be the same regardless of whether it was expensed in
one year or multiple years?

------
didibus
I wish we got rid of all taxes except for income tax on people.

Anyone versed in finance can tell me why that's a bad idea?

~~~
gotocake
The simplest counterpoint is that the wealthier people are, the less their
wealth relies on income and the more it relies on capital gains; using money
to make more money. Squeezing the middle and lower classes while giving a free
pass to the very rich seems counterproductive in terms of policy.

~~~
didibus
Well, in my proposal, capital income is just regular income as well.

When you sell stock, sell property, etc. Basically everytime you cash out,
that would just count as additional income for that year.

So I'm not sure in that way I understand how it would squeeze the middle and
lower class?

~~~
gotocake
To be fair, this “proposal” is something you in no way included the details of
in your comment. It would be impossible to guess that you were using a novel
definition of “income tax” to include capital gains tax as well.

~~~
didibus
Yes, I recognise that.

I guess my thought is more, why not only tax income?

Not exactly, why not only keep the existing income tax and get rid of all
others.

Only taxing income (all forms of them), and just using a bracketing system
would simplify the whole equation so much. And make filing taxes quite simple.

I'm sad to see people have mostly downvoted me, and provided no rational for
what would be worse about such a tax scheme. It seems that's telling to why we
are probably very far from a tax reform, people seem to be irrationally
attached to the way they're used to it.

------
marcrosoft
Good for them.

This is why politicians say they want to help the middle class. They are
always paying the majority of taxes.

The politicians hardly ever live up to promises.

The important thing to remember is that, fortunately we don't live in a one-
world government so the US is forced to compete with Ireland or other
countries on taxes. There is a ceiling on how much you can tax before
companies say F this I'm going else where.

The "problem" is small US businesses can't replicate easily.

The obvious solution is to level the playing field and make the US competitive
on tax rates or drop taxes all together.

~~~
adventured
> This is why politicians say they want to help the middle class. They are
> always paying the majority of taxes.

87% of income taxes are paid by the top 25%; 70% of income taxes are paid by
the top 10%. The middle class in the US pays an extraordinarily low effective
tax rate. The US has a _very_ progressive tax system.

The 50% to 25% income bracket, which makes up most of the middle class, has a
7% average federal income tax rate. Few other developed nations come remotely
close to having something like that.

The politicians pander to the middle class out of virtue signaling (it's a
great ideological sound bite) and for votes (it's still a large voting block).

~~~
marcrosoft
> 87% of income taxes are paid by the top 25%; 70% of income taxes are paid by
> the top 10%.

Do you have an reputable source of truth for this?

> The 50% to 25% income bracket, which makes up most of the middle class, has
> a 7% average federal income tax rate.

Any source of truth for this? I'm a sample of one but I pay at least quadruple
this rate every year since I can remember and I'm not an edge case. 7% is a
joke. I would love to pay that.

