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Amazon Will Pay $0 in Federal Taxes on $11.2 Billion Profits (fortune.com)
Those wondering how many zeros Amazon, which is valued at nearly $800 billion, has to pay in federal taxes might be surprised to learn that its check to the IRS will read exactly $0.00. From a report: According to a report published by the Institute on Taxation and Economic (ITEP) policy Wednesday, the e-tail/retail/tech/entertainment/everything giant won't have to pay a cent in federal taxes for the second year in a row. This tax-free break comes even though Amazon almost doubled its U.S. profits from $5.6 billion to $11.2 billion between 2017 and 2018. To top it off, Amazon actually reported a $129 million 2018 federal income tax rebate -- making its tax rate -1%.
For more information on why this is on Congress. ITEP notes that its non-existent federal tax payment is a result of the Trump Administrationâ(TM)s corporation-friendly tax cuts. The think tank writes that the 2017 Tax Cuts and Jobs Act not only decreased corporate tax rates from 35% to 21%, but it also didnâ(TM)t close âoea slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.â According to The Week, Amazon ended up paying an 11.4% federal income tax rate between 2011 and 2016, which is a contrast to the -1% rate this year. http://fortune.com/2019/02/14/...
love the taste, hate the texture
Before we bash Amazon it's important to note the following from the linked to article.
"...ITEP notes that its non-existent federal tax payment is a result of the Trump Administration’s corporation-friendly tax cuts. The think tank writes that the 2017 Tax Cuts and Jobs Act not only decreased corporate tax rates from 35% to 21%, but it also didn’t close “a slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.”
According to The Week, Amazon ended up paying an 11.4% federal income tax rate between 2011 and 2016, which is a contrast to the -1% rate this year."
I ignore Anonymous Coward posts. If you want to discuss something, that's awesome. Log in.
Q: So who is paying for their employees' Social Security and SSI disability?
A: We are.
No, Social security and SSI disability are paid by both the employee and the employer, and are not "Income Taxes".
Your ignorance of the topic undercuts and invalidates your argument.
Ken
No, the chart at the bottom of TFA shows they've made profits for several years and except last year and this year, used to pay (very small) taxes on those profits. they've just been getting better at playing the system as their profits are rising.
Didn't Amazon not make profits for like the first 10 years or so of their existence? How much money did they spend building out their infrastructure?
Don't they get to write off all those loses from capital investments over that period?
I haven't reviewed there financial statements, but I can see how this would easily be true...
-Unresolved symbol? Byte me!
The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified “tax credits” as well as a tax break for executive stock options.
In researching what "a tax break for executive stock options" means, I found a Forbes article from 2013, that described it this way:
The option break,which Sen. Carl Levin (D-MI) calls an “unjustified corporate loophole,” works like this: A company issues options to executives to buy stock at a certain, usually low price. (For example, Facebook’s Mark Zuckerberg had options to purchase 120 million shares for just 6 cents a share when the company went public last May at $38 per share.) Then, when the executive exercises those options, the company gets to deduct the difference between the executive’s exercise price and the shares' higher market value, even though the company hasn’t actually paid the exec that large amount of cash. As a result, while Facebook reported $1.1 billion in pretax U.S. profits for 2012, it owed no corporate income taxes and in fact qualified for $429 million in refunds. (One key here is that companies report their earnings to shareholders and the SEC under different rules than they use to report taxable income to the IRS.)
It went on to explain:
Defenders of this tax treatment for executive options point out that it’s not like Uncle Sam is getting stiffed. That's because the executive must report the same amount deducted by the company as ordinary income. So while corporations avoid a 35% corporate income tax, wealthy executives pay individual income taxes (after this year's fiscal cliff tax deal) at a top 39.6% rate. Plus, the whole amount is considered compensation subject to Medicare taxes at a 3.8% rate. (That’s the normal 2.9% Medicare rate, equally split between employer and employee, plus a 0.9% Medicare surcharge on highly paid employees that was part of ObamaCare.) And, of course, the exec has state individual income taxes to pay too. (In California, the top rate on income above $1 million is now a whopping 13.3%.) Some companies such as Facebook, “net settle” options. As Forbes contributor Robert Wood, a tax lawyer, explains here, that means Facebook made tax payments to Uncle Sam on employees’ behalf (essentially, it withheld taxes the workers owed), giving them only the shares they would end up with, after tax. (Note that the tax treatment of executive stock options—also called nonqualified stock options--is entirely different than the tax treatment of the "qualified" or "incentive" stock options typically handed out to rank and file employees.
So taxes were paid, mainly by the employee exercising the stock options, but also to an extent by the corporation as well - the article sums it up thusly:
To tax geeks, the treatment of executive stock options makes perfect sense: A tax deduction on the corporate side is balanced by taxable income to the employee.
Source: Stock Options Meant Big Tax Savings For Apple And JPMorgan, As Well As Facebook
The takeaways - rather than tax the income at corporate tax rates (21.5%) the income is taxed at the highest individual rate (39.6%) AND Medicare at 3.8% and state tax rates, and the source of these deductions predate the Trump administration, since the above article is from during the Obama Administration. The origins of the tax break are left as a research project for the reader, I've done my part by showing the taxes are still paid by the employee that got the tax break, and paid at a higher rate than the corporation would have paid. (All tax rates described are from the 2103 article, the concerned reader is invited to substitute in post-Trump tax break rates if they like, the principle remains the same.)
Ken
What we have is no longer capitalism. Our elected "representatives" are owned and beholden to the oligarchy donor class who put and keeps them in office. If the elected ones don't keep the stream of payola flowing to the donor class, someone else gets elected who will. It's that simple. The only way to fix this is campaign finance reform.
The average return has dropped 8% this year... maybe you got a cut but perhaps you are also taking advantage of things that are not available to most people. I haven't done mine yet but a lot of people that I know personally that have ended up with a worse return than last year despite similar earnings and deductions.
"In America, first you get the sugar, then you get the power, then you get the women..." -H. Simpson
IMO, I think that salt deduction is unfair and crap. There is no reason why I should pay more federal taxes than another person just because they decided to live in a high tax sate and I wanted to live in a low tax state.
You get to live in your "low tax" states because those high tax states are donor states for your leeching. High tax states get back far less from the feds than the put in, while the "low tax" states leech far more money from the fed than they put in, that way they can have those "low tax" rates.
.95, of what they put in back. Virtually every "low tax" state would have their state budgets decimated by that... which might teach them a little bit about responsibility. It might also teach all the people in those "low tax" states to have a little bit of gratitude towards all of the taxpayers in the rest of the states who've been subsidizing them for decades.
If you don't think so, then lets all push for a constitutional amendment that says no state can receive more than 1.05, nor less than
Fascism: An authoritarian and nationalistic right-wing system of government and social organization. See also: NAZI's
Who exactly should Alabama tax?
Alabamans.
We blue states don't begrudge sending you money. What we begrudge is your complaints about our people are moochers while claiming your people are self-reliant uber-Randian supermen.
I dispute your finding
http://www.governing.com/week-...
and
https://rockinst.org/wp-conten...
with the data to support it from
https://www.govinfo.gov/conten...
NY and NJ pay a lot of taxes and don't get it all back.
and Politifact California, can't find your reference, cite your source
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