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Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes
- Bucephalus355 8y agoAmazon puts profits over patriotism. Amazon puts profits over people. When companies stop working for the good of democracy/government and for the good of the people/employees, then it is going to be on the receiving end of......many consequences.
- saagarjha 8y ago> When companies stop working for the good of democracy/government and for the good of the people/employees, then it is going to be on the receiving end of......many consequences. This sounds almost like a threat?
- ceejayoz 8y agoSo? "Stop driving drunk or you'll go to jail" is a threat. It's also a perfectly legitimate, legal one for a judge to make. Same thing here. "Act ethically on your own accord or you may see regulations/laws change" is a perfectly fine threat in public policy.
- jonknee 8y agoAmazon is about the worst example you could have for putting profits over anything. They have a tiny profit margin and are the second largest employer in the country.
- decebalus1 8y agoYou appear to be one of those people who thinks that creating jobs is a carte blanche for corporations to do whatever, including not paying taxes. It doesn't matter how many people Amazon employs, if the majority of the jobs are so shitty that the employees are forced to go on welfare creating even more burden on the taxpayer.
- jonknee 8y agoThe reason Amazon doesn't make a lot of money (and thus pay a lot of income tax) is because they keep hiring people to make new stuff. What more do you want out of a company?
- decebalus1 8y ago> What more do you want out of a company? I don't know... pay living wages, don't create a survivor-based working environment, have people pee in bottles to meet their quotas, install ACs instead of hiring paramedics for heat stroke victims even if it's more expensive, pay your taxes for the infrastructure you're using, don't be a monopsony, don't astroturf local government discussions in order to have your way, I could go on.
- whatok 8y agoCan you point me to the data that suggests that a majority of Amazon jobs pay welfare level wages?
- decebalus1 8y agoI didn't say that a majority of Amazon jobs pay welfare level wages. I said that the majority of Amazon jobs are shitty. And let's not discuss the 'less than X dollars to qualify for wellfare'. Shitty is shitty. Just ask a random Whole Foods worker how happy he/she is after the acquisition.
- ajhurliman 8y agoReally? It seems like they've a lot of things ahead of profits by continuously reinvesting in R&D instead of pleasing stockholders.
- decebalus1 8y ago> pleasing stockholders Are you for real? That's exactly what they're doing and nothing else. They're still growing and judged based on that. The stock price is going up so that means that the stockholders are pleased.
- bdcravens 8y agoWhen you take deductions when you file your taxes, is this unpatriotic?
- Verdex 8y agoPersonally, I think it's bad when powerful entities (whether people or organizations) externalize their failures such that they have to be paid by weak entities (whether people or organizations). However, I'm not convinced that this is the case with powerful corporations and the tax code. In this instance the tax code is broken and we're hoping that everyone just "does the right thing". Unfortunately, it's not obvious what the right thing is. Should Amazon take advantage of no tax laws for their benefit. Or maybe only some of the tax laws. When does it become unfair for them to use the system as is written to their advantage. This is like having a computer server that has a massive security vulnerability and fixing it by saying, "Let's just hope nobody sends malicious requests to the computer." Nobody would think that is acceptable. ONLY this is an incomplete metaphor. This is like a computer server that exposes a database directly without any restrictions as to what anyone is allowed to do with or to the database. How would you know which data you aren't supposed to look at. To use it you have to perform your own writes, but how do you know which tables aren't supposed to be written to or which columns are "not cool" to modify.
- exabrial 8y agoPaying taxes is not patriotic. We started this country by throwing tea into a harbor over a 3% tax increase.
- ceejayoz 8y agoThe slogan was "no taxation without representation", not "no taxation, ever".
- komali2 8y agoGood 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.
- harryh 8y agoWhat 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?
- ashelmire 8y agoTurning a large profit and not paying taxes? That part?
- deleted 8y ago[deleted]
- Operyl 8y agoThey're following the code, it's written in law. If they didn't take advantage of it, their stockholders would be pissed.
- ashelmire 8y agothatsthepoint.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...
- umanwizard 8y agoWhich specific sections of the tax code do you think should be repealed or amended?
- latencyloser 8y agoI'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.
- ceejayoz 8y agoConvincing 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.
- deleted 8y ago[deleted]
- pfortuny 8y agoThe question is not legality it is morality. And the moral actor is not Amazon but its governing body (consejo de administración in Spanish sorry).
- jimktrains2 8y agoI 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.
- slantyyz 8y ago>> 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.
- chc 8y ago
- donaldknuth123 8y agoInb4 the bootlickers
- Twirrim 8y agoHmm.. 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.
- adhambadr 8y agogiven 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.
- eloff 8y agoAccounting 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.
- PurpleBoxDragon 8y ago>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.
- EpicEng 8y agoSo 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".
- 8y ago
- ghobs91 8y agoA big part of it is that they reinvest a large portion of revenue back into the company in the form of growth. So while they're not paying income tax because of lack of profit, they're building fulfillment centers and hiring like crazy. This means income tax for all those new employees and property tax on all the centers they're building.
- kentosi 8y agoIs 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.
- airstrike 8y agoRead their 10-K
- OscarCunningham 8y agoWell then what are the companies they're buying stocks in doing with the money?
- THE_PUN_STOPS 8y agoI help construct the fulfilment centers. Believe me, this is for real.
- ghobs91 8y agoIf they stockpiled revenue in banks, it would be counted as profit and taxed, which is clearly not the case.
- clairity 8y agoprofit, 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).
- airstrike 8y ago
- jdhn 8y ago>the Trump Administration and its congressional allies included lavish new giveaways such as immediate expensing of capital investments. So this is obviously considered a bad thing by the author, but wouldn't the cost to the government be the same regardless of whether it was expensed in one year or multiple years?
- throwaway-1283 8y agoAnyone hit hard this year by the new $10k limit on State and Local Tax (SALT) deductions?
- alasdair_ 8y agoI am surprised we don’t have the equivilent of AMT for corporations.
- airstrike 8y agoExcept we did, and decided to do away with it for a variety of reasons. https://doeren.com/tax-reform-individual-amt-corporate-amt/ https://doeren.com/tax-reform-individual-amt-corporate-amt/
- exabrial 8y agoTo quote someone else on HN: > Why is it desirable to transfer money from job-producing companies and investors to the government? The government is a money pit. We're long past "essential services". I'm happy to see companies paying 0 tax into the waste pit.
- deleted 8y ago[deleted]
- octonion 8y agoHow about essential services like affordable healthcare, education, job training, housing and transportation? Every other major country has no trouble providing these, only the US.
- spectrum1234 8y agoOnce healthcare and education costs (and probably housing and transportation) aren't increasing way faster than inflation, sure.
- komali2 8y agoDoesn't it make sense for costs to go up as the population increases?
- deleted 8y ago[deleted]
- notahacker 8y agoThey're increasing a lot faster where healthcare isn't socialised...
- 2019ideas 8y agoLook at this list of top lobbyists. Oddly they correspond closely with everything you listed. Our government is very active in these. They just arent doing a great job. https://www.opensecrets.org/lobby/top.php?indexType=s https://www.opensecrets.org/lobby/top.php?indexType=s >Healthcare The government has been active in regulating healthcare for 30 years. Oddly during that time Physicians became 300k/yr earners, Pharmacists became 6 figure earners. Hospitals, Pharma and everyone between are growing. >Education, job training Highly funded k12 education, subsidized loans for college >housing Blaming real estate laws for this, but Im mostly out of the loop. Real estate is a top lobby >Transportation Maybe, but I feel like this could be bad for the environment.
- marcrosoft 8y agoGood for them. This is why politicians say they want to help the middle class. They are always paying the majority of taxes. The politicians hardly ever live up to promises. The important thing to remember is that, fortunately we don't live in a one-world government so the US is forced to compete with Ireland or other countries on taxes. There is a ceiling on how much you can tax before companies say F this I'm going else where. The "problem" is small US businesses can't replicate easily. The obvious solution is to level the playing field and make the US competitive on tax rates or drop taxes all together.
- adventured 8y ago> This is why politicians say they want to help the middle class. They are always paying the majority of taxes. 87% of income taxes are paid by the top 25%; 70% of income taxes are paid by the top 10%. The middle class in the US pays an extraordinarily low effective tax rate. The US has a very progressive tax system. The 50% to 25% income bracket, which makes up most of the middle class, has a 7% average federal income tax rate. Few other developed nations come remotely close to having something like that. The politicians pander to the middle class out of virtue signaling (it's a great ideological sound bite) and for votes (it's still a large voting block).
- marcrosoft 8y ago> 87% of income taxes are paid by the top 25%; 70% of income taxes are paid by the top 10%. Do you have an reputable source of truth for this? > The 50% to 25% income bracket, which makes up most of the middle class, has a 7% average federal income tax rate. Any source of truth for this? I'm a sample of one but I pay at least quadruple this rate every year since I can remember and I'm not an edge case. 7% is a joke. I would love to pay that.
- mises 8y agoThere'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.
- dovetailcode 8y agoDo you have to have the heft of an Amazon to take full advantage of loopholes, etc.? Can the existing tax law be fed into some software which will outline an appropriate path to owe $0? Its all just a bunch of rules, sub-rules, etc., likely with thresholds. If it is similar to personal taxes (e.g. claim medical costs if total is over 7% of adjusted gross) then this is something software should be able to handle. Or is corporate tax law an area that only can be done with a large team of humans?
- monocasa 8y agoMy 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.
- skookumchuck 8y agoTax loss carry-forwards are available to individual taxpayers as well as business.
- aaronbrethorst 8y agoProPublica published an article that is related to this a couple months ago. It's worth a read: https://www.propublica.org/article/how-the-irs-was-gutted https://www.propublica.org/article/how-the-irs-was-gutted Furthermore, one of the authors was just on a truly excellent episode of the podcast Why is this Happening?, which does a great job of summarizing the article and offering additional insights. https://www.nbcnews.com/think/opinion/can-we-tax-rich-jesse-eisinger-explains-ncna970581 https://www.nbcnews.com/think/opinion/can-we-tax-rich-jesse-...
- tvanantwerp 8y agoSecond 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.
- costcopizza 8y agoWhen I see headlines like this, which isn't the rarest thing, I wonder why we even bother with a corporate income tax. The companies that can afford to engineer out of it, will, making it oddly regressive in certain circumstances.
- didibus 8y agoI wish we got rid of all taxes except for income tax on people. Anyone versed in finance can tell me why that's a bad idea?
- gotocake 8y agoThe simplest counterpoint is that the wealthier people are, the less their wealth relies on income and the more it relies on capital gains; using money to make more money. Squeezing the middle and lower classes while giving a free pass to the very rich seems counterproductive in terms of policy.
- didibus 8y agoWell, in my proposal, capital income is just regular income as well. When you sell stock, sell property, etc. Basically everytime you cash out, that would just count as additional income for that year. So I'm not sure in that way I understand how it would squeeze the middle and lower class?
- gotocake 8y agoTo be fair, this “proposal” is something you in no way included the details of in your comment. It would be impossible to guess that you were using a novel definition of “income tax” to include capital gains tax as well.
- didibus 8y agoYes, I recognise that. I guess my thought is more, why not only tax income? Not exactly, why not only keep the existing income tax and get rid of all others. Only taxing income (all forms of them), and just using a bracketing system would simplify the whole equation so much. And make filing taxes quite simple. I'm sad to see people have mostly downvoted me, and provided no rational for what would be worse about such a tax scheme. It seems that's telling to why we are probably very far from a tax reform, people seem to be irrationally attached to the way they're used to it.
- 8y ago
- jakelarkin 8y agoanother clickbait article from this organization. "${TechCo} paid X% in taxes but it should have paid Y% * Current Year Net Income". What specifically is ITEP arguing for? GAAP profitability is not Taxable income is not Net Cash flow. The IRS has different multi-year schedules for various asset amortizations/depreciation than GAAP so of course the tax rates can be significantly different if the company is investing in growth.
- poorman 8y agoI 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.
- tracker1 8y agoPersonally, 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.
- thedangler 8y agoWell if corporation are people then why not tax them like people. have marginal tax rates with no loopholes.
- 0xmohit 8y agoReminds one of: Amazon's electricity rate discounts have pushed up utility costs Source: https://www.bloomberg.com/news/articles/2018-08-20/amazon-isn-t-paying-its-electric-bills-you-might-be https://www.bloomberg.com/news/articles/2018-08-20/amazon-is...
- anonymous5133 8y agoFor those wondering how amazon is able to do this it is from using excess stock-based compensation deductions and accelerated depreciation deductions. They also have $600 million net operating losses being carried forward and $1.4 billion in tax credits resulting from R&D spending. The operating losses and tax credits can be carried forward to future years but eventually they will run out of them.
- jostmey 8y agoAnd despite these losses Jeff Bozo is the richest man in the world. Clearly these companies are abusing the tax laws to avoid paying their share of taxes. Amazon depends on the roads that our tax dollars fund. Amazon depends on intelligent people to run its business, funded by the US government through various mechanisms such as research grants. Amazon depends on the protection of the US military. Amazon and companies like Amazon need to pay their share
- ChrisLomont 8y agoAnd Amazon pays billions in property tax, SS taxes, and all sorts of other taxes, and generates billions more in income for workers. Their “share” is what the law says. I doubt many posters here pay more than required by law, and take tax breaks when applicable, from mortgage deductions, healthcare deductions, schooling deductions, etc.
- clamprecht 8y agoHow much capital gains tax has been generated due to appreciation of AMZN stock sales?
- jostmey 8y agoAny politician promising to raise corporate, capital, and estate taxes automatically has my vote
- gok 8y agoThis is blog spam. They publish this exact same article about different companies every time one of them reports earnings.
- known 8y agoTax it's income, not profits