Insta
Amazing Amazon Made $11.2 Billion In Profits Last Year But Paid $0 In Federal Income Taxes. All Thanks To Trump
Swarajya Staff
Feb 20, 2019, 01:24 PM | Updated 01:24 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Amazon, the global retail behemoth, almost doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes, according to a report published by Institute on Taxation and Economic Policy (ITEP), an organization that is focussed on analysing the tax-paying habits by corporations for nearly 40 years.
Analysing Amazon’s newest corporate filing, the report revealed that, far from paying the statutory 21 percent income tax rate on its US income in 2018, Amazon reported a federal income tax rebate of $129 million.
For those who don’t have a pocket calculator handy, that works out to a tax rate of negative 1 percent. The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified “tax credits” as well as a tax break for executive stock options.
This isn’t the first year that the cyber-retailing giant has avoided federal taxes. Last year, the company paid no federal corporate income taxes on $5.6 billion in U.S. income.
While President Donald Trump has often been at loggerheads with the company including accusing it of unfair tax practices and antitrust violation, it was the Trump administration’s massive tax bonanza in 2017 (statutory corporate tax rate was reduced from 35 percent to 21 percent) that has provided Amazon loopholes to help escape from paying tax.
The supporters of the tax cut had advocated that it would incentivise better corporate citizenship. But according to the ITEP report, the new tax law has failed to broaden the tax base or close a slew of tax loopholes that enable profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.
As part of the proposal, the Trump administration and its congressional allies provided lavish new giveaways such as immediate expensing of capital investments. The ITEP report pointed out that several tax analysts had highlighted that the tax law was a huge revenue loser that was giving away far more to big corporations in rate cuts than it takes in loophole-closers.
The report criticised Trump for passing the tax proposal. While acknowledging that the president himself has criticised Amazon for its tax avoidance in the past, it said that his administration has so far displayed no awareness that its own tax package appears to have made the company’s corporate tax avoidance even more rampant than before.
ITEP report pointed out that Amazon is no stranger to tax controversies.
Last year the company, in a staggering act of hubris, engaged in a year-long aggressive push for huge new relocation subsidies for its “HQ2” headquarters. A year later, Amazon appears to have won its two-front battle against fair taxes by continuing to altogether avoid federal taxes and obtaining lucrative packages of local tax breaks for not one but two new HQ2 locations, in New York and Virginia as well breaks for an operations center in Nashville, Tenn.
ITEP report highlighted the possibility that Trump’s tax cuts have potentially opened the floodgates for tax avoidance.
It’s too soon to know whether this new revelation, following hard on the heels of Netflix’s similar announcement last week, means that the floodgates have opened for a wave of Fortune 500 corporate tax avoidance: we’ll have a better sense of that a month from now, when most big multinationals will have released their financial reports for 2018, the first full year of the new Trump corporate tax law. But these initial findings appear to confirm the view that last year’s tax law was a gigantic missed opportunity for true corporate tax reform.
Get Swarajya in your inbox.
Magazine
