Amazon in Its Prime: Doubles Profits, Pays $0 in Federal Income Taxes
itep.org
itep.org
The way that article reads, it seems like at least for the last year it's entirely due to the tax cut legislation congress passed last year. Essentially the legislation did exactly what it was designed to do. Amazon hasn't really done anything dodgy there.
This article really just emphasises the need to hold congress accountable for their actions.
Why not both? If I move to a country that legally allows me to do something horrible, people will rightfully call me a bad person regardless of the legality of the action.
The government says, through its tax laws, that it wants amazon to not pay taxes (probably because they had a loss). The logic behind this is that because amazon provides jobs, the government doesn't want the company firing people and/or not hiring people because of an unrelated occurrence.
If you want what amazon is doing to be horrible you have to show that what they're doing is actually horrible.
Perhaps talk about how they're making use of the resources of the united states while not paying back for the maintenance of those resources. Like, delivery trucks damage roads and without delivery trucks amazon can't exist, and therefore they are externalizing their costs to the tax payer by not paying taxes.
Additionally, you'll need to explain why the jobs argument is not sufficient to excuse their lack of taxes.
And you might also need to talk about how amazon R&D also isn't a good excuse. For example, if amazon perfects drone delivery of goods then they won't damage the goods. So we should let amazon not pay taxes so that they can perfect drone delivery because it will be a good to the entire nation. You need an argument for why this sort of idea is wrong.
This kind of statement that assumes big companies passively take their tax bill from the government is either exceptionally naïve or wilfully disingenuous. We're talking about a company whose executives sat down with representatives the Luxembourg government to negotiate a special sweetheart deal (subsequently ruled to be unlawful state aid) and then moved its European HQ to Luxembourg
If you want to do something selfless, paying more taxes is pretty low return for your buck.
How much extra did you pay on your taxes this year above the required amount? I would bet you paid exactly what was owed. Under your logic, you are dodging taxes.
Amazon is in the middle of taking a fortune in tax breaks from NY. They killed a tax on large employers in Seattle. They fought against cross state sales tax until they were so big it only hurt their competitors. Bezos owns the Washington Post, and media overall is controlled mostly be a handful of oligarchs.
I absolutely blame Amazon.
Highly simplified example: if you spend $100 million over five years on inputs, all while receiving no revenue, and then sell your gargantuan output product (say, a mega-robot) in the sixth year for $100 million, then you haven't yet made a profit -- even though your books show a $100 million profit in the sixth year. Paying no taxes in that year would be reasonable.
If anything, my understanding is that corporate tax law is unusually harsh about such long-term projects, limiting how many years you can carry forward losses.
The specifics of how they got to $0 taxes matter, and not all reasons are shady. Some are, of course, like deducting arbitrarily high IP licensing fees to your foreign sockpuppet subsidiary. In that case, sure, hit 'em with both barrels.
But please, attack them for the right reason.
The reality is, no regular person is ever going to be on the wrong side of corporate taxes. You'll never be a huge corporation, you'll never be a huge corporate board, and since indexing, you'll never be a particularly aggrieved proxy shareholder.
Nobody really cares how "giant corporation pays the maximum tax it can bear" is arrived to, but that's what people want. It's different if it were small business owners or landlords. People also sometimes hate SBOs and landlords, but sometimes normal people are landlords and small business owners, so they can imagine being on the wrong side of justice there.
So like so many things technocratic thinking gets into, it's possible to be right and wrong at the same time. Right in the general case, in this imaginary case, where you just enumerate all the things, then you think hard about the things, and then you get the right answer. Wrong in the case that people in the real world actually inhabit, because you're both a likable person and you're not a giant corporation, so your philosophy is great to co-opt for what is basically a public-theft agenda.
HN is a legal forum, a tech forum, a history forum, a knitting forum, and any other kind of forum that inspires knowledgeable posts by subject matter experts on topics the community finds interesting.
"Not paying taxes when you haven't made up past year's expenses" is the latter. It should not be cited as an example of the former.
I disagree. Make them pay taxes.
That's hard though, because ideology gets in the way. Everyone has this, almost "quasi-religious", devotion to their politicians. So it becomes a lot easier to say, "Hey, look at all these rich banks and wealthy companies taking advantage of all their tailor made tax laws!", than it is to say, "OK guys, we have to sit down and get a list of everyone who voted for these advantageous tax laws that these rich companies are using."
The one is more "sound bite"-y. It's easier to get people behind such a twitter storm. The other requires a performance review of each of our political leaders, which is just not the way we as Americans have typically operated. Not to mention the fact that it requires further action. You have a list, now what do you do with it? For instance, game theoretically speaking, it may be better to hold it over the current politician's head, than it would be to get rid of him/her immediately? Or maybe we just want to send a message, and get rid of all these men and women as soon as the law permits? I mean, it just opens up a lot of questions about how best to proceed.
The other option, you know how to proceed. You just join in on the twitter storm so to speak.
So like to have your cake and eat it too?
He probably also favors less government spending.
"lower taxes for corporations and individuals" which one is it?
I've never seen a lower federal budget, and the "small government" party has brought us 2 wars costing over $7 trillion over 18 years, and a perpetual war on an emotion that has caused an INCREASE in governmental size and spending, overall.
Can you explain your stance a bit?
This is objectively untrue. The wealthiest taxpayers, who overwhelmingly make their money off of investments in companies like Amazon, pay nearly all of federal taxes. Just because Amazon doesn't pay taxes doesn't mean the people profiting off Amazon aren't paying taxes. A big reason why corporate taxes are dumb, since the money either grows the business or goes to individuals who pay taxes.
Your shifting of the playing field smells like an excuse.
1) Whereas the federal budget has not been reduced.
2) Whereas the large monopolies and billionaires pay less (see: the $1.5 trillion tax cut for the top, and how it's hoarded rather than invested) tax
therefore we are compensating for Amazon and Netflix etc paying less tax.
Corporate taxes should grow with the size of the corporation. We should encourage small businesses as they spur innovation, mostly fail, and are the backbone of a stable economy, vs slave labor for globalized zombie corps like Amazon.
https://www.forbes.com/sites/teresaghilarducci/2018/09/28/wh...
https://www.cnbc.com/2018/06/20/now-we-know-how-major-corpor...
by all accounts, the opposite of an economic "pump" is when you give a tax cut to the already filthy rich.
The tax base has been shifted to the middle and lower class. Plain and simple.
Here’s a summary of CBO data [1]. IRS also posts much more detailed tax stats with the same results.
[1] https://www.taxpolicycenter.org/statistics/historical-averag...
The "small government" party was in power that entire time? Why weren't they voted out and replaced by a party that wanted to end these disastrous and costly wars?
Because the USA only has 2 historically significant parties and both mainstreams want wars? I mean, the US has a concept of "bipartisanship", as if the entire political spectrum could be boiled down to ultra liberalism or slightly less ultra liberalism.
Fixing that might be nice, but is probably also a distraction from more urgent matters... since it would be very expensive (in terms of political capital) to make parties give up their own monopoly.
The UK has multiparty democracy of sorts with FPTP; the US Presidential system (as opposed to a Parliamentary system) reinforces and more strongly nationalizes the local duopoly effect that FPTP naturally encourages.
You could argue the duopoly prevents extremism by straightjacking the political options, but after the Tea Party takeover the GOP and now Trump, that has been thoroughly debunked.
But France doesn't use simple one-round FPTP for either the Presidential or legislative elections, and doesn't combine the elections, either, using a two-rond majority-runoff system for each election (with additionally what amounts to a minimum threshold by eligible electorate size, rather than just share of turnout, for legislative seats for first-round wins.) Majority-runoff has a far less strong push to duopoly thaneither simple FPTP or the US Presidential election system.
It's not purely a cultural thing; to the extent it's cultural, it's largely cultural adaptation to structural incentives.
> You could argue the duopoly prevents extremism by straightjacking the political options, but after the Tea Party takeover the GOP and now Trump, that has been thoroughly debunked.
I wouldn't have argued that in the first place for other reasons, but Trump would, at worst, only debunk an absurdly absolutist version of that; electoral systems may structurally disfavor certain outcomes but they rarely absolutely prevent any particular ideological outcome.
Even if Amazon is not paying taxes on its corporate profits, it's still generating a boatload of tax money through income & payroll tax. And I think it's good to reduce corporate tax rates, to encourage our amazing economic engine to grow as fast as possible!
https://taxfoundation.org/benefits-cutting-corporate-income-...
We have believed over all these years that we could make more efficient use of the land of our planet than nature could, and we're going to learn that wasn't really the case at all.
We need to balance our economic engine against the ecological one or we're doomed. "Tax Foundation", a site that craps on carbon taxes at best over and over, and only makes one suggestion: reduce taxes.
I think we can provide a lot of energy without running into climate change and physics though. Nuclear energy is something I wish we did more to encourage. (It's a reliable emission-less source of energy!) Renewables are good, but we need battery tech to improve some more. (And the battery issue might also be another example of pushing against the limits of physics.)
I don't see Amazon as rogue here, just as taking what they are allowed to take, and this is the problem, not the particular anecdote mentioned here in this articles healine.
2) Monopoly means no competition = bad for pricing, quality of service, and ultimately, the market.
Are you unaware of federal anti-trust law and it's history?
For example, tax filing in the U.S. could be as simple as you verifying the information they already have on you, saving you from the time and hassle of having to fill everything out yourself (often through software like TurboTax that costs money). Many countries already do this. But anytime I read an article on the subject, the narrative is that we're stuck with the status quo because companies like TurboTax with a vested financial interest in making tax filing difficult have fought tooth and nail to keep your tax filing difficult. Uh...no, this is not why we don't have simpler tax filing, it's because crooked and/or clueless politicians aren't voting it through Congress.
https://www.vox.com/policy-and-politics/2019/2/13/18223836/p...
A Senator introduced a bill in 2007 to ban line-standing, a bill that never ended up leaving committee.
"The line-standing industry quickly rallied against the proposal. The owner of Linestanding.com submitted testimony that argued McCaskill’s bill would eliminate “an industry that employs hundreds of entry-level workers, and instead creating positions for even more lobbyists, the bill would have the opposite effect of that intended. It wouldn’t change the composition of who ultimately sat in hearing rooms; it would simply increase costs for all involved.”"
So politicians stop the passage of a law to ban line-standing, and we're supposed to feel that it's the lobbyists' fault rather than that of the politicians who prevented the bills passage? I guess politicians can do whatever they want and receive no accountability for their voting because the media has decided that politicians are immune and the lobbyists will take all the heat.
You've a bit more work to do to get that done than merely pinging or voting out your Representative:
https://www.ted.com/talks/lawrence_lessig_we_the_people_and_...
https://en.wikipedia.org/wiki/Citizens_United_v._FEC
On a more positive note, there seems to be some people in the US who want to (try to) make a difference. For instance:
https://www.youtube.com/watch?v=rq3QXIVR0bs
Only time will tell if they will. But I'm not holding my breath, TBH.
You sink a bunch of dollars into development of a new product. You sell it at a premium when it's new to start to pay back those costs (and marketing attaches cachet to the product during this time). The idea is to be making net profit off of the product before you hit the middle of the adoption bell curve. Boost efficiency to improve margins and ride the curve down. Middle and late adopters are pure profit.
From a tax perspective, things are going to look pretty dire until you hit the first inflection point in the adoption curve, and probably for a while after.
I mean, I am starting to loathe Amazon, cancelled my Prime membership a couple years ago and have been giving my family non-Amazon wish lists for at least that long. They don't treat people well (even in the bad old days of Monopoly Microsoft, they took much better care of their people). It's a shit place to work, which makes me wonder how it is to work for one of their suppliers. Zero love lost here. But this whole line of inquiry just seems like a red herring or sour grapes even to me.
The bigger issue here is the fiction that stock option compensation should be taxed as investment rather than employment compensation. Bill Gates even brought it up whe Colbert asked him about a 70% marginal tax rate and said something to the effect of, “The vast majority of these billion dollar fortunes weren’t built with ordinary income.” We need the tax code to separate profits made from buying stock for money only from profits made from buying stock that one is only offered at that price because of one’s employment status. Until we do that, those 70% marginal tax rates will only hit entertainers and others not able to structure their compensation using stock and leave open the huge loophole that the richest use to pay themselves in a way that allows them to pay an overall lower percentage of income than most of us commenting here.
Dude, the chart gives you the 5- and 10-year effectives rates, they're 2.2% and 3.0% respectively.
Here’s one if you care to look.
https://www.sec.gov/Archives/edgar/data/1018724/000101872417...
Everyone's free to remain a layman, but just remember nobody cares what the layman thinks. Taxes are complicated.
Patches welcome. You'll just need to be an expert in taxes first. Or do you expect the public to also contribute to discussions on the Linux Kernel Mailing List?
For example, cycling's doping scandals are well illustrated by Lance Armstrong.
The problem is that if you don't state it clearly and specifically, that message will be lost on most people, and they'll still redirect their anger at the company as opposed to the actual source of the problem.
Do you have references to any articles that evaluate the efficacy of this? It seems like an effort in futility to me.
The problem is both. It is a problem that people lobby for selfish policies that ignore the needs of others, and it is a problem that the system sometimes listens to them.
EVERY argument about what is "morally right" w.r.t. paying taxes is a matter of perspective. To you, what Amazon is doing is immoral. To someone worse off than you, what you do routinely on your taxes (deducting mortgage interest, student loan interest, etc.) is immoral.
Sure, but if that opportunity was given to everyone, it would only take a few years to make the case for taxes crystal clear to even the most selfish person. In the meantime, much damage would be done.
It does.
> write your local representatives and ask them to change it.
Done and done.
Here's the problem: my voice, plus the voices of all of those who agree, have far less of an impact on the beahviour of the politicians than Amazon does.
I think the problem is that our politicians, by and large, don't really represent us. That is, the "template" if you will, of a politician, tends to not fit what the general average person is.
For instance - how many politicians are middle class? I'd wager that none of them are, for even if they were prior to being elected, after they are elected they would get a salary that is much larger than a standard middle-class salary.
Instead - our representatives (mainly federal - state level is a different story, but there are analogies) all are of the "wealthy class" - not the middle class, which is kinda who you would expect to represent everyone (that is, the "average").
Note that I am speaking from a US-centric perspective, but I bet it's the same elsewhere.
So why do we keep electing the same template of people to the same positions, and expect a real change?
I don't know. Part of it may be the whole "temporarily embarrassed millionaire" thing. Part of it may be corruption once they get into power (that is, why would a middle-class person, upon obtaining a much larger salary that bumps them out of middle class and into wealthy - change that?).
This is really the heart of the matter; it isn't that our representatives only represent companies, but rather that they don't represent us (that is, the average American) period - as people we can really relate to, that they can relate to - because of the wealth discrepancy.
And it's not likely to ever change; I can't think of a way to do it that doesn't involve violence - and even if it did happen, how do you keep it from changing back (what incentivizes people to continue to stay representative of the people they represent)?
To me "wealthy class" means people who have saved enough to never have to work again, which is by no means certain on a 174k salary.
In most of the world, it very much is.
Not a native english speaker here, so I might miss a nuance. "Represent" as in "depict us" or as in "works for us"? It sounds like you would prefer to take random citizens and turn them into politicians. Wouldn't you rather have the best people working for you? Sure, understanding your client is necessary to represent (as in work for) someone and having the same background can be one way to do so. But just one way to tick one of many requirements.
I'd guess the better question is how to elect better politicians. Money in politics and campaigning (tricky to solve) and FPTP voting leaving just two parties certainly doesn't help.
"...than Amazon's money does."
For example, Hillary outspent Trump 2:1, yet still lost.
Amazon elects politicians in a more substantial way than voters do.
Seems a little bit more relevant here.
It means that money is not buying elections. The voters still have to be pleased with their choice, and the money isn't flowing their way.
The power of corporations over people is far more subtle and far reaching than all that, and I'm not really referencing any 'conspiracy' junk.
Briefly, I think it fundamentally comes down to a fundamentally pro-company atmosphere that exists in the United States. This has been created after many decades of typically subtle and legal manipulations.
They weren't trying to be evil; they were just trying to maximize shareholder value.
Jeff Bezos is the worlds richest person of course people will be writing about Amazon.
Are articles (assuming they meet your aesthetic criteria otherwise) allowed to mention anyone who does things in line with prevailing legal policy, yet might be problematic?
I, personally, am really sick of reflexive whining when the media dare be critical of certain firms.
Articles like this are the reason why people write their representatives.
Your comment is a subtle exhortation to do absolutely nothing about the tax policies that lead to results like this.
Regulatory capture is a nice phrase from economics. What we have in the U.S. (and elsewhere) is tax law capture.
The reality is it's more convenient to pretend you have no power because then it excuses your inaction.
Firstly, prove Amazon, specifically, lobbied for the tax law they're benefiting from here. Let's start with that.
Of course it's not magical. It's money. No magic needed. Amazon spent a lot of money and effort to lobby against allowing states to tax internet sales. Then when it got big enough it lobbied for them because at their scale it became a competitive advantage against small players to have everyone charge sales taxes on internet orders. Amazon lobbies for tax break where they build warehouses and other buildings.
The reality is it's more convenient to pretend you have no power because then it excuses your inaction.
The reality is that I have very little power in comparison to Amazon. This is not disputable. I do have some power. Just nowhere near the amount of power that Amazon has.
Firstly, prove Amazon, specifically, lobbied for the tax law they're benefiting from here. Let's start with that.
I trust your Google skills. I trust your common sense too on this matter.
What'll be fun is trying to watch you prove Amazon lobbied for a law that's older than it is.
Don't hate the player, hate the game. If shit like this bothers you, write your local representatives and ask them to change it.
Then you wrote in response to me:
Lobbying is not some magical salve you rub on every problem to make the laws say whatever you want. The reality is it's more convenient to pretend you have no power because then it excuses your inaction.
Now you seem to want to talk specifically about the taxes mentioned in the article. I think you are not staying on topic. We were never talking about that specific tax law.
My Google skills returned this:
https://www.washingtonexaminer.com/trump-is-wrong-amazon-lob...
In 2012, facing a slew of these court rulings, Amazon dropped its opposition to the federal "marketplace fairness" laws Walmart had long pushed. In fact, Amazon joined the lobbying coalition to pass such legislation, which would force all online retailers to collect sales tax on every sale and remit it to the state of the buyer.
This is a huge compliance burden for smaller retailers but no big deal for Amazon. Also smaller retailers, with no network of warehouses, are not required under current law to collect sales taxes, and Amazon didn't like that. Pass the Marketplace Fairness Act, and bam—you impose a big burden on Amazon's smaller competitors.
Sorry, but you're just upset I made a good point (Amazon didn't lobby for this tax law), and are trying to deflect. Not going to work.
I did not read the "from here" part of the comment you originally wrote that I responded to. I thought you asked for examples of Amazon lobbying for tax law changes in general. My mistake.
I did not claim that Amazon lobbied for the specific law mentioned in the article though. Indeed I can't because it hasn't. I did give examples of how Amazon has lobbied for other tax law changes. The comment I originally replied to was in regard to "the game". In this case the game being politics and lobbying.
The things I wrote about Amazon doing remain true. The complaint isn't against Amazon though. It's rational for them to take advantage of the system in place. The overall point I've made and believe is that the system is not fair and that Amazon has outsized power in the U.S.
My point is actually quite well illustrated by your examples. Amazon lobbied its heart out to avoid state taxes on goods sold, and failed. Now in the article you linked, it was spun as some big win for Amazon, but if that's the case, why were they lobbying (unsuccessfully) against it for so long?
Lobbying doesn't work, not nearly as well as people think it does. It's easy to assume money makes laws happen, but if you look at the actual quantities involved, it's a relative pittance compared to individual contributions to campaigns, and as much as we pretend like voters are complete sheep, the reality is more complicated.
Is corporate lobbying a problem? Definitely. Is is this singular driving force in politics? No.
When they were growing they lobbied against. When it became a competitive advantage they lobbied for them.
Lobbying doesn't work, not nearly as well as people think it does.
It works quite well. Both in terms of building walls to discourage competition and to write favorable changes to existing laws. It is in essence a singular force in politics. By lobbying I mean the whole campaign finance machine where rich people personally donate to a campaing and then have their companies do so too. Lobbying is just a proxy for "money in politics" and not just the official lobbyists that are registered. The soft money in politics dwarfs direct campaign contributions.
https://repository.law.miami.edu/cgi/viewcontent.cgi?article...
https://www.washingtonpost.com/news/monkey-cage/wp/2014/03/1...
https://www.washingtonpost.com/news/wonk/wp/2014/04/29/yes-y...
https://www.npr.org/2014/02/13/276448190/a-closer-look-at-ho...
And what you call soft money is actually called freedom of expression, and you're going to be a lot harder pressed than you think to prove that soft money works as directly as you're claiming.
Finally, no lobbying is not a substitute for "money in politics". That's factually wrong.
Yes, those with more capital have more ways to express themselves. This is in conflict the spirit of democracy, were everyone has equal weight. And while democracy seems more resistant to such power imbalances than other forms of governance, it might still be beneficial for society to keep such imbalances in check.
The above extreme example is merely to show that sometimes the responsible party is not solely those who do the actual deed. There are lots of examples of this concept in criminal law if you want learn more about idea.
It's hard to claim corporations don't control the media when only a few media companies control a large majority of the media in the United States.
Industry experts know more about the space that's getting regulated than the lawmakers, so the lawmakers ask for help. Saying "corporations write the law" (by proxy or otherwise) completely misrepresents how laws are actually written.
Does corruption happen? Definitely. Is it rampant? No. It's not "some members who stand strong" it's "almost all members stand strong with some small exceptions, many of whom are no longer in office as a result."
Politics is mostly pretty boring, routine stuff. It's nothing like what's portrayed in the media, stop assuming the most interesting parts are more common than they are...
A great many people work at and invest in Amazon, why would it be more fair for your single voice to exceed the tens or hundreds of thousands on the other side?
The legal person known as Amazon has far more say and sway in U.S. elections than I do. The legal person known as Amazon is controlled by a few people. Transitively speaking those few people by virtue of their control of Amazon have an outsized influence on American elections.
Someday the U.S. will amend its Constitution to abolish the Electoral College and just let the CEOs of the Fortune 500 companies elect the President. It'd be a lot more honest that way.
The fact is while people oppose them vocally they aren't willing to take any action to do so. People like you stay invested in Amazon while opposing it's business practices, that's just one example of many. Have a prime account, use AWS and so on and so on.
You might have a hundred million on your side but the amount of effort they are willing to put forth is maybe a facebook post so nobody cares.
It's not really a matter of outsized voices, it's just one voice isn't willing to do more than whisper.
Your perception that the power an average person holds versus Amazon is roughly equal is not rooted in reality.
Your post makes me want to smash everything around me.
Furthermore, one of the authors was just on a truly excellent episode of the podcast Why is this Happening?, which does a great job of summarizing the article and offering additional insights. https://www.nbcnews.com/think/opinion/can-we-tax-rich-jesse-...
Can the existing tax law be fed into some software which will outline an appropriate path to owe $0? Its all just a bunch of rules, sub-rules, etc., likely with thresholds. If it is similar to personal taxes (e.g. claim medical costs if total is over 7% of adjusted gross) then this is something software should be able to handle.
Or is corporate tax law an area that only can be done with a large team of humans?
Companies are legally obligated to get the best "deal" financially for their shareholders they can. Purposely paying tax would be in breach of their fiduciary responsibility. Blame stupid politicians, not companies.
The problem is that our tax laws allow immense, profitable corporations to pay nothing in federal taxes despite using massive amount of federally funded infrastructure in their course of doing business. How much burden do all those delivery trucks put on our federally funded roadways, bridges, and environment? And that's just the start of it...
I'm allowed to be upset at the fact that it's possible, without knowing how they do it.
What I don't like is that companies are allowed to do this at all - I support more government sponsored measures such as universal healthcare and education, far greater investment in sciences, etc, and I believe corporations paying higher tax rates is a fantastic way to pay for these things.
Same goes for losses. A calendar year is an arbitrary delineation of time. If your business loses $100 in one year and brings in $100 in revenue the next, do you really want them to pay taxes on said revenue? Seems a bit unfair, no? In a two year period they broke even, and that's not even considering what profits they may or may not have made.
We want people to grow their businesses because it's generally good for everyone. Similarly, we tax profits, not revenue, because if we did the former companies would simply cut costs at every opportunity and never put money back in.
Also: if amazon’s profit is double what it was last year, shouldn’t that profit be taxed? If they never pay taxes and continue exploiting labor, aren’t they a net drain on society?
>if amazon’s profit is double what it was last year, shouldn’t that profit be taxed? If they never pay taxes and continue exploiting labor, aren’t they a net drain on society?
Well they do pay taxes, so I don't know where you're getting "never" from. Heck, just look at the chart at the bottom of the article. This is the _first_ year they had a negative rate. If you're going to make statements (shrouded in questions) like "they're a net drain on society" you're going to have to come up with some numbers.
Investing in capital goods and means of production. Again, this has a return that giving to the government does not.
Simple example of what is going on here. Someone buys a plot of land and materials in 2000 for $100000. They build a house and sell it in 2001 for $120000. What should they be taxed on? The "losses" from 2000 get carried over to 2001, and they are taxed on $20k.
In virtually every one of these articles "OMG ABC Corp paid $0 in taxes this year!", the explanation is that losses (investments typically) are being carried forward. This is absolutely normal, expected, and necessary for long term planning and growth.
It's not like they've ensured my roads are safe, my food is safe, my healthcare is taken care of, and that laws are enforced. Also, I'm not so selfish to think I'm the only one who should be helped here. The greater good of society matters more than me as an individual.
Why shouldn't amazon pay their share of taxes for those things, (some) of which they're undoubtedly taking advantage?
I’m not a tax expert, but I think most capital investments work this way.
Recently, stock buy-backs are causing people to get around income tax, so we'd have to fix capital gains, too.
Taxing companies seems like a cop-out. It doesn't seem to have any impact at all on inequality. And it just makes American businesses less competitive.
I agree it is stupid to tax businesses due to how international our economies are getting. Foreign companies can ship product into the USA but pay no taxes in the USA so they get an economic advantage by being in the lowest taxed country. The only tax they pay is import taxes.
They literally just slashed them.
taxes serve as both revenue and incentive generation. turns out that when you have 0% corporate tax you lose the ability to incentivize corps via taxes. there are externalities e.g. pollution that one can no longer incentivize via taxation.
you're also bound to hear the same excuse, can't afford to pay the labor now that their tax rates are higher, guess we'll move somewhere else!
You can't really bad pollution anyway. You and I exhale CO2, a greenhouse gas.
There's still an incentive, it's just it's not tethered to income which has MANY ways to work around in other ways with the current structure and the companies wind up not reducing pollution and waste.
Tax the rich directly, via their incomes.
Well, you can't incentivize via tax deductions or credits against the corporate income tax if it doesn't exist, but you can absolutely drive corporate incentives via other taxes. E.g., particularly with regard to pollution, fuel/carbon/emissions taxes, rather than corporate income taxes.
Of course economic data is usually statistical in nature, so interpretation leaves a pretty wide margin for personal biases to influence model/policy selection, but that doesn't mean economics is not evidence based.
Proving things is only possible withing a model. That's easy. Arguing for and finding the right model is hard.
The best rebuttals I've heard are
1. Potentially reduces accounting compliance (but the argument is that public companies have this either way)
2. Less frequent taxation (only when owners have capital gains)
3. Creates a greyer area for business expenses, that businesses might fight
4. Regulatory market that REITs currently enjoy (that effectively have this)
The major arguments for it are transparency, simplification, more progressive passive income taxes.
I might be wrong, but I think the system is currently structured such that corporate taxes are mostly a sham anyway; when they pay out dividends, those are taxed at a lower rate to make up for the corporate tax. This is probably anti-progressive because poor people aren't incentivized to invest in businesses, as they'd be effectively taxed closer to rich people rates.
Really, a surprising amount of screwy and circuitous things in our civilization are a direct result of income taxes.
if you equalize tax treatment (not just rates, but other things like carryforwards) across people, corporations, and capital, wealthy folks wouldn't be able to game the differences like they do now.
international competition can be addressed with tariffs, which is already quite prevalent but are used for petty politics rather than to level the playing field in international trade.
The CEO is taking untaxed value out of the corporation but paying no income tax. If the corporation pays no taxes either, then the staff of the yacht will be paying more taxes than the CEO & corporation combined!
There's a lot of ways (though there are limits) you can derive personal benefit through things that look like corporate expenses but not personal income, and so are not taxed to you or the corporation; these aren't even constrained by corporate taxes.
But, back to the point, absent corporate taxes, you can use corporate retained earnings as a perpetual tax structuring vehicle by choosing to extract and realize income from the corporation when most convenient for you, as well as enjoying any personal benefits tax free that you can slide by as business expenses. It's that permanent deferment piggy bank,not the more limited tax free benefit extraction, that makes it a tax shelter.
And given the high threshold at which estate tax kicks in, this is potentially a multigenerational tax shelter.
Corporate income tax (which is really a retained earnings tax, because expenses are deducted) shuts down the corporation as tax shelter maneuver.
Claiming personal expenses as business expenses is slippery, we are in illegal territory here.
Since stocks are how one owns a corporation, it's literally exactly the same as stocks, which are not an “other investment”.
Of course, there is a manifest difference between controlling enough stock that one determines, among other things, if, when, and how much a corporation distributes back to shareholders and, well, not controlling that much. But the same issue, in principal, exists with shareholders collectively as with a single shareholder individually, though coordinated action becomes harder with larger numbers.
I think onlyrealcuzzo suggested that problem would be fixed by "properly tax money as it LEAVES companies"
What if the money never leaves, but instead is spent by the corporation to benefit the individual?
https://www.thetaxadviser.com/issues/2017/may/identifying-co...
I don't think we should give corporations a pass, but at the same time we can't also expect them to "play fair" when there is no way for anyone to actually determine what that means.
The truth is, there's really only a couple hundred thousand families in the US with enough money to do stuff like this. And the IRS should have the resources to make sure they aren't making $10M+ per year and reporting income of like $15k.
My understanding is that this issue is still robustly debated among economists. Do you have a citation for this?
Name names, please.
This whole buyback debate in the last few days is frankly bizarre and just shows how many people are financially illiterate.
— President John F. Kennedy, 1963
Myopic egalitarianism on taxes would have ruinous affects on all levels of society. The incentive structures that determine how we allocate capital determine how dynamic our economy is and thus the opportunities for working and middle-class Americans. Lower capital gains taxes encourages skilled investors to reallocate capital to promising projects, ensuring capital goes to the companies most likely to create jobs as they innovate and scale. Better investment of capital literally results in higher wages, superior goods, and a more sustainable tax base. The maximum capital gains tax in the US is already one of the highest in the developed world. It should be zero, like Singapore, Hong Kong, and a dozen other OECD countries.
Taxing capital gains as ordinary income would freeze long term investments in place. This is the “lock-in effect.” When capital gains taxes are high, the tax penalty discourages investors from moving their money to potentially better investments.
Obama said raising capital gains taxes was “fair.” However, that sounds good to voters that don’t know any better while it would be disastrous in practice. His statement was catnip to the economically ignorant just like “build the wall” is catnip to the right-wing. Both ideas are of questionable benefit while the potential for unintended consequences are somewhat infinite. Of course there are those that actually want the US economy to get worse in order to bolster anti-capitalist arguments. So perhaps the negative effects of taxing capital gains as ordinary income is a desirable outcome for those who suggest it. A bit cynical, however, how else could it be explained: if raising capital gains taxes is bad for the economy as Kennedy and economists say, why would anyone support it? They’re either badly informed or perfectly informed and malicious.
Appealing to the authority of rich white dudes on this topic is not at all convincing.
Once double taxation is eliminated, capital gains can approach the full progressive rate as they will still be incentivized without the earned income payroll taxes.
Source?
Oh yeah? Got some evidence for that claim?
The U.S. Tax law stops at the U.S border. The U.S. needs to compete at the global level. Ireland's tax law is not by coincidence.
Fortunately companies have a choice for now.
https://www.barnesandnoble.com/w/the-chickenshit-club-jesse-...
Oligarchs don't have the same laws as the rest of us.
https://www.nytimes.com/2014/05/04/magazine/only-one-top-ban...
Amazon depends on the roads that our tax dollars fund. Amazon depends on intelligent people to run its business, funded by the US government through various mechanisms such as research grants. Amazon depends on the protection of the US military. Amazon and companies like Amazon need to pay their share
Their “share” is what the law says.
I doubt many posters here pay more than required by law, and take tax breaks when applicable, from mortgage deductions, healthcare deductions, schooling deductions, etc.
It's nothing but punditry to decry Amazon's tax rate without seriously discussing why it's so low and whether that underlying reason is good policy or not.
Amazon's electricity rate discounts have pushed up utility costs
Source: https://www.bloomberg.com/news/articles/2018-08-20/amazon-is...
Corporations should either give dividend and/or diversify/expand. If paying dividends, shareholders can then pay income taxes. Amazon has a growth model. What I'm against is corporations holding on to unutilized or underutilized assets in a longer term.
It's the spending and changing hands of money that promotes a healthy economy, having cash or capital sitting unused doesn't really help anyone all that much imho.
That's just my take on it... I'm not in favor of corporate protectionist policies and would rather see a lot of it be torn down to an effect of both reducing corporate power as well as the influence of tax incentives.
What specifically is ITEP arguing for? GAAP profitability is not Taxable income is not Net Cash flow. The IRS has different multi-year schedules for various asset amortizations/depreciation than GAAP so of course the tax rates can be significantly different if the company is investing in growth.
The companies that can afford to engineer out of it, will, making it oddly regressive in certain circumstances.
> Why is it desirable to transfer money from job-producing companies and investors to the government?
The government is a money pit. We're long past "essential services". I'm happy to see companies paying 0 tax into the waste pit.
Just think for one moment longer about the logistical complexities involved in getting you a package. You need a unique address identifier, streets that are paved, a global trade network that won't be pilfered by pirates, currency with value and neighbors with stable enough incomes that they don't see the postman and take your package for themselves.
Libertarianism is a pipe dream. Your desire for our transition to a failed state would be the undoing of the institutions that make your cushy life possible.
Who guarantees amazon isn't immediately overwhelmed with ten thousand copycat sites with similar URLs?
Who built the roads upon which employees drive to get to HQ? Upon which delivery drivers drive to get packages to customers?
Who ensures Amazon doesn't need someone riding shotgun, with a shotgun, with every delivery driver?
I'm not even scraping the surface here. Libertarianism, I presume? The free market would have done a better job at building a sovereign system in which Amazon could thrive?
Roads and police are (mostly, with some exceptions) controlled by the states.
(1) spends about as much per capita on healthcare as other OECD countries, with dramatically worse coverage,
(2) spends about 10x the world average on military, per capita,
(3) has a political system that is set up to make meaningful reform almost impossible,
and so on...
So this is obviously considered a bad thing by the author, but wouldn't the cost to the government be the same regardless of whether it was expensed in one year or multiple years?
Anyone versed in finance can tell me why that's a bad idea?
When you sell stock, sell property, etc. Basically everytime you cash out, that would just count as additional income for that year.
So I'm not sure in that way I understand how it would squeeze the middle and lower class?
I guess my thought is more, why not only tax income?
Not exactly, why not only keep the existing income tax and get rid of all others.
Only taxing income (all forms of them), and just using a bracketing system would simplify the whole equation so much. And make filing taxes quite simple.
I'm sad to see people have mostly downvoted me, and provided no rational for what would be worse about such a tax scheme. It seems that's telling to why we are probably very far from a tax reform, people seem to be irrationally attached to the way they're used to it.
I'm saying get rid of property tax and sale tax, and add income tax. If you need to adjust the income tax to some new levels due to losses of other taxes that's fine.
This is why politicians say they want to help the middle class. They are always paying the majority of taxes.
The politicians hardly ever live up to promises.
The important thing to remember is that, fortunately we don't live in a one-world government so the US is forced to compete with Ireland or other countries on taxes. There is a ceiling on how much you can tax before companies say F this I'm going else where.
The "problem" is small US businesses can't replicate easily.
The obvious solution is to level the playing field and make the US competitive on tax rates or drop taxes all together.
87% of income taxes are paid by the top 25%; 70% of income taxes are paid by the top 10%. The middle class in the US pays an extraordinarily low effective tax rate. The US has a very progressive tax system.
The 50% to 25% income bracket, which makes up most of the middle class, has a 7% average federal income tax rate. Few other developed nations come remotely close to having something like that.
The politicians pander to the middle class out of virtue signaling (it's a great ideological sound bite) and for votes (it's still a large voting block).
Do you have an reputable source of truth for this?
> The 50% to 25% income bracket, which makes up most of the middle class, has a 7% average federal income tax rate.
Any source of truth for this? I'm a sample of one but I pay at least quadruple this rate every year since I can remember and I'm not an edge case. 7% is a joke. I would love to pay that.