According to a recent report by Institute on Taxation and Economic Policy, a progressive think-tank, the ubiquitous online-retail giant Amazon doubled its profit from $5.6 billion in 2017 to $11.2 billion in 2018.
The report indicates that in 2017 the Seattle company paid $0, the same amount it will pay this year. ITEP reported this finding Feb. 13.
“The company’s newest corporate filing reveals that, far from paying the statutory 21 percent income tax rate on its U.S. income in 2018, Amazon reported a federal income tax rebate of $129 million,” ITEP wrote in a blog. “For those who don’t have a pocket calculator handy, that works out to a tax rate of negative 1 percent.”
According to the report, Amazon’s income tax disclosure states that the company paid no income tax “due to various unspecified tax credits as well as a tax break for executive stock options.” ITEP found a year ago that over the past five years leading up to 2017 that Amazon reported U.S. profits of $8.2 billion, paying “an effective income tax rate of just 11.4 percent.” According to ITEP, this means the company was “able to shelter more than two-thirds of its profits from tax during that five-year period.” In 2017 the company projected that it would receive a $789 million one-time tax break due to the tax laws passed by the Legislature under President Donald Trump.
ITEP stated that it has 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.
“When Congress in 2017 enacted the Tax Cuts and Jobs Act and substantially cut the statutory corporate tax rate from 35 percent to 21 percent, proponents claimed the rate cut would incentivize better corporate citizenship,” ITEP wrote in a blog post. “However, the tax law failed to broaden the tax base or 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.”
ITEP also found that Streaming service Netflix, reporting its highest profits ever in the U.S. and most streaming customers, will pay $0 in federal and state income taxes.
“It’s too soon to know whether this new revelation, following hard on the heels of Netflix’s similar announcement last week, means that the floodgates have opened for a wave of Fortune 500 corporate tax avoidance: we’ll have a better sense of that a month from now, when most big multinationals will have released their financial reports for 2018, the first full year of the new Trump corporate tax law,” ITEP wrote in a blog post. “But these initial findings appear to confirm the view that last year’s tax law was a gigantic missed opportunity for true corporate tax reform.”