I think the meme is "Amazon pays no federal taxes on it's profits", and that is a correct statement.

Even that is not really true. They paid no federal income tax in 2017 and 2018, but have before and since.

I'm no fan of Amazon, but you have to admit there is a pretty large distance between "Amazon pays no tax" and "Amazon pays billions in tax, but they didn't pay this one specific kind of tax a couple years ago".

https://www.cnbc.com/2020/02/04/amazon-had-to-pay-federal-in...

I think income tax is the most impactful and expensive tax we have in the US, it's the one everyone thinks of when someone says "doing your taxes".

The fact that Amazon just this year after not paying for 2 years had to pay a measly 1.6% in taxes does not really negate the argument.

Edit: 4 years -> 2 years

It really feels like you're twisting reality.

Amazon went 2 years without paying _income_ tax, not 4.

Amazon paid $3.5 billion in taxes in 2019 (some of which was differed, but still owed). That is over 25% of their income that year. Their federal income tax rate came out to 1.6%, but its borderline lying to say "they paid a measly 1.6% in taxes".

Amazon is an awful company. There is no reason to bend the truth to try and show how awful they are. Being disingenuous only makes your argument weaker.

I misread the article, and I'll correct the 4 to 2 years now.

Income is income though, not sales or payroll which are the expected and manageable operating costs of overhead and human resources.

If I win the lottery, almost 50% of my winnings go back to the state, and I haven't even bought anything with those winnings. What's different about Amazon having a banner year?

> What's different about Amazon having a banner year?

The big difference is that Amazon is a company.

If Amazon decides to pay out large bonuses or dividends with its surplus, that gets taxed at the same rate as your lottery winnings. Before that happens, the income is Amazon's and not an individual's. There is no reason to expect the corporate income tax to behave the same way as individual's income tax.

Because that's how lotteries work in the US. Companies don't have to be behemoths to pay no tax on income. They just have to post no profits by spending all the money they make on opex and capex.

I understand the system, I just want to be clear how broken this is.

Both are windfalls, one gets taxed immediately, the other gets taxed if they don't use up all their profits reinvesting in themselves by the end of the year.

I don't see how you can think this is broken. Think about the implications if it wasn't like this. Bankruptcy would be rampant and R&D investment would be impossible for everyone but the largest companies.

I disagree, as these companies already calculate how much they need to spend to prevent having to pay taxes.

That doesn't matter. They're still spending it, rather than keeping it as profit.

Well yes, governments tend to like their industrial bases growing and are willing to wait for bigger gains over a longer time period. That isn't broken it is by design.

How are they windfalls? For whom?

This is quite pendandic. When you calculate your tax rate do you also include GST(VAT)? Because this is essentially the same thing.

I guess it depends on the context. When I am filing my income tax, I am focused on that. But when budgeting or discussing tax liability in general, I certainly don't forget about the tens of thousands of dollars I pay in local, sales, SS, etc taxes.

I would certainly not make the claim "I paid no taxes this year" if I managed to skirt only federal income tax.

Isn't that also incorrect? It would presumably pay the normal corporate tax on it's profits. It's just that Amazon reinvests it's revenue and thus has no (or little) profit.

If that were the meme, I wouldn't be trying to dispel it.

Isn't it the workers who (whom? I never know) pay the payroll tax? That's their money, in exchange for their time spent on work, that's not Amazon's money. This doesn't make sense to me.

In the US, "payroll" taxes are split between employer and employee. The biggest items that fall into payroll are Social Security and Medicare.

https://www.taxpolicycenter.org/briefing-book/what-are-major...

in USA it works like: pay is $100. then take home is $80 because $20 is taken out for various payroll taxes. then also the company pays $20 for their portion. employees only see the -20 from them, not the +20 from Company on wage stubs.

also, if the company has profits there is some tax on that (well, my little C-corp did)

(numbers are made up to show process)