The article is reluctant to mention the reason why they got those tax rebates, and focuses on the way people feel about it. This seems like bad journalism.
According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.”
https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-feder...
These are the actual things we should be talking about.
Those all sound like corporate tax policies. That's literally what they're talking about. Clearly, a growing portion of the electorate doesn't like those policies.
That's the first step in democracy, no? Engagement?
>>These are the actual things we should be talking about.
I (hesitantly) disagree. That specific tax policy change is a tree in a vast forest. It happens to be relevant here, but without it... It's not like Amazon, Google, apple, etc would have paid anywhere near the simple tax rate had that legislation not been enacted. Amazon had a different loophole/strategy in 2016 and will have another one for whenever the 2017 one expires whatnot.
Ultimately, corporate income tax has been broken for over 50 years, and it's been brought ken internationally, not just in the US.
...broken in the sense that the "rate" can be 35%, 23% or whatever and the total tax raised in an economy some number unrelated to that.
Reporting the way you suggest implies that in 2016 things were different, or that canceling that policy will yield a meaningfully different result. That's not the case.
Do we have any more information on this line item? I'm in a position where over 1/2 of my income is via RSU grants from my employer. If those are deductible from corporate taxes, that seems to make sense since they are treated as regular income to the recipients, just like salaries (other payroll taxes, etc. are another story). I know there are other forms of equity-based compensation as well. I'm curious to see how these things work.
Go look at Amazon's 8k and 10k filings; If memory serves it wasn't until 2015 or 2016 they turned a profit after almost 2 decades. It's been illegal, under racketeering laws, to sell at a loss in order to capture a market for a long, long time, and that's the real story here.
Republicans and Democrats have let that one go; blaming political parties is a straw-man argument. They expect to utter the words and hope you believe it and not fight what they're doing.
In 2008 after the crash the retail industry switched to hiring part-time jobs only; Wal-mart, Meijer, Kroger, almost everyone and a lot of that was due to pricing pressure from online retail namely E-bay and to a larger extent Amazon. People began working 3 or 4 unstable part time jobs to piece together 60+hr weeks in order to make ends meet and still living in destitution (not having savings for a car or house repair). Many turned to drugs and alcohol to deal with the trauma of being in a sitaution where that looked to be a permanent state of affairs. Today, Wal-mart has stopped drug testing new hires, they've implimented a drug rehab program for new hires because they drug test 100 people and literally 99 fail. Other retailers and employers are doing the same.
Any company that views it's customers as the product ultimately is looking to do what anyone does with a product once they are done with it; throw it into the garbage. CNBC is filling your head with garbage and turning you into garbage just like Amazon and the retail industry did to those retail workers I just mentioned; now they get to clean up their mess. Those people get to lose a good 15-20 years of productive live due to this. You have literally nothing to gain by listening to them whatsoever; take a news literacy course and invest a little bit of money on real journalism.
The intellectual dishonesty of this from allegedly smart people continues to astound me. Amazon has little-to-no taxes mainly because they have such low taxable income in the first place because they spend so much in R&D and other things. They’re actually creating jobs and new businesses rather than showing massive profits and paying a ton in taxes. I have no doubt they take advantage of perfectly legal tax code items like accelerated depreciation, just like millions of other companies. At the end of the day, people of a certain mindset just want to take other peoples’ money and the more of it they have they more desperately people believe they don’t deserve to have it.
Can you prove that all the other businesses that didn't survive, either online or shops weren't has much jobs than the one Amazon provide?
Also, all the taxes that they don't pay needs to be paid by others. For each optimizations done by those companies, it's as much money that needs to be paid by others as each country runs on a budget that is mainly based on taxes. Them not paying taxes as a direct impact on taxes that needs to be paid by the one who pay taxes as well as the quality of service and infrastructure of a country. Infrastructure they uses a lot by the way, like roads to deliver their goods for example.
> carryforward losses from years when the company was not profitable
The idea of carrying forward losses in general is sound, but I'm beginning to wonder if there should be an exception. If the loss is intentional, using investment instead of profit to drive growth, I'm not so sure those losses deserve to be carried forward. Probably an unpopular opinion here on HN, but I think denying reductions in those cases would be beneficial not only in terms of tax revenue from the larger companies but also in terms of reducing the VC-fueled ""unicorn or bust" mentality among the smaller ones.
Agree that these companies are using the tax code to write off losses that they are intentionally incurring in order to achieve a lower cost point than their (profitable) competitors. This is a very predatory practice that should be ended. Companies should compete in the marketplace. Having tax payers foot the bill for some companies disruption gambit makes no sense.
Taxing profits (as opposed to revenue, value add, capital gains..) is the ultimate quixotic temptation for politicians.
On paper, it is a fantastic tax. Google, Apple, FB, Amazon... all the new economy winners are very profitable, 20% - 30% margins & fast growth are expected (and priced into market caps).
They're so profitable that money is just piling up, atm. They can't usefully invest it all. This means you can tax their profits without affecting the real economy. There's nothing google is doing that it couldn't do if they had to pay $10bn (25%-30%) as a tax on profits.
OTOH, unprofitable companies (eg Tesla), would have trouble paying extra taxes. It'd need to come out of investments in production capacity, R&D, etc. They wouldn't have to pay.
Corporate income tax is just a sensible idea, on the face of it. Unprofitable? Don't pay. Profitable? Pay. Minimum economic disruption.
But in practice... across many times and places... it's proved very hard to make a corporate tax scheme work.
Tax policy complexity. Accounting complexity. Multiple jurisdictions. The looping cascade of company ownership, partial ownership, contractual relationships, making up the legal "structure" of a google or amazon.
It all adds up to a reality wherein politicans cannot make a law that says 25% tax.. and have that mean something similar to what it sounds like.
This is a pill very few politicans or voters can swallow. Of course we can! We're legislators. We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn.
Empirically, they generally can't. Changing things to enable corporate tax would require massive, difficult legal/bureaucratic reforms. You would need to consider insanely difficult changes, like heavy handed restrictions on a company's ability to own other companies, and the types of legal entities that can own legal entities. You'd need new accounting standards. The bureaucratic guts of the economic machine.
We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn.
Your post is very insightful. The only thing I’d add is that when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it.
That’s the crux of the problem to me. No matter what scheme the government can come up with to tax it, the numbers are so large that it is in the company’s interest and ability to find loopholes. That’s why we end up with sophisticated shell companies shuffling money around in tax havens that are perfectly legal but don’t make sense outside of tax avoidance schemes.
I must admit that my knowledge is lacking in this area. Can someone offer a high-level explanation to one of the people who don't understand corporate taxes in the US?
As far as my understanding goes, the bulk of taxes are paid on profit (to be more precise, operating income), and not revenue. As far as I understand, big companies do everything possible to make it seem like they are not profitable from an accounting perspective. As an example, this might mean that they'd pay some subsidiary in Ireland, where corporation taxes are smaller. What am I missing?
Surprised to see a headline from the NYT that uses weasel words ("some voters"? well some voters are also uneducated, so what?), which even Wikipedia has rules against. That being said, why does it matter if Amazon is not paying taxes itself if it is creating many jobs, with a good percentage of them being high paying, and who end up paying income taxes anyway? Not to mention taxes that Amazon pays for those employees to begin with.
Initially I too thought this was a bad idea, but if you think about it and set the tax rate really low - like a handful of percent, say 1% or 2%, not more than 5% - it might actually work.
Because even if the corporate tax rate is 30%, but we only collect it on profit, which ends up being only 5%-10% of revenue. So in actual fact, if the corporation was honest, we're really only collecting 30% of 5% or so, which is about 1-2% of revenue.
The thing which I think works with this "revenue tax" is that it removes the ability of the corporation to do clever accounting tricks to reduce the amount of profit. For example moving the IP offshore to a lower taxed country. It is something that could work for a lot of countries and would satisfy a lot of people.
The one place where it might not work is where margins are already razor thin and the business makes up on volume. But then again the business would have to charge more to cover the extra expense.
> One of the benefits of taxation is taking it and using it for the collective good
Which is true no matter if the tax rate is 1% or 75%
> He could be taxed at 99.9 percent and still have millions left over
I realize this is hyperbole but do realize that no 99.9% tax would be complied with
> tax on every dollar over $100 million in profits they earn anywhere in the world
oh the American hubris, so lost in the goal of catering to their constituents that they think this institution has a valid claim on assets, and income. Lets take a cut of everyone's productivity IN A MORE FAIR WAY crowd cheers.
But alas, the US rule of law makes it secure for you to do business and these corporations benefit from this society and use its services - but thats also true whether the tax is 1% of 75%, so it isn't really an argument
> article shows graphs about tax rebates
Article doesn't talk about how the corporations used tax rebates at all. It talks about the outcome of paying no tax, talks about all these proposals, and none of the proposals talk about tax rebates. Even the most ambitious proposal here would probably not effect how these corporations operate. Are people - I dare say - stupid? Is this a mass reading comprehension issue?
It is interesting that people who can simply read can play tax games like this for another 100 years before anyone catches on.
subchapter S (and other pass through) corporations pay no corporate income tax at all. this is the majority of small businesses.
Corporations ultimately distribute their profits to actual people. Those people will pay tax on that income.
It isnt automatically obvious that corporations should pay any taxes on income (or revenue) until it is distributed to actual people (shareholders and employees). We tax the profit of larger corporations because we can and because we need the tax dollars, not because there is some moral imperative to do it.
It doesn’t matter if corporations pay taxes because the money just flows to people who own equity in or work for those corporations, and they pay taxes.
Not only do they not pay taxes, they also enjoy absurd political power through lobbyists and through being able to pump huge sums of money into politics thanks to the Citizen's United decision.
There is simply too much power in the hands of the corporations. I mean, Amazon literally had dozens of city governments falling over themselves to give up enormous tax goodies and red carpet roll out all for the weak promise of 50000 jobs and an HQ2.
Smaller companies pay their taxes and set their prices at a level where they can afford that. If Amazon are forced to compete fairly on efficiency/quality/... rather than on tax avoidance, that's a good thing for customers in the long run (and of course collecting tax to be spent on public services is good for citizens immediately).
This comes up all the time. The issue is not the companies. The issue is the loopholes that their highly paid tax accountants are taking advantage of. Change the law not attack the company for acting in the best interest of its shareholders.
synecdoche: a figure of speech by which a part is put for the whole (such as fifty sail for fifty ships), the whole for a part (such as society for high society), the species for the genus (such as cutthroat for assassin), the genus for the species (such as a creature for a man), or the name of the material for the thing made (such as boards for stage)
seunosewa|6 years ago
According to CNBC, “Amazon's low tax bill mainly stemmed from the Republican tax cuts of 2017, carryforward losses from years when the company was not profitable, tax credits for massive investments in R&D and stock-based employee compensation.” https://www.cnbc.com/amp/2019/04/03/why-amazon-paid-no-feder...
These are the actual things we should be talking about.
chii|6 years ago
yes, this definitely should be talked about. Why can't people's income be carried forward like this as well?
If i made a lot of money one year, why can't i claim away taxes from years that i didn't make income (such that my tax bracket is lower)?
civilitty|6 years ago
That's the first step in democracy, no? Engagement?
netcan|6 years ago
I (hesitantly) disagree. That specific tax policy change is a tree in a vast forest. It happens to be relevant here, but without it... It's not like Amazon, Google, apple, etc would have paid anywhere near the simple tax rate had that legislation not been enacted. Amazon had a different loophole/strategy in 2016 and will have another one for whenever the 2017 one expires whatnot.
Ultimately, corporate income tax has been broken for over 50 years, and it's been brought ken internationally, not just in the US.
...broken in the sense that the "rate" can be 35%, 23% or whatever and the total tax raised in an economy some number unrelated to that.
Reporting the way you suggest implies that in 2016 things were different, or that canceling that policy will yield a meaningfully different result. That's not the case.
fatnoah|6 years ago
Do we have any more information on this line item? I'm in a position where over 1/2 of my income is via RSU grants from my employer. If those are deductible from corporate taxes, that seems to make sense since they are treated as regular income to the recipients, just like salaries (other payroll taxes, etc. are another story). I know there are other forms of equity-based compensation as well. I'm curious to see how these things work.
noworld|6 years ago
TheBobinator|6 years ago
Republicans and Democrats have let that one go; blaming political parties is a straw-man argument. They expect to utter the words and hope you believe it and not fight what they're doing.
In 2008 after the crash the retail industry switched to hiring part-time jobs only; Wal-mart, Meijer, Kroger, almost everyone and a lot of that was due to pricing pressure from online retail namely E-bay and to a larger extent Amazon. People began working 3 or 4 unstable part time jobs to piece together 60+hr weeks in order to make ends meet and still living in destitution (not having savings for a car or house repair). Many turned to drugs and alcohol to deal with the trauma of being in a sitaution where that looked to be a permanent state of affairs. Today, Wal-mart has stopped drug testing new hires, they've implimented a drug rehab program for new hires because they drug test 100 people and literally 99 fail. Other retailers and employers are doing the same.
Any company that views it's customers as the product ultimately is looking to do what anyone does with a product once they are done with it; throw it into the garbage. CNBC is filling your head with garbage and turning you into garbage just like Amazon and the retail industry did to those retail workers I just mentioned; now they get to clean up their mess. Those people get to lose a good 15-20 years of productive live due to this. You have literally nothing to gain by listening to them whatsoever; take a news literacy course and invest a little bit of money on real journalism.
bedhead|6 years ago
boudin|6 years ago
Also, all the taxes that they don't pay needs to be paid by others. For each optimizations done by those companies, it's as much money that needs to be paid by others as each country runs on a budget that is mainly based on taxes. Them not paying taxes as a direct impact on taxes that needs to be paid by the one who pay taxes as well as the quality of service and infrastructure of a country. Infrastructure they uses a lot by the way, like roads to deliver their goods for example.
_Microft|6 years ago
Not wanting to contribute to that is the epitome of free-riding.
lugg|6 years ago
Nobody is saying otherwise. They are saying these legal loopholes are the problem that need changing.
specialist|6 years ago
ikeboy|6 years ago
notacoward|6 years ago
The idea of carrying forward losses in general is sound, but I'm beginning to wonder if there should be an exception. If the loss is intentional, using investment instead of profit to drive growth, I'm not so sure those losses deserve to be carried forward. Probably an unpopular opinion here on HN, but I think denying reductions in those cases would be beneficial not only in terms of tax revenue from the larger companies but also in terms of reducing the VC-fueled ""unicorn or bust" mentality among the smaller ones.
tomohawk|6 years ago
Allower|6 years ago
[deleted]
netcan|6 years ago
On paper, it is a fantastic tax. Google, Apple, FB, Amazon... all the new economy winners are very profitable, 20% - 30% margins & fast growth are expected (and priced into market caps).
They're so profitable that money is just piling up, atm. They can't usefully invest it all. This means you can tax their profits without affecting the real economy. There's nothing google is doing that it couldn't do if they had to pay $10bn (25%-30%) as a tax on profits.
OTOH, unprofitable companies (eg Tesla), would have trouble paying extra taxes. It'd need to come out of investments in production capacity, R&D, etc. They wouldn't have to pay.
Corporate income tax is just a sensible idea, on the face of it. Unprofitable? Don't pay. Profitable? Pay. Minimum economic disruption.
But in practice... across many times and places... it's proved very hard to make a corporate tax scheme work.
Tax policy complexity. Accounting complexity. Multiple jurisdictions. The looping cascade of company ownership, partial ownership, contractual relationships, making up the legal "structure" of a google or amazon.
It all adds up to a reality wherein politicans cannot make a law that says 25% tax.. and have that mean something similar to what it sounds like.
This is a pill very few politicans or voters can swallow. Of course we can! We're legislators. We make laws. We have police, and tax authorities. Google finance said google made $40.42bn. The rate is 25%. Gives us $10.1bn.
Empirically, they generally can't. Changing things to enable corporate tax would require massive, difficult legal/bureaucratic reforms. You would need to consider insanely difficult changes, like heavy handed restrictions on a company's ability to own other companies, and the types of legal entities that can own legal entities. You'd need new accounting standards. The bureaucratic guts of the economic machine.
300bps|6 years ago
Your post is very insightful. The only thing I’d add is that when you have a $10 billion tax bill that you can afford to pay $5 billion to attorneys and accountants to avoid it.
That’s the crux of the problem to me. No matter what scheme the government can come up with to tax it, the numbers are so large that it is in the company’s interest and ability to find loopholes. That’s why we end up with sophisticated shell companies shuffling money around in tax havens that are perfectly legal but don’t make sense outside of tax avoidance schemes.
specialist|6 years ago
bdibs|6 years ago
rocgf|6 years ago
As far as my understanding goes, the bulk of taxes are paid on profit (to be more precise, operating income), and not revenue. As far as I understand, big companies do everything possible to make it seem like they are not profitable from an accounting perspective. As an example, this might mean that they'd pay some subsidiary in Ireland, where corporation taxes are smaller. What am I missing?
specialist|6 years ago
apta|6 years ago
grenoire|6 years ago
daemin|6 years ago
Because even if the corporate tax rate is 30%, but we only collect it on profit, which ends up being only 5%-10% of revenue. So in actual fact, if the corporation was honest, we're really only collecting 30% of 5% or so, which is about 1-2% of revenue.
The thing which I think works with this "revenue tax" is that it removes the ability of the corporation to do clever accounting tricks to reduce the amount of profit. For example moving the IP offshore to a lower taxed country. It is something that could work for a lot of countries and would satisfy a lot of people.
The one place where it might not work is where margins are already razor thin and the business makes up on volume. But then again the business would have to charge more to cover the extra expense.
chatmasta|6 years ago
joesb|6 years ago
seunosewa|6 years ago
dragosbulugean|6 years ago
[deleted]
caprese|6 years ago
Which is true no matter if the tax rate is 1% or 75%
> He could be taxed at 99.9 percent and still have millions left over
I realize this is hyperbole but do realize that no 99.9% tax would be complied with
> tax on every dollar over $100 million in profits they earn anywhere in the world
oh the American hubris, so lost in the goal of catering to their constituents that they think this institution has a valid claim on assets, and income. Lets take a cut of everyone's productivity IN A MORE FAIR WAY crowd cheers.
But alas, the US rule of law makes it secure for you to do business and these corporations benefit from this society and use its services - but thats also true whether the tax is 1% of 75%, so it isn't really an argument
> article shows graphs about tax rebates
Article doesn't talk about how the corporations used tax rebates at all. It talks about the outcome of paying no tax, talks about all these proposals, and none of the proposals talk about tax rebates. Even the most ambitious proposal here would probably not effect how these corporations operate. Are people - I dare say - stupid? Is this a mass reading comprehension issue?
It is interesting that people who can simply read can play tax games like this for another 100 years before anyone catches on.
ex_ex_nihilo|6 years ago
It is probably the case that profitable companies pay too little in tax, but articles like this are misleading as hell.
achenatx|6 years ago
Corporations ultimately distribute their profits to actual people. Those people will pay tax on that income.
It isnt automatically obvious that corporations should pay any taxes on income (or revenue) until it is distributed to actual people (shareholders and employees). We tax the profit of larger corporations because we can and because we need the tax dollars, not because there is some moral imperative to do it.
unknown|6 years ago
[deleted]
acslater00|6 years ago
crispyambulance|6 years ago
BUT there's more to the story.
Not only do they not pay taxes, they also enjoy absurd political power through lobbyists and through being able to pump huge sums of money into politics thanks to the Citizen's United decision.
There is simply too much power in the hands of the corporations. I mean, Amazon literally had dozens of city governments falling over themselves to give up enormous tax goodies and red carpet roll out all for the weak promise of 50000 jobs and an HQ2.
movax|6 years ago
lmm|6 years ago
GeekyBear|6 years ago
We can means test access to tax loopholes as well.
Quarrelsome|6 years ago
gigatexal|6 years ago
jyounker|6 years ago
mikojan|6 years ago
I'd call that a success.
juskrey|6 years ago
Proven|6 years ago
[deleted]
just_a_dev|6 years ago
[deleted]
sara123123|6 years ago
[deleted]
tim333|6 years ago
The gripes seem to largely a political issue which I guess is down to the voters as to who they vote in.
glerk|6 years ago
Who cares about what Colin Robertson thinks?
tclancy|6 years ago
jdhn|6 years ago