How Amazon Harms Your Local Government

Amazon is one of the most lucrative companies in the world, from growing in value by $3.4 trillion in 2020 to making about $830,000 per minute in the final quarter of 2020. With such a large net worth and resources, Amazon’s taxes should be high as well as help fund federal programs.

Amazon’s founder, Jeff Bezos, advocated for “a rise in the corporate tax rate” early in 2021. A rise in the corporate tax rate would help fund President Joe Biden’s infrastructure plan. By publicly supporting Biden’s tax rate proposal for corporations, the company seemed to acknowledge its domination of the market as well as understand the need for large corporations to pay taxes.

However, Amazon avoided about $2.3 billion in taxes in 2020. With an income of $20 billion in the U.S, Amazon should have paid about $4.1 billion if it paid 21 percent of its earnings, but instead, it paid less than half of that.

Avoiding paying its full taxes is not new for the e-commerce giant; Amazon’s tax subsidies amount to $7.2 billion from 2018 to 2020. Amazon avoided payment of its full rate in taxes because of various tax breaks and credits.

Some tax breaks that Amazon has are from its investment in research and development, in property, plant and equipment, and employee stock compensation. Part of the reason that Amazon does not pay much in taxes is because it invests a good bit of its profits back into the company.

Amazon received these tax breaks by hiring tax lobbyist Joshua Odintz, a former Democratic congressional aide and veteran of the Obama administration, “to lobby on the section of the tax code dealing with the research and development tax reduction, according to a disclosure filing,” according to Politico.

By investing heavily in research and development, companies like Amazon are incentivized because it benefits them by providing tax credits. Amazon is able to avoid paying what it originally should owe in taxes through legal loopholes.

Other companies like Delta Air Lines, Netflix and other giant corporations have also succeeding in not paying what they would originally have to pay in taxes before various tax breaks and rebates.

What these companies are doing is legal; however, by avoiding paying taxes corporations like Amazon eventually hurt state, local and federal revenues that fund programs that help people by fixing some roads, water pipes and ports in America. By working to avoid paying these taxes, Amazon once again shows what it prioritizes most and what is not important to the company.