Amazon to Pay $0 in Federal Taxes Despite Doubling Revenue to $11.2 Billion

The online shopping and tech giant, helmed by the world’s richest man, will be paying no taxes for 2018 due to various "unspecified 'tax credits' and executive stock options".

Amazon almost doubled its profits in the US from $5.6 billion to $11.2 billion between 2017 and 2018. The e-commerce giant is now valued at about $800 billion; its CEO and founder Jeff Bezos valued at $134.1 billion. For numbers such as these, Amazon will pay exactly $0.00 in federal taxes.

According to a report published by the Institute on Taxation and Economic (ITEP) policy earlier this week, Amazon is getting away with federal taxes for the second year in a row. Besides, the company reported a $129 million 2018 federal income tax rebate which makes its tax rate fall down to -1%. The report stated that the “achievement is partly due to various unspecified ‘tax credits’ as well as a tax break for executive stock options”.

The non-existent tax rates have fuelled US senators who have expressed their dissent on social media platforms such as Twitter.

It is not the first time that Amazon has manipulated governments to come up with subsidies and tax-cut for its good. With a business model concrete with tax avoidance, Amazon has a history of extracting favours that give it a competitive advantage – finding ways to save tax and extracting public money for its growth, claiming a monopoly in the market which turns out to be bad for consumer choice, market competition, and entrepreneurship.

There have been studies revealing that incentive programs have no discernable impact on firm expansion, neither are they any better for the long-term economic growth. Yet, numerous states continue to lure big companies like Amazon by providing subsidies, in the hope that they will bring new jobs through their fulfillment centres, a promise which Amazon had conveniently managed to backtrack from in the past.

These massive tax cuts allow companies like Amazon to expand further, which it has managed to do so well ever since it started as a garage bookstore in Seattle, about twenty five years ago. Since then, it has grown to acquire several new markets – apparel, cloud computing, video and audio streaming, and voice assistants to name but a few.

The expansions of Amazon, nevertheless, continue to cater to the elite as in the case of one of its expansions called Blue Origins — an aerospace manufacturer and spaceflight services company which works for developing technologies to enable private human access to space. Amazon has also has been under strong criticism by TV shows in popular culture, such as South Park, which in its latest season came up with episodes that highlighted the plight of local business owners after their businesses fell to newly emerging fulfillment centres across the US.

Also read: Amazon Scraps Plans for New York City Headquarters

In recent news, Amazon pulled away from its second headquarters in New York city after it failed to see “positive, collaborative” relationships with state and local officials who have been constantly objecting the billions given in incentives and tax cuts to huge companies like Amazon.

The opposition to the deal also feared higher rents in the Long Island City neighbourhood of Queens where the headquarters was to be set up. Amazon had promised that the new headquarters would employ over 25,000 people in exchange for up to $3 billion in tax breaks from state and city governments.

Ribhu writes about society, arts and culture, and science and technology. He is an intern at The Wire.