An analysis released Monday shows Amazon used legal mechanisms to avoid paying $5.2 billion in federal corporate income taxes in 2021, a year in which the online retail behemoth saw its profits and sales skyrocket.
An analysis released Monday shows that Amazon utilized several perfectly legal mechanisms to avoid paying $5.2 billion in federal corporate income taxes in 2021, a year in which the online retail behemoth saw its profits and sales skyrocket.
Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy (ITEP), estimated that given Amazon’s record-breaking $35 billion in U.S. pretax income for fiscal year 2021, the Seattle-based corporate giant paid an “effective federal income tax rate of 6%” — far lower than the statutory corporate tax rate of 21%.
Had Amazon paid the latter rate on its 2021 U.S. income, Gardner noted, the company’s federal tax bill would have amounted to more than $7.3 billion.
“Instead, the company reports a current federal income tax expense of $2.1 billion,” Gardner wrote Tuesday.
“Amazon’s 2021 federal income tax payment is comparatively significant for a profitable company that paid less than $0 in the first year of the Trump-GOP tax law. But the company’s continuous tax avoidance adds up over time. Over the past four years, Amazon reported a total federal tax rate of just 5.1% on over $78 billion of U.S. income.”
ITEP’s latest analysis caught the attention of Warren Gunnels, the staff director for Senate Budget Committee Chairman Bernie Sanders (I-Vt.), a longtime critic of Amazon’s tax dodging and mistreatment of workers.
“Class warfare is Amazon making a record-breaking $36 billion profit last year, avoiding $5.2 billion in taxes, and paying an effective federal income tax rate of 6% while Jeff Bezos spends his fortune on union-busting, flying to outer space and protecting his $500 million yacht,” Gunnels tweeted late Monday, referring to Amazon’s billionaire executive chairman and former CEO.
Gardner explained that Amazon used several “familiar” legal maneuvers to slash its federal tax bill in 2021, including tax credits and deductions such as the foreign-derived intangible income (FDII) deduction — which was made available by the 2017 Trump-GOP tax law.
“These are tax breaks that Congress has endorsed and even expanded,” Gardner emphasized. “This means that Amazon’s 6% tax rate is a result that lawmakers have enabled and could prevent if they summon the political will to do so. This outcome will be very unlikely for Amazon and other very low-tax corporations to replicate in the future if Congress enacts the minimum corporate tax provision included in the Build Back Better Act passed by the House of Representatives in November.”
While raking in massive profits, handing CEO Andy Jassy a huge compensation package, and doubling its cap on base salaries for corporate employees to $350,000, Amazon is working aggressively to crush a unionization effort by warehouse employees in Bessemer, Alabama.
Bessemer workers are currently voting for the second time on whether to unionize after the National Labor Relations Board ruled that Amazon unlawfully interfered in the previous election last year.
According to Glassdoor, the average Amazon warehouse worker in the U.S. makes $16 an hour — roughly $31,000 a year for a full-time worker.
Bezos, meanwhile, saw his wealth grow by $1.4 billion in 2021.
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It’s really simple–don’t buy through Amazon.
Your’s is the first comment, and you beat me to the punch of saying the exact same thing … STOP using Amazon.
1) perfectly legal is the key phrases. Change the laws. Biden and co have control over both houses, dontcha know.
2) company tax should be zero. Taxing the job creators is insane. And it would eliminate billions upon billions of dollars spent minimising tax, via tax accountants and lawyers, which is just wasted money to the economy. It would also see trillions in profits currently parked overseas flow back to the US ($4 trillion by memory). Wouldn’t that be nice? It would also see a huge surge in capital expenditure as capital expenditure is throttled by the inability to take immediate deduction. That would all be mute if there were no corp taxes.
3) Amazon employs gazillions of people. How much did Amazon indirectly pay via the taxes paid by their employees? Business creates a lot of tax revenue when it creates jobs.
The answer is to convert all taxes to consumption taxes. Taxing labour and business really is insane.
Have to agree with you on this one. The Fed Govt should be small enough to run balanced on a small tariff on imported goods .
Robert (QSLV)
Large Corporations buy politicians so they can influence tax bills that minimize their taxes and are only available to the big boys. Small companies cannot afford to buy politicians and end up footing the full tax rate.
And another good reason to have no corporate tax. It gets rid of a lot of that crap.
Amazon owns the Washington Post which blatantly supports Democrat politics. Bezos gives great amounts of cash to leftist politicians. Amazon pays for a lot of Hollywood production. Obviously this has successfully bought what he wanted. I sent a box recently by US Mail, cost $24. Amazon ships items all over the country worth less than $24, and the US Mail is free to us. Tell me how that works. Has he bought all of our government?_
their prime membership just increased by 15%
There’s a difference between “tax evasion” and “tax avoidance”. Big business….like Amazon…
employees countless lawyers, accountants and lobbyists to create and get passed all manner of
arcane rules and laws that allow them to AVOID paying taxes. Us little peons can’t afford to do
that. Thus if we don’t pay our taxes we get screwed for “tax evasion”. It’s an EXCLUSIVE CLUB
and we ain’t in it.
OTOH, looking at it another way (and yes! I’m prepared for the raspberries and middle fingers), Amazon is an American company (with all that this implies financially) and yes, Bezos is an ass (whadyu expect – he is a Democrat), but a little something is still better than a lot of nothing.
An American company selling cheap chinese crap.
Can someone explain the huge disconnect pointed out by Gardner, implying it was the Trump-GOP tax rules that gave them a big break? If true, why are most corporations so anti-GOP (and rabidly anti-Trump)?
If this headline and story were accurate, it would have read:
Not one single corporation paid a single dime in taxes for 2021.
You cannot tax a business. You can only tax the consumers of a business. The idea of taxing a business was a con by politicians to get you to believe that they weren’t taking your money; they were taking the money of greedy business owners. And when the price of their products went up after their taxes are raised they tell the people “see we told you they are greedy”. Being a business owner, I’ve known this for decades. But it was nice to hear it confirmed when Jonathan Gruber, famed Obamacare economist, told his audience this true fact.