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Amazon pays zero federal taxes for second year in succession despite doubling profits, says new report

Company says it paid all taxes it was legally required to

Andrew Buncombe
Seattle
Saturday 16 February 2019 21:49 GMT
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Jeff Bezos predicts we'll have 1 trillion humans in the solar system

Amazon has paid zero federal taxes for the second year in succession, despite a doubling of its profits, according to a new report.

Although the tech giant founded by Jeff Bezos saw its profits grow from $5.6bn (£4.3bn) in 2017 to $11.2bn (£8.7bn) in 2018, it will actually receive a tax rebate of $129m (£100m).

“The company’s newest corporate filing reveals that, far from paying the statutory 21 per cent income tax rate on its US income in 2018, Amazon reported a federal income tax rebate of $129m,” said the report by the Institute on Taxation and Economic Policy (ITEP), which describes itself as a “non-partisan, non-profit think tank”, based in Washington DC.

“For those who don’t have a pocket calculator handy, that works out to a tax rate of negative one per cent. 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.”

The report added: “This isn’t the first year that the cyber-retailing giant has avoided federal taxes. Last year, the company paid no federal corporate income taxes on $5.6bn in US income.”

The news that the company founded by the world richest man paid no federal taxes, was immediately seized on by its critics.

Senator Bernie Sanders, who has pressured the company to increase its wages for workers, said on Twitter: “If you paid the $119 annual fee to become an Amazon Prime member, you paid more to Amazon than it paid in taxes.”

He added: “Our job: Repeal all of the Trump tax breaks for the top 1% and large corporations and demand that they pay their fair share in taxes.”

The company had already made headlines this week following its decision not to push ahead with plans to open a major new facility in New York City’s Long Island City neighbourhood. It made the decision following widespread opposition, including from congresswoman Alexandria Ocasio-Cortez, who objected to the company receiving $3bn in tax incentives to open the premises in New York.

“Anything is possible: today was the day a group of dedicated, everyday New Yorkers & their neighbours defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world,” the newly-elected Democrat said after the company’s announcement.

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The report by the ITEP said it had “examined the tax-paying habits of corporations for nearly 40 years and has long advocated for closing loopholes and special breaks that allow many profitable corporations to pay zero or single-digit effective tax rates”.

It said the 2017 tax cut passed by Donald Trump and the Republicans had helped Amazon pay no taxes.

“The Trump Administration and its congressional allies included lavish new giveaways such as immediate expensing of capital investments,” it said.

“Multiple analysts scored the tax law as a huge revenue loser, giving away far more to big corporations in rate cuts than it takes in loophole-closers.”

A week ago, the ITEP revealed that streaming giant Netflix – which in 2018 posted its largest ever US profit of $845m – did not pay any federal taxes. Indeed, it too received a rebate, of $22m.

Amazon on Saturday said it disputed the ITEP report and had asked for a correction. It said the tax credits received were not unspecified, as the report claimed, but rather related to depreciation of capital investments, and research and development.

“Amazon pays all the taxes we are required to pay in the US and every country where we operate, including paying $2.6 bn in corporate tax and reporting $3.4 bin in tax expense over the last three years,” a spokesperson said in a statement to The Independent.

“Corporate tax is based on profits, not revenues, and our profits remain modest given retail is a highly competitive, low-margin business and our continued heavy investment.”

Asked if it was true Amazon had paid no corporate tax in 2018 and obtained a rebate of $129m, the spokesperson replied: “Nothing else on this one, although appreciate the inquiry.”

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