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Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes (itep.org)
228 points by djoldman 36 days ago | hide | past | web | favorite | 311 comments



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.


>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.


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.


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.


Found another one in the news today:

https://www.vox.com/policy-and-politics/2019/2/13/18223836/p...

A Senator introduced a bill in 2007 to ban line-standing, a bill that never ended up leaving committee.

"The line-standing industry quickly rallied against the proposal. The owner of Linestanding.com submitted testimony that argued McCaskill’s bill would eliminate “an industry that employs hundreds of entry-level workers, and instead creating positions for even more lobbyists, the bill would have the opposite effect of that intended. It wouldn’t change the composition of who ultimately sat in hearing rooms; it would simply increase costs for all involved.”"

So politicians stop the passage of a law to ban line-standing, and we're supposed to feel that it's the lobbyists' fault rather than that of the politicians who prevented the bills passage? I guess politicians can do whatever they want and receive no accountability for their voting because the media has decided that politicians are immune and the lobbyists will take all the heat.


Clearly, this is not the result of creative accounting, but merely displays just how SKEWED the playing field is in favor of large parasitic corporations, that kill innovation for each small company they acquire or quash.

I don't see Amazon as rogue here, just as taking what they are allowed to take, and this is the problem, not the particular anecdote mentioned here in this articles healine.


In what world is Amazon a large parasitic corporation that is killing innovation? I'm no Amazon fan, but I'd say they're dong more than their fair share of innovation, and given how many companies use their online stores and cloud services, they're the opposite of parasitic.


1) Acquisitions of actually innovative tech corps and their products, which may be incorporated into Amazons products or simply killed. Microsoft is quite good at this.

2) Monopoly means no competition = bad for pricing, quality of service, and ultimately, the market.

Are you unaware of federal anti-trust law and it's history?


OK, put me on your list, I generally vote in favor of lower taxes for corporations and individuals.


So, essentially small businesses and lower/middle income folks will pick up the slack on the missing revenue, and in general in terms of the tax-base tilt: In essence you are excusing a heavy tilt for the large global corporations that 1) constitute monopolies, in many cases, which are anti-innovation and kill innovation, actually. 2) are killing mom-and-pop small businesses left and right.

"lower taxes for corporations and individuals" which one is it?

I've never seen a lower federal budget, and the "small government" party has brought us 2 wars costing over $7 trillion over 18 years, and a perpetual war on an emotion that has caused an INCREASE in governmental size and spending, overall.

Can you explain your stance a bit?


"essentially small businesses and lower/middle income folks will pick up the slack on the missing revenue"

This is objectively untrue. The wealthiest taxpayers, who overwhelmingly make their money off of investments in companies like Amazon, pay nearly all of federal taxes. Just because Amazon doesn't pay taxes doesn't mean the people profiting off Amazon aren't paying taxes. A big reason why corporate taxes are dumb, since the money either grows the business or goes to individuals who pay taxes.


This is objectively untrue. The wealthiest corporations and people overwhelmingly pay the LEAST share of taxes.

Your shifting of the playing field smells like an excuse.

1) Whereas the federal budget has not been reduced.

2) Whereas the large monopolies and billionaires pay less (see: the $1.5 trillion tax cut for the top, and how it's hoarded rather than invested) tax

therefore we are compensating for Amazon and Netflix etc paying less tax.

Corporate taxes should grow with the size of the corporation. We should encourage small businesses as they spur innovation, mostly fail, and are the backbone of a stable economy, vs slave labor for globalized zombie corps like Amazon.

https://www.forbes.com/sites/teresaghilarducci/2018/09/28/wh...

https://www.cnbc.com/2018/06/20/now-we-know-how-major-corpor...

by all accounts, the opposite of an economic "pump" is when you give a tax cut to the already filthy rich.

The tax base has been shifted to the middle and lower class. Plain and simple.


CBO and IRS reports on taxes show the richest pay the vast majority of Federal taxes, and a significantly higher rate than the middle class and poor. Care to cite otherwise?

Here’s a summary of CBO data [1]. IRS also posts much more detailed tax stats with the same results.

[1] https://www.taxpolicycenter.org/statistics/historical-averag...


35% of trillions is still trilliions. 10% of 10k is difference between eating everyday and not. The marginal utility of money is negative past the first 10M per capita, if not less.


>I've never seen a lower federal budget, and the "small government" party has brought us 2 wars costing over $7 trillion over 18 years, and a perpetual war on an emotion that has caused an INCREASE in governmental size and spending, overall.

The "small government" party was in power that entire time? Why weren't they voted out and replaced by a party that wanted to end these disastrous and costly wars?


> replaced by a party that wanted to end these disastrous and costly wars

Because the USA only has 2 historically significant parties and both mainstreams want wars? I mean, the US has a concept of "bipartisanship", as if the entire political spectrum could be boiled down to ultra liberalism or slightly less ultra liberalism.


Because the US voting system practically only allows two parties. You will never get a diverse political landscape with First Past the Post that dominant.

Fixing that might be nice, but is probably also a distraction from more urgent matters... since it would be very expensive (in terms of political capital) to make parties give up their own monopoly.


> You will never get a diverse political landscape with First Past the Post that dominant.

The UK has multiparty democracy of sorts with FPTP; the US Presidential system (as opposed to a Parliamentary system) reinforces and more strongly nationalizes the local duopoly effect that FPTP naturally encourages.


France has a similar presidential system and even there are other parties with double digits votes. It's a purely cultural thing.

You could argue the duopoly prevents extremism by straightjacking the political options, but after the Tea Party takeover the GOP and now Trump, that has been thoroughly debunked.


> France has a similar presidential system. It's a purely cultural thing.

But France doesn't use simple one-round FPTP for either the Presidential or legislative elections, and doesn't combine the elections, either, using a two-rond majority-runoff system for each election (with additionally what amounts to a minimum threshold by eligible electorate size, rather than just share of turnout, for legislative seats for first-round wins.) Majority-runoff has a far less strong push to duopoly thaneither simple FPTP or the US Presidential election system.

It's not purely a cultural thing; to the extent it's cultural, it's largely cultural adaptation to structural incentives.

> You could argue the duopoly prevents extremism by straightjacking the political options, but after the Tea Party takeover the GOP and now Trump, that has been thoroughly debunked.

I wouldn't have argued that in the first place for other reasons, but Trump would, at worst, only debunk an absurdly absolutist version of that; electoral systems may structurally disfavor certain outcomes but they rarely absolutely prevent any particular ideological outcome.


Large corporations avoid taxes by different methods (operational transfer pricing, off-balance assets, special purpose vehicles etc.) It is the small and medium business, as well as the middle class who pay the bulk of the taxes, and yes, I believe in smaller government, regardless of the party stance.


> I generally vote in favor of lower taxes for corporations and individuals.

So like to have your cake and eat it too?


The implication is a smaller government and fewer public services. We could theoretically eliminate social security / medicare and immediately put extra money in people's pockets, but that would be disastrous for a number of reasons.


How does that follow? You're assuming what kind of government services he votes for.

He probably also favors less government spending.


[flagged]


What makes you think that? There's a lot of people that would prefer money go to social programs rather than the military, but would prefer the spending on both be reduced by spending money more effectively. The Pentagon Wars is a prime example of how many people think the government spends it's money, "yes, that billions, with a B".


You're projecting real hard. The left has become insanely pro-war. It's really sad what the media is doing to Tulsi Gabbard, who's the only anti-war presidential candidate. https://www.youtube.com/watch?v=QlXhRBsOwpA


> The left has become insanely pro-war

No it has not, you're confusing neoliberals like Polosi with "the left", which is actually represented by people like Ro Khanna. The left, as in progressives, have been strong supporters of Tulsi and in fact she has backed Sanders over Clinton as well.


That's fair. I mean, I did link to Jimmy Dore, I know there are some good anti-war progressives out there. (And, despite being a libertarian, I donated $100 to Tulsi's campaign as soon as she announced.) We might disagree with what "the left" means, which is fine. I use it to apply to "any Democrat or leftist-leaning independent".

And it's just that Pelosi is freaking speaker of the house right now. The people and interests that are controlling the Democratic party are pro-war.


> I mean, I did link to Jimmy Dore

Yeah, that's "the left" I would identify with.

> We might disagree with what "the left" means, which is fine. I use it to apply to "any Democrat or leftist-leaning independent".

That unfortunately hasn't been true for a long time. The Clinton "Third Way" doctrine basically means "we're centre right economically, don't hate gays and support abortion rights". That is why these kinds of democrats play identity politics so hard, (while smearing minority candidates, ironically enough).

In the UK, the policy that closely represents the Democratic Party establishment is actually represented by a party called the Conservative Party, that should tell you something.

> being a libertarian

I am glad to hear that. While I probably massively disagree with you when it comes to social spending, I 100% agree however with libertarians on their anti-war stance as well as far as personal liberty goes in a large number of areas.

> And it's just that Pelosi is freaking speaker of the house right now. The people and interests that are controlling the Democratic party are pro-war.

I know, trust me as someone on the left, it's incredibly frustrating to be "represented" by such leadership.


I mean, I agree with your statement about ideology, but I disagree about everything else.

Even if Amazon is not paying taxes on its corporate profits, it's still generating a boatload of tax money through income & payroll tax. And I think it's good to reduce corporate tax rates, to encourage our amazing economic engine to grow as fast as possible!

https://taxfoundation.org/benefits-cutting-corporate-income-...


Growth without limits pushes up against Climate Change and physics.

We have believed over all these years that we could make more efficient use of the land of our planet than nature could, and we're going to learn that wasn't really the case at all.

We need to balance our economic engine against the ecological one or we're doomed. "Tax Foundation", a site that craps on carbon taxes at best over and over, and only makes one suggestion: reduce taxes.


That's a fair criticism of the tax foundation-- I do think that a carbon tax would be a good market-driven approach to reducing CO2 emissions.

I think we can provide a lot of energy without running into climate change and physics though. Nuclear energy is something I wish we did more to encourage. (It's a reliable emission-less source of energy!) Renewables are good, but we need battery tech to improve some more. (And the battery issue might also be another example of pushing against the limits of physics.)


It’s not a mystery when you see what their stock has done in the past couple of years. When the stock more than doubled, the company gets to deduct the difference between exercise and strike price. But employees then have to pay that difference. So most of this is a non-story around Amazon transferring it’s tax burden to its employees by awarding them lots of stock.

The bigger issue here is the fiction that stock option compensation should be taxed as investment rather than employment compensation. Bill Gates even brought it up whe Colbert asked him about a 70% marginal tax rate and said something to the effect of, “The vast majority of these billion dollar fortunes weren’t built with ordinary income.” We need the tax code to separate profits made from buying stock for money only from profits made from buying stock that one is only offered at that price because of one’s employment status. Until we do that, those 70% marginal tax rates will only hit entertainers and others not able to structure their compensation using stock and leave open the huge loophole that the richest use to pay themselves in a way that allows them to pay an overall lower percentage of income than most of us commenting here.


This is business 101 stuff. As in I literally remember talking about this in Business 101.

You sink a bunch of dollars into development of a new product. You sell it at a premium when it's new to start to pay back those costs (and marketing attaches cachet to the product during this time). The idea is to be making net profit off of the product before you hit the middle of the adoption bell curve. Boost efficiency to improve margins and ride the curve down. Middle and late adopters are pure profit.

From a tax perspective, things are going to look pretty dire until you hit the first inflection point in the adoption curve, and probably for a while after.

I mean, I am starting to loathe Amazon, cancelled my Prime membership a couple years ago and have been giving my family non-Amazon wish lists for at least that long. They don't treat people well (even in the bad old days of Monopoly Microsoft, they took much better care of their people). It's a shit place to work, which makes me wonder how it is to work for one of their suppliers. Zero love lost here. But this whole line of inquiry just seems like a red herring or sour grapes even to me.


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

You've a bit more work to do to get that done than merely pinging or voting out your Representative:

https://www.ted.com/talks/lawrence_lessig_we_the_people_and_...

https://en.wikipedia.org/wiki/Citizens_United_v._FEC

On a more positive note, there seems to be some people in the US who want to (try to) make a difference. For instance:

https://www.youtube.com/watch?v=rq3QXIVR0bs

Only time will tell if they will. But I'm not holding my breath, TBH.


Holding politicians accountable for their actions is very difficult in practice. Occasionally someone pulls it off though, from a book depository window.


Congress is pretty much controlled by entities like Amazon.


[Citation needed]




They did hold congress accountable, that is why you now have a different congress. But I don't see this one roll back the tax cuts so far, and even then it would have to pass in the senate.


"Amazon has been paying federal taxes fairly regularly."

Dude, the chart gives you the 5- and 10-year effectives rates, they're 2.2% and 3.0% respectively.


Amazon’s SEC filings claim much larger taxes than this blog post. I’ll trust the SEC filing over this article.

Here’s one if you care to look.

https://www.sec.gov/Archives/edgar/data/1018724/000101872417...


given the corp tax rate in 2011 was 35% id say hitting 600M in profit and somehow paying only 30M instead of 210M does not really count as "fair" nor regular.


As I said in my comment on the Netflix tax thread [1], not necessarily.

Highly simplified example: if you spend $100 million over five years on inputs, all while receiving no revenue, and then sell your gargantuan output product (say, a mega-robot) in the sixth year for $100 million, then you haven't yet made a profit -- even though your books show a $100 million profit in the sixth year. Paying no taxes in that year would be reasonable.

If anything, my understanding is that corporate tax law is unusually harsh about such long-term projects, limiting how many years you can carry forward losses.

The specifics of how they got to $0 taxes matter, and not all reasons are shady. Some are, of course, like deducting arbitrarily high IP licensing fees to your foreign sockpuppet subsidiary. In that case, sure, hit 'em with both barrels.

But please, attack them for the right reason.

[1] https://news.ycombinator.com/item?id=19097415


In my opinion, the philosophy of "specifics of how" has already been co-opted by tax dodgers. There is no way to have both enumerative, mathematical thinking and a sense of justice when it comes to taxes, because rich entities can always think of a tax dodge you didn't enumerate!

The reality is, no regular person is ever going to be on the wrong side of corporate taxes. You'll never be a huge corporation, you'll never be a huge corporate board, and since indexing, you'll never be a particularly aggrieved proxy shareholder.

Nobody really cares how "giant corporation pays the maximum tax it can bear" is arrived to, but that's what people want. It's different if it were small business owners or landlords. People also sometimes hate SBOs and landlords, but sometimes normal people are landlords and small business owners, so they can imagine being on the wrong side of justice there.

So like so many things technocratic thinking gets into, it's possible to be right and wrong at the same time. Right in the general case, in this imaginary case, where you just enumerate all the things, then you think hard about the things, and then you get the right answer. Wrong in the case that people in the real world actually inhabit, because you're both a likable person and you're not a giant corporation, so your philosophy is great to co-opt for what is basically a public-theft agenda.


This isn't a legal forum.

HN is a legal forum, a tech forum, a history forum, a knitting forum, and any other kind of forum that inspires knowledgeable posts by subject matter experts on topics the community finds interesting.


I agree that lobbying is a problem, but it's still important to distinguish between "corruption of the tax code" vs "stuff that makes perfect sense and would probably exist even if no one ever tried to corrupt the tax code for personal benefit".

"Not paying taxes when you haven't made up past year's expenses" is the latter. It should not be cited as an example of the former.


Certainly none of us will "be" huge corporations, since corporations are not human beings. But many of us are part of huge corporations, both as shareholders and employees.


Well certainly, if a bunch of other employees of other corporations can live a just and equal life, and those employer-corporations pay more than 0% tax, you can imagine that you can be part of a corporation that merely pays more taxes?


didn't know that info actually, as it's different here in Europe. I also see they had 91% in 2014 which is also interesting. Anyways wasn't really attacking them at all and also think the reason behind the 0$ is quite relevant in the discussion, yet I do strongly oppose the idea the original commenter made that amazon had been doing its fair share and square. They are doing whats best for them under what the law permits, including lobbying btw which uncertainly bends the laws to their favour. And the real debate in my opinion is, should it be possible this way ?


> Paying no taxes in that year would be reasonable.

I disagree. Make them pay taxes.


And under your system, what incentive is there for long term capital investment?


Accounting is a little more complex than your math would suggest. I'm sure Amazon followed the law here. Blame the laws, not the company. You wouldn't voluntarily pay more taxes than you're required to either.


>Blame the laws, not the company.

Why not both? If I move to a country that legally allows me to do something horrible, people will rightfully call me a bad person regardless of the legality of the action.


Sure, but not paying any taxes isn't obviously a horrible thing.

The government says, through its tax laws, that it wants amazon to not pay taxes (probably because they had a loss). The logic behind this is that because amazon provides jobs, the government doesn't want the company firing people and/or not hiring people because of an unrelated occurrence.

If you want what amazon is doing to be horrible you have to show that what they're doing is actually horrible.

Perhaps talk about how they're making use of the resources of the united states while not paying back for the maintenance of those resources. Like, delivery trucks damage roads and without delivery trucks amazon can't exist, and therefore they are externalizing their costs to the tax payer by not paying taxes.

Additionally, you'll need to explain why the jobs argument is not sufficient to excuse their lack of taxes.

And you might also need to talk about how amazon R&D also isn't a good excuse. For example, if amazon perfects drone delivery of goods then they won't damage the goods. So we should let amazon not pay taxes so that they can perfect drone delivery because it will be a good to the entire nation. You need an argument for why this sort of idea is wrong.


> The government says, through its tax laws, that it wants amazon to not pay taxes

This kind of statement that assumes big companies passively take their tax bill from the government is either exceptionally naïve or wilfully disingenuous. We're talking about a company whose executives sat down with representatives the Luxembourg government to negotiate a special sweetheart deal (subsequently ruled to be unlawful state aid) and then moved its European HQ to Luxembourg


So what are you suggesting; Amazon should voluntarily send a bonus check to the fed? That's just ridiculous. I'm also not convinced that following the current tax law is "something horrible".


The least they could do is pay out a stock dividend from all the tax money they've managed to avoid paying.


They could just announce a new HQ in NYC instead of faking competition to try and bleed communities for money.


What does that have to do with anything?


What's most troubling is that these are the same companies who say things like "We need more educated workers" as if tax dollars don't help to do that. They also use it was a rationalization / justification for paying less and less taxes (i.e., "We're not getting any benefit from what we're already playing.) To the bottom we go...


Especially egregious when they refuse to offer tuition incentives or at bare minimum competitive pay rates.


I disagree that it's horrible to try to minimize your tax burden. On the contrary, it seems like logical self-interest.

If you want to do something selfless, paying more taxes is pretty low return for your buck.


The companies lobbied for the laws. The companies aggressively pursue every break they can get.

Amazon is in the middle of taking a fortune in tax breaks from NY. They killed a tax on large employers in Seattle. They fought against cross state sales tax until they were so big it only hurt their competitors. Bezos owns the Washington Post, and media overall is controlled mostly be a handful of oligarchs.

I absolutely blame Amazon.


I think a lot of people do blame the laws, that's why they want to change the tax laws to make this sorry of dodging harder.


If you start a business. Should you be able to deduct eligible expenses? I don’t know any sane person that would suggest not. If you make $100 and spent $100, then you have no profit. But you’re suggesting that this is a tax “dodge.” So that means that you’d tax the $100 of revenue even though there wasn’t any actual gain. If you applied that to all businesses, you’d destroy economic activity.

How much extra did you pay on your taxes this year above the required amount? I would bet you paid exactly what was owed. Under your logic, you are dodging taxes.


never implied they did anything illegal. im pretty sure their numbers this year is 100% legal as well. Nor im implying they did anything wrong, they're doing whats best for them which you and I would have done. I just refute the notion its "fair" that the tax structure is quite harsh on private individuals (id go as far as claiming is dependant on private individuals) but creates the situation for corps that using clever accounting to pay a fraction of the supposed sum is considered graciously courteous.


It's "fair" in the sense that they had losses prior to 2011 that the IRS allowed them to deduct.


Exactly. Nothing wrong going on here.


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.


A big part of it is people who don't understand accounting and taxation are chiming in on stuff that is way beyond their understanding.

Everyone's free to remain a layman, but just remember nobody cares what the layman thinks. Taxes are complicated.


What an awful opinion! Instead of having a transparent tax code that the public understand and can judge, we have an obfuscated tax system that only a few people can understand, so everyone should just ignore the fact that Jeff Bozo-head is the richest man in the world and yet Amazon pays almost nothing in taxes


> Instead of having a transparent tax code that the public understand and can judge

Patches welcome. You'll just need to be an expert in taxes first. Or do you expect the public to also contribute to discussions on the Linux Kernel Mailing List?


I'd argue that a lot of folks care about the opinions of non-experts.


Sure, insofar as those opinions matter to get them elected. But they're maximizing for votes, not for genuinely trying to find a solution to the problem


profit, by definition, is money left over after expenses and capital (re-)investment, so it's already been accounted for. profit goes in the shareholder's pockets (if they so choose rather than shield it from taxes by leaving it in the corporation).


Except that every municipality is trying so hard to recruit them that they're getting more in tax breaks and other incentives than they and their employees would be paying in taxes in the first place.


We're talking about federal taxes exclusively


Are we? Since when does the federal government collect property tax?


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.


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


Read their 10-K


Well then what are the companies they're buying stocks in doing with the money?


I help construct the fulfilment centers. Believe me, this is for real.


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.


> 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.


I agree, with one slight correction:

"...than Amazon's money does."


Amazon's money is a subset of Amazon, it doesn't change the statement.


Yes it does suck how corrupted people become when they wield power. It almost puts into question the entire idea of a representative democracy.


> the entire idea of a representative democracy

I think the problem is that our politicians, by and large, don't really represent us. That is, the "template" if you will, of a politician, tends to not fit what the general average person is.

For instance - how many politicians are middle class? I'd wager that none of them are, for even if they were prior to being elected, after they are elected they would get a salary that is much larger than a standard middle-class salary.

Instead - our representatives (mainly federal - state level is a different story, but there are analogies) all are of the "wealthy class" - not the middle class, which is kinda who you would expect to represent everyone (that is, the "average").

Note that I am speaking from a US-centric perspective, but I bet it's the same elsewhere.

So why do we keep electing the same template of people to the same positions, and expect a real change?

I don't know. Part of it may be the whole "temporarily embarrassed millionaire" thing. Part of it may be corruption once they get into power (that is, why would a middle-class person, upon obtaining a much larger salary that bumps them out of middle class and into wealthy - change that?).

This is really the heart of the matter; it isn't that our representatives only represent companies, but rather that they don't represent us (that is, the average American) period - as people we can really relate to, that they can relate to - because of the wealth discrepancy.

And it's not likely to ever change; I can't think of a way to do it that doesn't involve violence - and even if it did happen, how do you keep it from changing back (what incentivizes people to continue to stay representative of the people they represent)?


> I think the problem is that our politicians, by and large, don't really represent us.

Not a native english speaker here, so I might miss a nuance. "Represent" as in "depict us" or as in "works for us"? It sounds like you would prefer to take random citizens and turn them into politicians. Wouldn't you rather have the best people working for you? Sure, understanding your client is necessary to represent (as in work for) someone and having the same background can be one way to do so. But just one way to tick one of many requirements.

I'd guess the better question is how to elect better politicians. Money in politics and campaigning (tricky to solve) and FPTP voting leaving just two parties certainly doesn't help.


Congresspeople make $174,000 a year which, while more than most Americans, is certainly not outside the norm for senior-level professionals in a variety of "normal" careers. Plenty of people you would consider "middle class" make 174k or more.

To me "wealthy class" means people who have saved enough to never have to work again, which is by no means certain on a 174k salary.


>To me "wealthy class" means people who have saved enough to never have to work again, which is by no means certain on a 174k salary.

In most of the world, it very much is.


Amazon doesn't elect politicians, voters do.

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


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

Seems a little bit more relevant here.


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


3m votes out of XXXm is not much to show for 2x spending. Secondly, both candidates spent their efforts where things were tight, not where the most voters were. Hillary's 2x spending advantage failed there, where it counted.


Of course, this is true. My comment was extremely simplistic.

The power of corporations over people is far more subtle and far reaching than all that, and I'm not really referencing any 'conspiracy' junk.

Briefly, I think it fundamentally comes down to a fundamentally pro-company atmosphere that exists in the United States. This has been created after many decades of typically subtle and legal manipulations.

They weren't trying to be evil; they were just trying to maximize shareholder value.


1. Corporations typically "invest" in multiple candidates - I wouldn't be surprised if they funded both Clinton and Trump. 2. Amazon owns a major publication that directly influences voters. 3. Amazon employs lobbyists who actively work to change laws that will help Amazon's bottom line. 4. Amazon and other tech giants absolutely have the power and profit incentive to heavily influence voters for or against particular candidates. It shouldn't be surprising, then, that we ended up with two candidates in the general election who are extremely friendly to large corporations.

Amazon elects politicians in a more substantial way than voters do.


Just because Hillary’s campaign contributions were not as effective at persuading voters enough to win a electoral college majority does not mean that Trump (or other politicians) are not influenced by those contributions. It seems clear to me that businesses are getting a return in investment for the money they are spending in politics, otherwise they wouldn’t do it.


> Just because Hillary’s campaign contributions were not as effective at persuading voters enough to win a electoral college majority

It means that money is not buying elections. The voters still have to be pleased with their choice, and the money isn't flowing their way.


Amazon and other companies actively lobby to write tax laws the way they are. Amazon's voice, money, power far exceeds mine. It isn't a level playing field. In addition to voting and contacting my representatives I comment on articles like this one. My actions aren't limited to just the two you mentioned. It bothers me how rigged the system is and I'm vocal about it.

Regulatory capture is a nice phrase from economics. What we have in the U.S. (and elsewhere) is tax law capture.


>Amazon's voice, money, power far exceeds mine. It isn't a level playing field.

A great many people work at and invest in Amazon, why would it be more fair for your single voice to exceed the tens or hundreds of thousands on the other side?


Are you suggesting that those hundreds of thousands of shareholders all have a proportionate amount of input in determining how Amazon lobbies? I own stock in Amazon and have zero say in how it lobbies government or spends its money to influence the writing of laws.

The legal person known as Amazon has far more say and sway in U.S. elections than I do. The legal person known as Amazon is controlled by a few people. Transitively speaking those few people by virtue of their control of Amazon have an outsized influence on American elections.

Someday the U.S. will amend its Constitution to abolish the Electoral College and just let the CEOs of the Fortune 500 companies elect the President. It'd be a lot more honest that way.


If you dislike how Amazon does business why are you invested in them? That is one way to have a say, divest, forgo the profit and if possible make some noise on your way out. "I'll keep the profits but wag my finger at the behavior" isn't a reasonable stance to take in my opinion. As it is today you are directly funding the lobbying you claim to oppose.


Oh, because I'm a hypocrite. But my hypocrisy has nothing to do with whether or not I'm right in saying that Amazon has an outsized influence on our elections. Fortunately the truth does not depend on whether or not I'm a hypocrite.


If people really oppose these tax changes why do they keep voting in the people who voted for them in the first place?

The fact is while people oppose them vocally they aren't willing to take any action to do so. People like you stay invested in Amazon while opposing it's business practices, that's just one example of many. Have a prime account, use AWS and so on and so on.

You might have a hundred million on your side but the amount of effort they are willing to put forth is maybe a facebook post so nobody cares.

It's not really a matter of outsized voices, it's just one voice isn't willing to do more than whisper.


It's not really a matter of outsized voices, it's just one voice isn't willing to do more than whisper.

Your perception that the power an average person holds versus Amazon is roughly equal is not rooted in reality.


A great many more people run businesses with fewer sweetheart tax deals than Amazon...


Those tens or hundreds of thousands of Amazon employees have more clout than tens or hundreds of thousands of a random distribution of citizens.


Lobbying is not some magical salve you rub on every problem to make the laws say whatever you want.

The reality is it's more convenient to pretend you have no power because then it excuses your inaction.

Firstly, prove Amazon, specifically, lobbied for the tax law they're benefiting from here. Let's start with that.


Corporations write trade deals. Corporations literally write laws (by proxy) in many cases. Corporations control the media. Corporations pay trusted 3rd parties to promote whatever agenda helps their bottom line. Corporations aren't evil - they're just (by definition) self-interested entities who have decided that government has a high ROI. Those are all actually very inconvenient for me since power is a zero sum game and I'm on the other end of the equation.


Corporations don't write trade deals, corporations don't write laws, and corporations don't control the media, unless your definition of corporations is "any group of people", in which case yes, groups of people do literally everything on this planet.


I see you missed the by proxy part of the comment you responded to. A lot of the large estates in the South pre Civil War had owners who didn't beat their slaves. Those owners hired people to do it for them. So it would be incorrect to say that those owners beat their slaves.

The above extreme example is merely to show that sometimes the responsible party is not solely those who do the actual deed. There are lots of examples of this concept in criminal law if you want learn more about idea.

It's hard to claim corporations don't control the media when only a few media companies control a large majority of the media in the United States.


That's like saying the quoted definition of a word or concept is being paid by corporations to "write" whatever the definition is being quoted in.

Industry experts know more about the space that's getting regulated than the lawmakers, so the lawmakers ask for help. Saying "corporations write the law" (by proxy or otherwise) completely misrepresents how laws are actually written.


Why do you believe that corporations employ lobbyists? Why do you believe that corporations make campaign contributions? We can imagine that Congress could be composed of members spanning the normal human gamut of morality and then adjust the viable window to account for the system. Given that money is a primary factor in campaigns on this scale, fundraising is important enough that members of Congress spend almost half of their time raising money for their re-election. If someone can get you elected by funding your campaign, they can also fund your opponents instead at any moment. Now, there are probably some members who stand strong in the face of that pressure - and they are more likely to lose than someone who caves - so over time, those members lose their spots. Therefore, the window of morality, I would argue, will naturally get skewed towards those "willing to appease corporations who donate to their campaign". In some cases, that means that laws are written with input from lobbyists (and maybe labor unions as well) and in other cases that will mean that lobbyists literally write the bills themselves (which are still subject to alterations during the process of course). Unfortunately, the system skews Congress over time towards the latter. There isn't a conspiracy theory here - just a math problem and the human condition.


Because it has some effect, just not nearly as substantial as people here keep claiming.

Does corruption happen? Definitely. Is it rampant? No. It's not "some members who stand strong" it's "almost all members stand strong with some small exceptions, many of whom are no longer in office as a result."

Politics is mostly pretty boring, routine stuff. It's nothing like what's portrayed in the media, stop assuming the most interesting parts are more common than they are...


Lobbying is not some magical salve you rub on every problem to make the laws say whatever you want.

Of course it's not magical. It's money. No magic needed. Amazon spent a lot of money and effort to lobby against allowing states to tax internet sales. Then when it got big enough it lobbied for them because at their scale it became a competitive advantage against small players to have everyone charge sales taxes on internet orders. Amazon lobbies for tax break where they build warehouses and other buildings.

The reality is it's more convenient to pretend you have no power because then it excuses your inaction.

The reality is that I have very little power in comparison to Amazon. This is not disputable. I do have some power. Just nowhere near the amount of power that Amazon has.

Firstly, prove Amazon, specifically, lobbied for the tax law they're benefiting from here. Let's start with that.

I trust your Google skills. I trust your common sense too on this matter.


My google skills turned up absolutely nothing, and my common sense tells me that you're incorrectly applying a "corporations is bad" heuristic.

What'll be fun is trying to watch you prove Amazon lobbied for a law that's older than it is.


I mentioned specific areas in which Amazon has lobbied for tax law changes. These specific areas are different than the area of the article in question but the comment that I responded to wasn't talking specifically about the taxes mentioned in the article. That person wrote:

Don't hate the player, hate the game. If shit like this bothers you, write your local representatives and ask them to change it.

Then you wrote in response to me:

Lobbying is not some magical salve you rub on every problem to make the laws say whatever you want. The reality is it's more convenient to pretend you have no power because then it excuses your inaction.

Now you seem to want to talk specifically about the taxes mentioned in the article. I think you are not staying on topic. We were never talking about that specific tax law.

My Google skills returned this:

https://www.washingtonexaminer.com/trump-is-wrong-amazon-lob...

In 2012, facing a slew of these court rulings, Amazon dropped its opposition to the federal "marketplace fairness" laws Walmart had long pushed. In fact, Amazon joined the lobbying coalition to pass such legislation, which would force all online retailers to collect sales tax on every sale and remit it to the state of the buyer.

This is a huge compliance burden for smaller retailers but no big deal for Amazon. Also smaller retailers, with no network of warehouses, are not required under current law to collect sales taxes, and Amazon didn't like that. Pass the Marketplace Fairness Act, and bam—you impose a big burden on Amazon's smaller competitors.


I want to talk about the article and I'm the one not staying on topic?

Sorry, but you're just upset I made a good point (Amazon didn't lobby for this tax law), and are trying to deflect. Not going to work.


.... tax law they're benefiting from here.

I did not read the "from here" part of the comment you originally wrote that I responded to. I thought you asked for examples of Amazon lobbying for tax law changes in general. My mistake.

I did not claim that Amazon lobbied for the specific law mentioned in the article though. Indeed I can't because it hasn't. I did give examples of how Amazon has lobbied for other tax law changes. The comment I originally replied to was in regard to "the game". In this case the game being politics and lobbying.

The things I wrote about Amazon doing remain true. The complaint isn't against Amazon though. It's rational for them to take advantage of the system in place. The overall point I've made and believe is that the system is not fair and that Amazon has outsized power in the U.S.


Sure, and I appreciate you recognizing the miscommunication.

My point is actually quite well illustrated by your examples. Amazon lobbied its heart out to avoid state taxes on goods sold, and failed. Now in the article you linked, it was spun as some big win for Amazon, but if that's the case, why were they lobbying (unsuccessfully) against it for so long?

Lobbying doesn't work, not nearly as well as people think it does. It's easy to assume money makes laws happen, but if you look at the actual quantities involved, it's a relative pittance compared to individual contributions to campaigns, and as much as we pretend like voters are complete sheep, the reality is more complicated.

Is corporate lobbying a problem? Definitely. Is is this singular driving force in politics? No.


....why were they lobbying (unsuccessfully) against it for so long?

When they were growing they lobbied against. When it became a competitive advantage they lobbied for them.

Lobbying doesn't work, not nearly as well as people think it does.

It works quite well. Both in terms of building walls to discourage competition and to write favorable changes to existing laws. It is in essence a singular force in politics. By lobbying I mean the whole campaign finance machine where rich people personally donate to a campaing and then have their companies do so too. Lobbying is just a proxy for "money in politics" and not just the official lobbyists that are registered. The soft money in politics dwarfs direct campaign contributions.

https://repository.law.miami.edu/cgi/viewcontent.cgi?article...

https://www.washingtonpost.com/news/monkey-cage/wp/2014/03/1...

https://www.washingtonpost.com/news/wonk/wp/2014/04/29/yes-y...

https://www.npr.org/2014/02/13/276448190/a-closer-look-at-ho...


I never disagreed that it worked, I said it worked less well than people think.

And what you call soft money is actually called freedom of expression, and you're going to be a lot harder pressed than you think to prove that soft money works as directly as you're claiming.

Finally, no lobbying is not a substitute for "money in politics". That's factually wrong.


> And what you call soft money is actually called freedom of expression

Yes, those with more capital have more ways to express themselves. This is in conflict the spirit of democracy, were everyone has equal weight. And while democracy seems more resistant to such power imbalances than other forms of governance, it might still be beneficial for society to keep such imbalances in check.


People with money do have now ways to express themselves, what's with with that? There is a floor to expression but no ceiling.


Lobbyists routinely write the actual laws themselves and then just hand them over to politicians to run.


Is the claim that journalists should only write about crime?

Are articles (assuming they meet your aesthetic criteria otherwise) allowed to mention anyone who does things in line with prevailing legal policy, yet might be problematic?

I, personally, am really sick of reflexive whining when the media dare be critical of certain firms.


It’s acticles like this one that will raise awareness of the issue. Doesn’t matter if the issue is illegal or not. The article clearly states one of the proposed beneifts of the corporate tax cut was better corporate citizenship.

Jeff Bezos is the worlds richest person of course people will be writing about Amazon.


And what power does a local representative have over Jeff Bezos? He is willing to threaten to leave whole cities over small tax increases on his company. Capital represents a lot more power than local government!


the purpose of journalism is to expose "the game" so that people can write their local representatives and ask them to change it.


If most people just come away resenting Amazon and not "the game", has journalism done its job?


I doubt many people would pass up a "pay no taxes this year" card if they were given one.


Most people do not have the resources to lobby for that sort of tax system. Amazon, and other corporations, do.


> Most people do not have the resources to lobby for that sort of tax system.

EVERY argument about what is "morally right" w.r.t. paying taxes is a matter of perspective. To you, what Amazon is doing is immoral. To someone worse off than you, what you do routinely on your taxes (deducting mortgage interest, student loan interest, etc.) is immoral.


Many people pay zero income taxes. And individuals can also carry forward certain losses from previous years, just like Amazon and other corporations.


Lobbying is not the problem, the problem is the system that allows itself to be lobbied.


> Lobbying is not the problem, the problem is the system that allows itself to be lobbied.

The problem is both. It is a problem that people lobby for selfish policies that ignore the needs of others, and it is a problem that the system sometimes listens to them.


Yeah, because Amazon was around in early 20th century...


> I doubt many people would pass up a "pay no taxes this year" card if they were given one.

Sure, but if that opportunity was given to everyone, it would only take a few years to make the case for taxes crystal clear to even the most selfish person. In the meantime, much damage would be done.


Convincing people the game sucks sometimes requires specific examples of individual players everyone recognizes.

For example, cycling's doping scandals are well illustrated by Lance Armstrong.


> I'm really sick of articles like this...If shit like this bothers you, write your local representatives and ask them to change it.

Articles like this are the reason why people write their representatives.

Your comment is a subtle exhortation to do absolutely nothing about the tax policies that lead to results like this.


Meanwhile those who control companies with virtually limitless resources successfully lobby against changes wanted by individuals. It's unethical, and unfair. Sickening articles like this are necessary to raise awareness about how imbalanced the system is.


Why in the world should we tolerate people or companies acting badly just because they can?


The question is not legality it is morality. And the moral actor is not Amazon but its governing body (consejo de administración in Spanish sorry).


A lack of prosecution does not necessarily mean that the conduct is legal. It could mean that we have deficient prosecution.


We do indeed have a deficient prosecution. The Republican Party has been slashing the budget of the IRS to investigate tax dodging and malfeasance. The Republican Party campaigns on eliminating the IRS.


Ok so which illegal acts are they committing exactly?


Those laws were done because the companies corrupted our representatives. I hold both responsible.


You're sick of articles like this?

Your post makes me want to smash everything around me.


I don't think anyone questions the legality of it. Articles like this are intended to convince people that the current system is unfair and to write their representatives and senators, even if they don't state that specifically.


>> Articles like this are intended to convince people that the current system is unfair and to write their representatives and senators, even if they don't state that specifically.

The problem is that if you don't state it clearly and specifically, that message will be lost on most people, and they'll still redirect their anger at the company as opposed to the actual source of the problem.


This article repeatedly calls out "Congress" and "Trump" as the major responsible parties. I don't see how that could be conveyed much more clearly.


> to write their representatives and senators

Do you have references to any articles that evaluate the efficacy of this? It seems like an effort in futility to me.


its been effective on niche policy issues within states, but at the federal level the representatives simply lie about what they have "heard" from constituents.


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

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-...


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?


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.


Tax loss carry-forwards are available to individual taxpayers as well as business.


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.


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.


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.


+1

The best rebuttals I've heard are

1. Potentially reduces accounting compliance (but the argument is that public companies have this either way)

2. Less frequent taxation (only when owners have capital gains)

3. Creates a greyer area for business expenses, that businesses might fight

4. Regulatory market that REITs currently enjoy (that effectively have this)

The major arguments for it are transparency, simplification, more progressive passive income taxes.


The implicit argument #5 is that a lot of people would be upset if corporations weren't taxed, because it wouldn't be "fair".

I might be wrong, but I think the system is currently structured such that corporate taxes are mostly a sham anyway; when they pay out dividends, those are taxed at a lower rate to make up for the corporate tax. This is probably anti-progressive because poor people aren't incentivized to invest in businesses, as they'd be effectively taxed closer to rich people rates.

Really, a surprising amount of screwy and circuitous things in our civilization are a direct result of income taxes.


> almost every economists thinks we shouldn't have corporate taxes.

My understanding is that this issue is still robustly debated among economists. Do you have a citation for this?


I asked the same question and I'm still waiting for a reply. I won't hold my breath


I bet he means western economists aka lobbyists


getting rid of corporate tax would simply increase inequality, because wealthier individuals can employ corporations more effectively to gain even more advantage.

if you equalize tax treatment (not just rates, but other things like carryforwards) across people, corporations, and capital, wealthy folks wouldn't be able to game the differences like they do now.

international competition can be addressed with tariffs, which is already quite prevalent but are used for petty politics rather than to level the playing field in international trade.


How would they do that though? You can't take money out of a corporation without it being taxed as income? At some point it's going to be taxed. I agree capital gains rates could use a second look but I don't see this big "wealth loophole".


How about this example: a corporation buys a yacht that the CEO has exclusive use of and lives on. Now the CEO gets full food & board & luxury sea transportation provided. The CEO's salary is $1.

The CEO is taking untaxed value out of the corporation but paying no income tax. If the corporation pays no taxes either, then the staff of the yacht will be paying more taxes than the CEO & corporation combined!


Aside from the fact that this is illegal under the current rules (most perquisites are considered income by the IRS), the yacht is an expense, so reduces the taxes the corporation pays under today's rules.


> You can't take money out of a corporation without it being taxed as income?

There's a lot of ways (though there are limits) you can derive personal benefit through things that look like corporate expenses but not personal income, and so are not taxed to you or the corporation; these aren't even constrained by corporate taxes.

But, back to the point, absent corporate taxes, you can use corporate retained earnings as a perpetual tax structuring vehicle by choosing to extract and realize income from the corporation when most convenient for you, as well as enjoying any personal benefits tax free that you can slide by as business expenses. It's that permanent deferment piggy bank,not the more limited tax free benefit extraction, that makes it a tax shelter.

And given the high threshold at which estate tax kicks in, this is potentially a multigenerational tax shelter.

Corporate income tax (which is really a retained earnings tax, because expenses are deducted) shuts down the corporation as tax shelter maneuver.


Sure, but how is that different than other investments such as stocks or bonds?

Claiming personal expenses as business expenses is slippery, we are in illegal territory here.


> Sure, but how is that different than other investments such as stocks or bonds?

Since stocks are how one owns a corporation, it's literally exactly the same as stocks, which are not an “other investment”.

Of course, there is a manifest difference between controlling enough stock that one determines, among other things, if, when, and how much a corporation distributes back to shareholders and, well, not controlling that much. But the same issue, in principal, exists with shareholders collectively as with a single shareholder individually, though coordinated action becomes harder with larger numbers.


Corporate car leases, corporate hotel stays, corporate supplied breakfasts and lunches, corporate sponsored day care, corporate tickets to games/performances. There are a lot of lifestyle perks that can be justified as a cost of doing business.


> wealthier individuals can employ corporations more effectively

I think onlyrealcuzzo suggested that problem would be fixed by "properly tax money as it LEAVES companies"


> I think onlyrealcuzzo suggested that problem would be fixed by "properly tax money as it LEAVES companies"

What if the money never leaves, but instead is spent by the corporation to benefit the individual?


Then it's probably regarded as a 'constructive dividend' by the IRS and is liable to tax.

https://www.thetaxadviser.com/issues/2017/may/identifying-co...


That type of behavior falls into category of either "income" or "embezzlement".


This is actually a good point. If you're sufficiently rich, you can create your own corporation that exists to buy really nice boats and then sail you around as a business plan. The corporation will be able to avoid paying any taxes by virtue of being completely unable to exist without you pumping it full of money.

I don't think we should give corporations a pass, but at the same time we can't also expect them to "play fair" when there is no way for anyone to actually determine what that means.


This is illegal under current laws.

The truth is, there's really only a couple hundred thousand families in the US with enough money to do stuff like this. And the IRS should have the resources to make sure they aren't making $10M+ per year and reporting income of like $15k.


Alternatively, you could do something similar as a religious organization and bypass a lot more IRS scrutiny.


Buybacks don't "get around" income tax since buybacks in no way affect taxable income or tax rate at the corporate level. However, buybacks could (hopefully) boost the value of the stock, in which case shareholders pay more in capital gains taxes when the stock is sold, so indirectly, buybacks are sometimes effectively taxed already. I would also note that no other country in the world taxes buybacks.

This whole buyback debate in the last few days is frankly bizarre and just shows how many people are financially illiterate.


So corporations are people but without income taxes? How can I declare myself a corporation?


Capital gains should be taxed as normal income.


“The tax on capital gains directly affects investment decisions, the mobility and flow risk of capital.. the ease and difficulty experienced by new ventures in obtaining capital, and thereby the strength and potential for growth in the economy.”

— President John F. Kennedy, 1963

Myopic egalitarianism on taxes would have ruinous affects on all levels of society. The incentive structures that determine how we allocate capital determine how dynamic our economy is and thus the opportunities for working and middle-class Americans. Lower capital gains taxes encourages skilled investors to reallocate capital to promising projects, ensuring capital goes to the companies most likely to create jobs as they innovate and scale. Better investment of capital literally results in higher wages, superior goods, and a more sustainable tax base. The maximum capital gains tax in the US is already one of the highest in the developed world. It should be zero, like Singapore, Hong Kong, and a dozen other OECD countries.

Taxing capital gains as ordinary income would freeze long term investments in place. This is the “lock-in effect.” When capital gains taxes are high, the tax penalty discourages investors from moving their money to potentially better investments.

Obama said raising capital gains taxes was “fair.” However, that sounds good to voters that don’t know any better while it would be disastrous in practice. His statement was catnip to the economically ignorant just like “build the wall” is catnip to the right-wing. Both ideas are of questionable benefit while the potential for unintended consequences are somewhat infinite. Of course there are those that actually want the US economy to get worse in order to bolster anti-capitalist arguments. So perhaps the negative effects of taxing capital gains as ordinary income is a desirable outcome for those who suggest it. A bit cynical, however, how else could it be explained: if raising capital gains taxes is bad for the economy as Kennedy and economists say, why would anyone support it? They’re either badly informed or perfectly informed and malicious.


It irks me that you're allowed to effectively call me stupid but any response would get me in trouble.

Appealing to the authority of rich white dudes on this topic is not at all convincing.


Well, that's a fair response, but it also is unconvincing - the op shouldn't have implied that you're malicious in wanting a tax on capital gains. Still, the question remains - does it have a chilling effect on investment? Since you seem to know about this I'm curious what your retort would be.


Removing the corporate income tax implies changing the capital gains exemptions as corporations would no longer be double taxed.

Once double taxation is eliminated, capital gains can approach the full progressive rate as they will still be incentivized without the earned income payroll taxes.


What double-taxation are you referring to here?


Corporate tax + capital gains tax.


Still not sure what you're referring to. Are you talking about companies investing into other companies, then when they sell those investments, are they paying a capital gains AND corporate tax on the profits?


> almost every economists thinks we shouldn't have corporate taxes

Name names, please.


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!


> 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.

Well, you can't incentivize via tax deductions or credits against the corporate income tax if it doesn't exist, but you can absolutely drive corporate incentives via other taxes. E.g., particularly with regard to pollution, fuel/carbon/emissions taxes, rather than corporate income taxes.


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."


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.


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.


You can still incent corporations via taxes. You just don't have an additional "no reason" tax.

Tax the rich directly, via their incomes.


The pollution issue can be solved by simply regulating polluting businesses or just banning them.


Taxing pollution is a much more economically efficient approach than regulation or banning.

You can't really bad pollution anyway. You and I exhale CO2, a greenhouse gas.


Tax/Legislate the issues directly.


This effectively removes income tax entirely for rich people. I can simply create a corporation and never take money out of it. If I need to spend money, I can just borrow (whether directly from the corporation or indirectly). Even if you remove the latter loophole somehow, you're effectively only taxing consumption, which is highly regressive.


> almost every economists thinks we shouldn't have corporate taxes

Source?


Because we've already spent those tax dollars by allocating them to some spending program. In other words, we can't stop taxing corporations and based on current sentiments going around....the taxes on businesses are only going higher.

I agree it is stupid to tax businesses due to how international our economies are getting. Foreign companies can ship product into the USA but pay no taxes in the USA so they get an economic advantage by being in the lowest taxed country. The only tax they pay is import taxes.


> based on current sentiments going around....the taxes on businesses are only going higher

They literally just slashed them.


Income taxes go into the general fund, they aren't allocated to specific spending programs. Obviously any complete elimination of corporate income taxes would have to be coupled with a tax increase on high-income individuals in order to make the change revenue neutral.


From my understanding the government pays for things by printing money. It's literally created on demand. Taxation and bonds/interest rates are partially used to take excess money supply out of the economy and control inflation (which is a highly simplified view of things).


> Serious question: almost every economists thinks we shouldn't have corporate taxes.

Oh yeah? Got some evidence for that claim?


We shouldn't care what economists think, only what they can prove. Evidence-based policy is what is needed.


If you have a choice between A and B, and can't "prove" (what?) B is better, that doesn't mean you should choose A.


Economists prefer models and policies based on models, based on data.

Of course economic data is usually statistical in nature, so interpretation leaves a pretty wide margin for personal biases to influence model/policy selection, but that doesn't mean economics is not evidence based.

Proving things is only possible withing a model. That's easy. Arguing for and finding the right model is hard.


Most corporations don't pay taxes... it would be simpler to just remove the taxes as a whole and remove incentives around holding onto underutilized and unutilized capital. That would lead to either an expanding economy or payouts to those who then would be paying taxes.


What areas of the tax code do you think that Amazon is taking advantage of? What "ridiculous loopholes" do you think are problems in this specific case?


Just for interesting discussion: What kind of reasonable activity would you suggest would fairly negate a corporation's tax obligation? I.e. What can corporations do with their money—instead of giving it to the government—that would benefit the people as much or more than actually giving it to the government.


Would you agree that Amazon has bettered your life in some way? If so, then your argument loses most of its weight. Personally, I trust a corporation with money more than the federal government, for the simple reason of accountability. A business has a chance at failure if they're dumb about money. A government will always have more. It's simple, but a compelling argument.


I don't understand your reasoning here. I've given amazon money for products and/or services, and I've paid my share of taxes on those transactions.

It's not like they've ensured my roads are safe, my food is safe, my healthcare is taken care of, and that laws are enforced. Also, I'm not so selfish to think I'm the only one who should be helped here. The greater good of society matters more than me as an individual.

Why shouldn't amazon pay their share of taxes for those things, (some) of which they're undoubtedly taking advantage?


From an economic perspective, there's no difference between the sales tax that is paid by the seller or by the buyer. So it's not correct for you to take credit for the taxes paid on the transactions between you and Amazon - the economic burden is shared by both parties. Likewise, Amazon pays the payroll tax and any income tax that is paid by its employees, effectively increases the cost of transaction between Amazon and its employees, making it a shared burden by both parties.


Paying employees to produce benefits many people. Possibly at a much more effective rate than giving it to the government (as they actually produce something in return).

Investing in capital goods and means of production. Again, this has a return that giving to the government does not.

Simple example of what is going on here. Someone buys a plot of land and materials in 2000 for $100000. They build a house and sell it in 2001 for $120000. What should they be taxed on? The "losses" from 2000 get carried over to 2001, and they are taxed on $20k.

In virtually every one of these articles "OMG ABC Corp paid $0 in taxes this year!", the explanation is that losses (investments typically) are being carried forward. This is absolutely normal, expected, and necessary for long term planning and growth.


How does “doubled profits” indicate any losses to carry forward? Aren’t profit and loss mutually exclusive?


Pay the capital investment of a huge data center that they depreciate and reduce tax liability over the term specified by the IRS. That seems pretty reasonable to me.

I’m not a tax expert, but I think most capital investments work this way.


What tax obligations are being negated here? My assumption is that Amazon is not paying any taxes because they don't owe any - as in, they have no tax obligations.


Reinvesting in said company for one, which is why carry over debt is deductible.


Sure, but how does that benefit the people of the U.S.?


How does growing a business benefit citizens? Jobs, economic stimulus, eventually larger taxes would be the obvious three. If you start disincentivizing reinvestment then, well... growth will slow.

Same goes for losses. A calendar year is an arbitrary delineation of time. If your business loses $100 in one year and brings in $100 in revenue the next, do you really want them to pay taxes on said revenue? Seems a bit unfair, no? In a two year period they broke even, and that's not even considering what profits they may or may not have made.

We want people to grow their businesses because it's generally good for everyone. Similarly, we tax profits, not revenue, because if we did the former companies would simply cut costs at every opportunity and never put money back in.


Sounds a lot like Trickle Down Economics, which has been disproven time and again.

Also: if amazon’s profit is double what it was last year, shouldn’t that profit be taxed? If they never pay taxes and continue exploiting labor, aren’t they a net drain on society?


We're talking about specifics here though, not an overarching economic theory which is defined by political buzzwords. I agree that the idea of trickle down on the whole doesn't work, but that doesn't mean every one of its ideas are wrong (and I believe this specifically is related to Reagan era economics.) Companies investing revenue is, in general, a good thing. You can of course debate the specifics of what constitutes an investment.

>if amazon’s profit is double what it was last year, shouldn’t that profit be taxed? If they never pay taxes and continue exploiting labor, aren’t they a net drain on society?

Well they do pay taxes, so I don't know where you're getting "never" from. Heck, just look at the chart at the bottom of the article. This is the _first_ year they had a negative rate. If you're going to make statements (shrouded in questions) like "they're a net drain on society" you're going to have to come up with some numbers.


Turning a large profit and not paying taxes? That part?


They're following the code, it's written in law. If they didn't take advantage of it, their stockholders would be pissed.


thatsthepoint.jpg

The problem is that our tax laws allow immense, profitable corporations to pay nothing in federal taxes despite using massive amount of federally funded infrastructure in their course of doing business. How much burden do all those delivery trucks put on our federally funded roadways, bridges, and environment? And that's just the start of it...


Which specific sections of the tax code do you think should be repealed or amended?


The entirety of the tax code that allows them to pay under 20% of their profit in taxes.


Can you cite any specific sections? Just one example!


The deductibility of employee stock compensation would be the obvious answer here.


[flagged]


Actually I am being serious, not trolling.

To make my point more clearly -- I think accounting is too complicated to reduce to simple populist sound-bytes like "companies with X income should pay Y tax". I also think it's plausible that there are good reasons for some or all of the deductions Amazon is taking advantage of. That might not turn out to be the case, but it's impossible to know in advance without knowing what those deductions are.


Corporate income tax accounts for a whopping 9% of federal taxes for 2017. It's projected at 7% for 2019. Pathetic. Historically, this tax as a percentage of GDP is pretty low: https://www.taxpolicycenter.org/statistics/corporate-income-....

Those "good reasons" appear to be "because our representatives like to keep their paychecks coming and fashion the tax code in a way favorable to corporations". You can complain about "populist sound-bytes" all you'd like, but it's absurd for a company to use so many public resources and pay nothing.


I think the very fact that it is complicated is unfair.

I want one of the following

1. An education system so absurdly stellar that our 18 year old high school graduates have the legal and fiscal expertise to navigate the tax code as expertly as a HSBC financial advisor, or

2. A tax code so simple it can be read and understood, verbatim, by every US citizen.


> 2. A tax code so simple it can be read and understood, verbatim, by every US citizen.

Not possible considering one-fifth of adults don't understand percentages.

https://www.theguardian.com/education/2016/mar/07/a-fifth-of...

Yeah, the article refers to adults in the UK, but considering how terrible the education system is in the USA, do you think it'd be any better?


Asking for an example isn't trolling, and claiming otherwise is uncivil.


If I knew the answer to that, I would also be paying 0 in tax.

I'm allowed to be upset at the fact that it's possible, without knowing how they do it.


So, given that you admit to not understanding the details of Amazon's accounting practices, how can you be so sure that what they're doing is wrong or bad?


We're in the thread I started, where I lauded them for taking advantage of tax loopholes to not pay any tax. So, I'd be interested in why you believe I think what Amazon is doing is wrong.

What I don't like is that companies are allowed to do this at all - I support more government sponsored measures such as universal healthcare and education, far greater investment in sciences, etc, and I believe corporations paying higher tax rates is a fantastic way to pay for these things.


Well approximately 45% of Americans pay no federal income tax.


The 45% that are disabled, retired, unemployed, or who make barely enough to live? Who cares that they pay nothing. How many citizens have $10B in annual income and pay nothing in taxes? The effective tax rate for the top 1% of citizens is about 30%... what do you think it is for the top 1% of corporations?


Being able to income average by carrying forward previous losses is not a ridiculous loophole. Many businesses have a much longer cycle of investment/payoff than a year. Boeing, for example, when they develop a new airplane like the 747, can have massive losses for 8 years or so before turning a profit.


My cynical view is these loopholes will only close when small/midsized companies start to aggressively apply them. However, I fear that when the little guy does this there is a real risk of prison time, and no matter how far Apple and AMZN push the bounds of the law there is no way in hell Bezos or Cook would ever get arrested.

https://www.barnesandnoble.com/w/the-chickenshit-club-jesse-...


No one got arrested for 2008. Has anyone been arrested for the Opiate crisis?

Oligarchs don't have the same laws as the rest of us.


Let's imagine you were a federal prosecutor. Who specifically would you indict for the 2008 crisis, and on what specific charge?


Let's not, because it's a pointless exercise. I'm not a federal prosecutor with the powers to investigate the malfeasance of white collar criminals.

https://www.nytimes.com/2014/05/04/magazine/only-one-top-ban...


accounting fraud, for one. Banks carried so much unsold bonds on their books at prices that were nowhere near reality.


Fortunately no amount of US law restricts a foreign company.

The U.S. Tax law stops at the U.S border. The U.S. needs to compete at the global level. Ireland's tax law is not by coincidence.

Fortunately companies have a choice for now.


How is it broken? If Amazon pays less taxes, that means the products I need are necessarily cheaper. A tax cut for Amazon is a discount to everyone that buys their products. That discount is more valuable for lower income people, which means that cutting taxes for Amazon means more disposable money in the pockets of their customers. I’m not sure how that’s a bad thing. Corporations don’t pay taxes: their customers do.


How is it broken? Or are you suggesting taking away a carry loss forward deduction?


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