Amazon paid no tax on its $11.2B profits

Amazon, the e-commerce giant helmed by the world’s richest man, paid no federal taxes on profit of $11.2 billion last year, according to an analysis of the company’s corporate filings by the Institute for Taxation and Economic Policy (ITEP), a progressive think tank.

Thanks to a variety of tax credits and a significant tax break available on pay handed out in the form of company stock, Amazon actually received a federal tax rebate of $129 million last year, giving it an effective federal tax rate of roughly minus-1 percent.

It’s the second year in a row the company has enjoyed a negative federal tax rate on a multibillion-dollar profit. That would place the company’s effective federal tax rate below the rate paid by the poorest 20 percent of American households, which had an effective federal tax rate of 1.5 percent in 2015, according to the Tax Policy Center.

“Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax and reporting $3.4 billion in tax expense over the last three years,” said an Amazon spokeswoman, Jodi Seth, in a news release. “We have invested more than $160 billion in the U.S. since 2011, building a network of more than 125 fulfillment and sortation centers, air hubs and delivery stations as well as cloud-computing infrastructure and wind and solar farms.”

(Amazon founder Jeff Bezos owns The Washington Post.)

Matthew Gardner, an ITEP senior fellow, called the situation a failure of American tax policy.

“Their U.S. profits doubled in the last year. If anyone is ever going to be subject to the corporate income tax, you would hope it would be Amazon,” he said.

From 2009 to 2018, the company earned roughly $26.5 billion in profit and paid approximately $791 million in federal taxes, for an effective federal tax rate of 3.0 percent for the period, according to ITEP’S analysis. That is well below the statutory 35 percent corporate tax rate in effect for most of that period, as well as the 21 percent rate ushered in last year with 2017’s Tax Cuts and Jobs Act.

Like many other large companies, Amazon reduces its effective tax rate each year using a variety of credits, rebates and loopholes. For Amazon, the most lucrative of those was a tax break for pay given out in the form of stock options, which allowed the company to shave roughly $1 billion off its 2018 tax bill, Gardner said.

That would represent nearly half the total federal tax bill levied on the company’s profit of $11.2 billion, he said.

Previous ITEP analysis has shown that between 2008 and 2015, profitable Fortune 500 companies paid an average effective federal tax rate of 21.2 percent, well under the statutory 35 percent rate in effect in that period.

One hundred of the companies had paid zero or negative tax in at least one profitable year, and 58 of them had multiple zero-tax years while being profitable.

Publicly traded companies such as Amazon have a legal responsibility to act in shareholders’ best interests, a mandate that many companies interpret to mean maximizing shareholder value by numerous means, including reducing their tax burdens.