AMAZON’S PREDATORY CAPITALISM
I
AMAZON’S TAX GAMBIT
t’s no surprise that President Joe Biden has introduced sweeping proposals to raise taxes on corporations and wealthy individuals. Biden campaigned for the White House, in part, on the platform of raising taxes to fund infrastructure spending. “A fireman or a teacher pays 22%, while Amazon and 90 other major corporations pay zero in federal taxes,” then-candidate Biden said on the campaign trail. While the average taxpayer may not feel the pinch if the individual tax rate is raised only for those making more than $400,000 annually, the story is different (and far more complicated) for corporations. Despite Amazon’s status as the best-known example of a company avoiding significant tax burdens, it may stand to win in the long run if the federal government hikes corporate taxes.
Jeff Bezos and Amazon are supporting higher taxes—a move that’s less counterintuitive than it appears
BY CHRISTOPHER VECCHIO
Corporate welfare One of Biden’s rationales for raising taxes on corporations was that the 2017 Tax Cut and Jobs Act (TCJA)
The firms
Fourteen of the 55 companies that had pre-tax income greater than $1 billion but paid $0 in federal taxes. (Figures are in millions of dollars); Source: itep.org Company name
U.S. pretax income
Current federal income tax
Effective tax rate
Total (all 55 companies)
$40,482.00
-$3,497
-8.60%
Industry
Charter Communications
$3,680.00
-$7
-0.02%
Telecommunications
Nike
$2,873.00
-$109
-3.80%
Miscellaneous manufacturung
Salesforce.com
$2,630.00
-$12
-0.50%
Computers, office eqiup, software, data
Dish Network
$2,532.00
-$231
-9.10%
Telecommunications
American Electric Power
$2,163.00
-$138
-6.40%
Utilities, gas and electric
Danaher
$1,583.00
-$321
-20.30%
Miscellaneous manufacturung
DTE Energy
$1,531.00
-$247
-16.10%
Utilities, gas and electric
Xcel Energy
$1,456.00
-$13
-0.90%
Utilities, gas and electric
Consolidated Edison
$1,227.00
-$2
-0.20%
Utilities, gas and electric
Nucor
$1,220.00
-$177
-14.50%
Metals & metal products
FedEx
$1,218.00
-$230
-18.90%
Miscellaneous manufacturung
Advanced Micro Devices
$1,208.00
n/a
0%
Computers, office eqiup, software, data
FirstEnergy
$1,108.00
-$14
-1.30%
Utilities, gas and electric
Fiserve
$1,100.00
-$25
-2.30%
Financial data services
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freed many corporations from paying federal income taxes despite turning significant profits. The TCJA reduced the statutory federal corporate income tax rate to 21% from 35%. “At least 55 of the largest corporations in America paid no federal corporate income taxes in their most recent fiscal year despite enjoying substantial pretax profits in the United States,” according to the Institute on Taxation and Economic Policy, or ITEP. That’s not quite the 90 that Biden referenced while campaigning, but it’s still significant. ITEP’s study detailed a potential fiscal windfall for the government if it collected taxes from giant companies that weren’t paying a dime. “The 55 corporations would have paid a collective total of $8.5 billion for the year had they paid that rate on their 2020 income,” the institute said. “Instead, they received $3.5 billion in tax rebates. Their total corporate tax breaks for 2020, including $8.5 billion in tax avoidance and $3.5 billion in rebates, comes to $12 billion.” Closing loopholes that enable American corporations to avoid paying taxes could bring in anywhere from $100 billion to $1 trillion over a 10-year period, which would pay for a significant portion of the Biden administration’s infrastructure plan. The American Jobs Plan, as the infrastructure package is called, would cost an estimated $2.3 trillion but could be subject to months-long negotiation. Bezos plays his hand What about Amazon paying no federal taxes? Well, it turns out that it wasn’t one of the 55 companies that paid no federal corporate income taxes in 2020. According to Amazon’s 10-K filings for 2019 and 2020, the company paid an effective tax rate of 1.2% in 2019 ($162 million) and 9.4% in 2020 ($1.8 billion). Facts are facts, and the simple reality is that Amazon has paid less in federal taxes in recent years than
Luckbox | June/July 2021
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5/13/21 10:17 PM
