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.
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.
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.
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.
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.
> 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.
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.
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!
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.
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.
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.
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.
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?
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.
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.
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 $1.4 billion in tax credits resulting from R&D spending. The operating losses and tax credits can be carried forward to future years but eventually they will run out of them.
And despite these losses Jeff Bozo is the richest man in the world. Clearly these companies are abusing the tax laws to avoid paying their share of taxes.
Amazon depends on the roads that our tax dollars fund. Amazon depends on intelligent people to run its business, funded by the US government through various mechanisms such as research grants. Amazon depends on the protection of the US military. Amazon and companies like Amazon need to pay their share
Second ITEP article on HN recently that bemoans a tech giant not paying taxes, without any substantive discussion of why. Corporations don't just decide to not pay tax; Amazon is operating within the law.
It's nothing but punditry to decry Amazon's tax rate without seriously discussing why it's so low and whether that underlying reason is good policy or not.
Personally, I don't mind corporations not paying taxes. Companies aren't people, and eliminating taxes should be done in conjunction with restricting political support.
Corporations should either give dividend and/or diversify/expand. If paying dividends, shareholders can then pay income taxes. Amazon has a growth model. What I'm against is corporations holding on to unutilized or underutilized assets in a longer term.
It's the spending and changing hands of money that promotes a healthy economy, having cash or capital sitting unused doesn't really help anyone all that much imho.
That's just my take on it... I'm not in favor of corporate protectionist policies and would rather see a lot of it be torn down to an effect of both reducing corporate power as well as the influence of tax incentives.
another clickbait article from this organization. "${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.
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.
[+] [-] Twirrim|7 years ago|reply
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.
[+] [-] ghobs91|7 years ago|reply
[+] [-] airstrike|7 years ago|reply
Everyone's free to remain a layman, but just remember nobody cares what the layman thinks. Taxes are complicated.
[+] [-] clairity|7 years ago|reply
[+] [-] cimmanom|7 years ago|reply
[+] [-] kentosi|7 years ago|reply
[+] [-] latencyloser|7 years ago|reply
[+] [-] Diederich|7 years ago|reply
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.
[+] [-] skh|7 years ago|reply
Regulatory capture is a nice phrase from economics. What we have in the U.S. (and elsewhere) is tax law capture.
[+] [-] __jal|7 years ago|reply
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.
[+] [-] wil421|7 years ago|reply
Jeff Bezos is the worlds richest person of course people will be writing about Amazon.
[+] [-] antiutopian|7 years ago|reply
[+] [-] SonicSoul|7 years ago|reply
[+] [-] ravenstine|7 years ago|reply
[+] [-] ceejayoz|7 years ago|reply
For example, cycling's doping scandals are well illustrated by Lance Armstrong.
[+] [-] tivert|7 years ago|reply
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.
[+] [-] brucemoose|7 years ago|reply
[+] [-] NegativeK|7 years ago|reply
[+] [-] pfortuny|7 years ago|reply
[+] [-] dhowingjwkd|7 years ago|reply
[+] [-] kevin_b_er|7 years ago|reply
[+] [-] anth_anm|7 years ago|reply
Your post makes me want to smash everything around me.
[+] [-] unknown|7 years ago|reply
[deleted]
[+] [-] jimktrains2|7 years ago|reply
[+] [-] aaronbrethorst|7 years ago|reply
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-...
[+] [-] dovetailcode|7 years ago|reply
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|7 years ago|reply
[+] [-] mises|7 years ago|reply
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|7 years ago|reply
[+] [-] onlyrealcuzzo|7 years ago|reply
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.
[+] [-] harryh|7 years ago|reply
[+] [-] skookumchuck|7 years ago|reply
[+] [-] jgalt212|7 years ago|reply
https://www.barnesandnoble.com/w/the-chickenshit-club-jesse-...
[+] [-] marcrosoft|7 years ago|reply
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.
[+] [-] briandear|7 years ago|reply
[+] [-] refurb|7 years ago|reply
[+] [-] anonymous5133|7 years ago|reply
[+] [-] jostmey|7 years ago|reply
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
[+] [-] tvanantwerp|7 years ago|reply
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|7 years ago|reply
Amazon's electricity rate discounts have pushed up utility costs
Source: https://www.bloomberg.com/news/articles/2018-08-20/amazon-is...
[+] [-] tracker1|7 years ago|reply
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|7 years ago|reply
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|7 years ago|reply
[+] [-] gok|7 years ago|reply
[+] [-] throwaway-1283|7 years ago|reply
[+] [-] costcopizza|7 years ago|reply
The companies that can afford to engineer out of it, will, making it oddly regressive in certain circumstances.
[+] [-] thedangler|7 years ago|reply
[+] [-] jostmey|7 years ago|reply
[+] [-] clamprecht|7 years ago|reply
[+] [-] alasdair_|7 years ago|reply