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This story comes back again and again. And it makes no sense, because businesses pay tax on profits, not revenue! It sounds outrageous that a big company does

by natn 5y ago

This story comes back again and again. And it makes no sense, because businesses pay tax on profits, not revenue! It sounds outrageous that a big company does so much business and doesn't end up paying lots of taxes, maybe it's suspicious, but it's only a necessarily problem if you make some flawed assumptions about how the business works. There are different theories about the social value of enterprise, but in general businesses are meant to reinvest revenue into developing the business, and only taxed on what is taken as profit, such as to be payed to shareholders. That this incentivizes direct reinvestment is a feature, not a bug. It's just that amazon takes this to an extreme in prioritizing reinvestment over profit. Does Amazon also structure its operations to optimize its tax posture? Of course, they're obliged to as a publicly traded company. Overall is this an optimal/fair situation? Probably not. But the problem is really an inevitable outcome of the way that tax laws are setup. Amazon's only major moral failing here is simply in being a large multinational, with an expansionist business model.

asplake 5y ago
In ways that smaller companies don’t, large organisations have choice about where they pay taxes, and that’s highly unfair both to companies and to countries. Hard not to see this leading in the long run to taxation on turnover.
username90 5y ago
Amazon did pay taxes in USA during that period though. They just shuffled around all their profits such that no taxes were paid in Europe.
desertedisland 5y ago
The story is that - certainly in the early days - you could be fired from Amazon as a manager if your section made a profit. The argument is that your entire focus as a software / service business is growth (aimed at profitability for some undetermined future date). If your section or company is making a profit this represents a failure to utilise all of your resources for the purpose of growth. As a multi-national there are various tax shenanigans you can play - that is up to governments to decide how to crack down on those. The unfortunate fact is that you need countries like Ireland on board who have benefited greatly from being very corporation tax friendly.

by natn 5y ago

asplake 5y ago

In ways that smaller companies don’t, large organisations have choice about where they pay taxes, and that’s highly unfair both to companies and to countries. Hard not to see this leading in the long run to taxation on turnover.

username90 5y ago

Amazon did pay taxes in USA during that period though. They just shuffled around all their profits such that no taxes were paid in Europe.

desertedisland 5y ago

The story is that - certainly in the early days - you could be fired from Amazon as a manager if your section made a profit. The argument is that your entire focus as a software / service business is growth (aimed at profitability for some undetermined future date). If your section or company is making a profit this represents a failure to utilise all of your resources for the purpose of growth. As a multi-national there are various tax shenanigans you can play - that is up to governments to decide how to crack down on those. The unfortunate fact is that you need countries like Ireland on board who have benefited greatly from being very corporation tax friendly.