Jeff Bezos supports US tax rise after not paying it for two years – and paying tiny amount in 2019

Amazon CEO Jeff Bezos has said he supports increasing corporate tax rates after receiving criticism, yet again, from US President Joe Biden. Bezos' stance was revealed in an announcement and a tweet. A message from Jeff Bezos. https://t.co/ZAcpnaRu6z pic.twitter.com/81AkgVyQke — Amazon News (@amazonnews) April 6, 2021 The …

[mark l 2]

Of course Bezos supports an increase in corporate tax, if your in house accountancy team can use loopholes to make your tax liability almost a zero amount on the books then an increase of a few percent in corporate tax won't make any difference to Amazon.

It about time that these big billion dollar corporations were treated to different tax rules than SME so they can't use loopholes such as incorporating in tax heaven and charging themselves licensing fees for using logos etc.

[Joe W]

Same with those who invest money into loss makers to use that as an excuse to not pay taxes. Tax rules are way too complicated, too many ifs and buts and whens, and thus too many loopholes. Sure, there were good (well... in many cases) reasons for saying such-and-such should reduce your taxable income, but overall I guess most of us would appreciate if waaay fewer of these rules existed and the overall tax rate would be lowered. In the end we'd end up paying a similar amount, but those who play the tax-evasion-game would actually have to pay their fair share.

I like it how in Norway tax evasion seems less of a public sport than elsewhere, with skatteetaten (the tax office) acutally urging you to check your tax assessment so that you do not overpay (publicly, on posters in official buildings, for example). I also found the Norwegian income tax system simpler to grasp than in other countries (not that I did not have to fight my way through some iterations of filing appeals, because of those deductions, which I did appreciate, but are now being phased out - which does make some sense[*])

[*] well, those were exemptions for foreign nationals moving to Norway or having family abroad. They now hire "Norwegian first" in many places, and the once welcoming culture is becoming more nationalistic, though way less than in other countries, also look at election outcomes. They are following the international trend, sadly.

[bombastic bob]

increase of tax *RATES* for high income earners does NOT tax people like BEZOS...

It taxes the MIDDLE CLASS WAGE EARNERS who are trying to *BECOME* "the rich", MOSTLY upper management and small business owners.

And if you tax SMALL BUSINESS OWNERS do you think they will be

* hiring more people

* increasing employee wages and benefits

* investing in future business growth

Or, will their otherwise "disposabl income" *NOW* be locked into being RE-DISTRIBUTED by GOVERNMENTS to BUY VOTES with in the form of WEALTH CONFISCATION TAXES???

And "the TRULY rich" like Bezos, who contributed in various ways to DEMO[N,C]RAT candidates, won't pay even an extra DIME in REAL taxes. Do not doubt me, Loopholes are the LEAST of his advantages. There are trusts, income deferment, non-profit "charity" corporations, off-shoring, yotta yotta yotta all working in his favor.

These people must be elitists with NO conscience.

[Anonymous Coward]

Yeah. This is why Hollywood stars love open borders, defunding the police and tax rises. They have made their money, have armed private security and accountants.

[Snake]

Tax cuts

I would like to ask, finally at this time, how supporters of supply-side "neo-liberal" ("conservative", politically) economics settle this cognitive dissonance:

That, after 40 years of supporting business-tax-cutting supply-side economics (since Reagan), based on a belief that allowing business to hold funds for "increasing employee wages and benefits"..

we have, statistically provable, over 3 decades of stagnant middle class wages.

According to your beliefs (and your directly-quotable statement), cutting taxes should allow businesses to increase wages and benefits.

Yet after 30+ years, we're still awaiting the promise.

But you never learn your lesson. You never question if believing in a promise that has not functioned in 3 decades is worthy of your continued servitude.

Have a nice day.

[Triggerfish]

i would have thought on the whole it may even be a good thing for Amazon, I wonder how much a independent potential rival gets hit in taxes before they can get to the sort of level they can exploit the same loopholes companies like Amazon do?

[Pascal Monett]

Ah, tax laws

Instead of changing the rate at which corporations are taxed, it might be simpler to change the rules that allow them deductions on their tax bill.

I'm guessing that would bring in a few billion.

[boblongii]

Re: Ah, tax laws

Just tax turnover. No deductions; tax becomes a cost like rent or salaries. I know it would put people at KPMG (those who aren't working on money laundering anyway) out of work, but I could live with that.

[jmch]

Re: Ah, tax laws

"Just tax turnover"

Much as I don't like this and see many disadvantages in this system, I am coming to believe that it is the 'least worst' system. Any tweaking on tax on profit has to necessarily get into nitty-gritty detail of what is and what is not an allowable expense for tax purposes, intergroup transfers etc etc, and any time you have to dive into details, lawyers and accountants will find loopholes. Turnover is easy for tax authorities to work out and close to impossible to obfuscate for companies.

While it is true that taxing on turnover would be very painful or fatal for any businesses that live on high volume and tiny margins, or any business where there is an intial loss-making startup period, this can be offset by keeping a limited system of deferrals and tax credits. Here again, keep it simple as possible and cap it at a few million, finding a point where it is significant enough to not drive SMEs out of business but rounding errors for large corporates such as Amazon.

[Arthur the cat]

Re: Ah, tax laws

Taxing turnover is an insane idea. The average (UK) supermarket has profit margins around 3-5%, Apple has profit margins of 50+%. If you set turnover tax high enough to capture a significant portion of Apple's profits you wipe out every supermarket in the land or they put their prices up by ridiculous amounts and the poor suffer. Set it low enough to not bugger up the supermarkets and Apple would end up keeping more of their profits.

[DS999]

There's a simple solution that would never be adopted

Apple's margins aren't anywhere near 50%, but yes a tax rate on revenue that caused them to pay the same tax bill in the US that they do now would put every supermarket into bankruptcy.

The simplest solution would be to tax on a cash basis - you have x dollars coming in and y dollars going out, your tax is based on x-y. No worrying about tracking when "revenue is recognized" - if they pay you over three years for something that revenue is recognized over three years as you receive it. Ditto for depreciating capital expenses and the like - if you write a check for the full amount of a big expense that would normally be depreciated over some years all it means is that your taxable income would be much lower that year, but would be higher in the remaining years, and it would all equal out in the end.

You don't even need to care about whether something is a "legitimate business expense". If the company bought it, it is a "cost" and deducts from revenue. Anything they pay to another company they file a form with the IRS saying how much. Anything they pay to an employee (even a jet purchased for the CEO) they file a form with the IRS saying how much. The total in those forms has to equal how much they claim they spent in their tax return. That would make tax collection super simple and make gaming things a lot more difficult. The IRS would get its money either way, it would be up to the shareholders to decide if buying a jet for the CEO was a good use of the corporate treasury.

This isn't a problem free approach, but one of the biggest reasons why it would never happen is that accountants/tax attorneys would lobby heavily against it as it would put a lot of them out of work. And politicians would hate it even worse, because a tax system so simple would make it difficult to justify tinkering with. If they can't tinker with the tax system they would see bribes^H^H^H^H^H^H campaign donations from corporations plummet!

[Oddlegs]

Re: There's a simple solution that would never be adopted

Wouldn't that just end up with exactly the situation we have now? For example Starbucks UK bring in £1Bn but pay Starbucks Cayman Islands £1Bn in licensing costs and, hey presto, make zero profit and pay no UK tax...

[John Brown (no body)]

Re: There's a simple solution that would never be adopted

Yup, and that's exactly how Amazon pays no tax. They spend all the profits on R&D, ergo, there are no profits.

[DS999]

Re: There's a simple solution that would never be adopted

That's UK tax, when the article is about US tax.

The way to handle that is via treaty, as it is obviously easy to shift costs around between countries. Sometimes it is even legitimate - i.e. if you have a company like Apple or Microsoft where many billions of dollars in development work takes place in the US then you'd unfairly be taxed more in other countries where you don't incur little or no development cost.

[Robert Grant]

Re: There's a simple solution that would never be adopted

The simplest solution would be to tax on a cash basis - you have x dollars coming in and y dollars going out, your tax is based on x-y.

You just described taxing profits.

[Oddlegs]

Re: Ah, tax laws

If what you say is correct then Apple will be paying 10x the corporation tax that Tesco do (adjusted for size)??

A brief search suggests that in 2019 Apple paid £3.8M tax on £1.2Bn of sales from its UK stores (approx 0.3%). Tesco meanwhile paid £176M corporate income tax in 2018 on £51Bn of sales (the same 0.3%).

Taxing turnover is far from perfect but it at least ensures that everyone pays something. The above numbers suggest that 0.3% would be just about revenue neutral for both Apple and Tesco but at least it would eliminate all of Apple's tax shenanigans. It also doesn't have to be the end point. There's no reason why you couldn't put a higher banding on electronics sales compared to food.

[DS999]

Re: Ah, tax laws

You're talking tax in the UK, when the article is about US taxes.

[Mark 65]

Re: Ah, tax laws

Same theories apply. Location is irrelevant, issue is universal.

[katrinab]

Re: Ah, tax laws

A turnover tax would benefit large companies who could do everything inhouse rather than buy from external suppliers

[bombastic bob]

Re: Ah, tax laws

A turnover tax would ALSO mess up inventory control for manufacturing and most likely DRIVE IT OFF SHORE. You'd see a lot of sub-contract distribution centers in China (for example) directly shipping to customers, thus avoiding any inventory at all within the borders of the taxing authority. And even if it WERE paid (instead of avoided), the cost would be passed on to the consumer. What, people thought that "mega-corps you want punished" would just dip their hands a little deeper into some wellsopring of CASH they have laying about??? No, they'll pass the costs on to consumers, an excuse to jack up prices or scrape revenue from them by some other means...

let alone the additional accounting nightmares for sales and VAT taxes later, because people WOULD complain a LOT about "taxing the tax" otherwise...

[boblongii]

Re: Ah, tax laws

"You'd see a lot of sub-contract distribution centers in China (for example) directly shipping to customers, thus avoiding any inventory at all within the borders of the taxing authority. "

Firstly, anything coming from China should be stopped at the border and burnt.

Secondly, anything can be subject to import levies.

"No, they'll pass the costs on to consumers, an excuse to jack up prices or scrape revenue from them by some other means"

That's fine. Then they will be competing with other people who might be able to do it better instead of simply undercutting them. The world does not have a responsibility to make your business plan work.

[Cliffwilliams44]

Re: Ah, tax laws

That would be an insane idea. eliminate all income related taxes and institute a 5% tax on end-point consumption. Corporations spend a lot of money in their daily operations. This eliminates all kinds of overhead like, as you say, KPMG. The up side is EVERYONE PAYS! Even the Crime organizations.

The only exception to this rule is food. All other gods and services qualify.

[Ogi]

Re: Ah, tax laws

Yes, but if they did that they would actually have to pay more Tax themselves. This way big business keeps their low/no tax loopholes, while governments (who don't pay taxes themselves) squeeze the middle class and poor (because at the end of the day, corporate taxes are not paid by companies, they are paid by the customers, in the form of higher prices).

Funny how those that pay little (or no) taxes, are the ones who seem the most keen to push tax increases on the rest of us.

[Anonymous Coward]

I'm pretty sure Jeff Bezos doesn't actually care anymore because he's retired, and it will also make his ex-wife's holdings worth less.

[0laf]

Yeah she'll be down from $57 Billion to $55 Billion. I'm sure we'll see her registering for her local foodbank while Jeff laughs at her misfortune.

[Anonymous Coward]

R&D deduction

But what is real R&D and what just money allocated there to make tax disappear? Is there a way to measure it?

Maybe that explain all the fuss about delivery drones that weren't never really usable, but probably costed billions to develop even if all the R&D was probably painting the Amazon logo on an existing drone to make some photos and videos.

[Anonymous Coward]

Re: R&D deduction

In the games industry (and probably other software industries too) R&D was basically development of any technology that could be considered "new". So I write a "new" collision system for a game, for example, that's R&D even though the same thing has been written a thousand times before by other people.

Nobody actually checks these things, so any new code is automatically an R&D candidate.

[IGotOut]

Is this the same Biden...

...that is threatening retaliatory actions for nations that are also trying to tax these companies?

Yes,yes it is.

(Trump was just the same).

[Jellied Eel]

Re: Is this the same Biden...

It's probably the same Biden who funnelled book & speaking fees through CelticCapri and Giacoppa Corp to avoid being taxed on that income. Funnily enough, the biggest saving was avoiding paying something aound $500k in Medicare and Obamacare taxes that would have been due, if that income had been treated as self-employed income. I guess maybe it was structured that way because most of the income ended up going to his ghost & speech writers.

[Mark 65]

Re: Is this the same Biden...

They're all parasites.

[KBeee]

I wouldn't worry either if my % of tax went up if I was paying fuck all in the first place.

[mankymanningBS]

In this case Amazon is using the rule to allow investment into services to be offset against their tax bill (in the US at any rate). An intentional tax rule designed to encourage businesses to invest and create bigger businesses employing more people. Amazon are fairly unique in the amount of their potential profit they don't actually hand to share holders but plough back into the business to make it grow even more.

[Anonymous Coward]

Political football

Among other things, Corporate taxes exist to benefit politicians. One side can fight to make sure that big bad corporations pay their "fair share" while the other fights to reduce taxes with claims of it being "good for business and for workers". Both sets of politicians use this to justify their own existence and to ensure that a substantial portion of any created value is deposited into the political system.

[Arthur the cat]

Re: Political football

Corporate taxes exist to benefit politicians.

Corporate taxes exist because of politics. Economic theory shows that the optimal rate(*) of corporate tax is 0%. However, the average Clapham omnibus rider (and voter) doesn't understand the concept of tax incidence so we get endless whinging about "companies not paying their fair share"(**) so corporate taxes are introduced to stopreduce the whinging.

(*) In the sense of maximising total wealth. How that wealth gets (re)distributed is a second, independent, decision. (Or should be.)

(**) See above, below and political speeches about companies.

[doublelayer]

Re: Political football

Yes, in the pursuit of maximum utility for you and nobody else, the optimal tax rate is 0%. That applies to corporate taxes and personal taxes. Which is just fine if you live in a world where you never need governments to provide services. However, economic theory doesn't agree what the best rates are when you do need those things and, as it's a subjective thing, may never be able to do so. In fact, as economic theory goes, there's not much difference between a corporation and an individual. It's best not to say that economic theory thinks X is a certainty because A) it isn't one person and frequently some economists think X and some think Y, and B) there are lots of questions that economic theory says it either doesn't or can't address.

[Boris the Cockroach]

Re: Political football

The optimal rate of tax for everyone is 0% However the question of how do we pay for the NHS springs to mind.....

Then consider this.... I get taxed on the profit I make by selling my labour to my boss.. basically what PAYE is.

I dont get paid, I dont pay any taxes.

So corps should be taxed on the amount of profits they make....... by forcing them to declare how much income they get vs expenses, with the very through proviso that if they buy IP from say Google cayman islands, then that is NOT counted as an expense unless anyone can buy the same IP from Google cayman islands.

(then again I'd tell all those british tax havens they get a choice..... treated as a regular part of the UK with an elected representative, or full independence,.... sadly too many MPs and their friends have off shore accounts for that to happen)

[AndrueC]

Re: Political football

Corporations don't pay tax. Only people pay tax.

Taxation is just another business expense and all companies just pass it on to owners, staff and/or customers along with every other business expense.

That's why politicians like it. Most of the public don't understand this concept because their natural tendency is to anthropomorphise businesses. This makes them pleased when they hear that 'big bad business' is paying more tax.

[doublelayer]

Re: Political football

And, using that argument, technically you as an individual also pay no tax, because you pass it all onto your employer. It is included in your income. Also, you pay no tax on your investments or property or anything else for which you get a tax bill and pay money if you consider it as ingrained in the cost.

It's not in the cost. It is a separate cost. How a change in taxes is handled depends on the actions of the person or company. If the tax rate goes up, companies may increase prices, decrease expenses, or report less profit. These are all options and are all used. If tax rates don't go up, companies may also increase prices and give the money to somebody else. It's a decision they and not the tax authorities make. It's not correct to assume that any increase in corporate taxes takes the form of price increases.

[Anonymous Coward]

Re: Political football

I believe there is a specific part of Economic Theory that deals with the ability to pass on costs etc.

[doublelayer]

Re: Political football

If you're referring to price elasticity, there is but it doesn't change the answer. It allows more granular discussion of exactly what will [probably] happen if suppliers change the prices. Some products are inelastic, so if the price goes up the company just gets more money. Some are elastic, meaning the companies are taking a large risk by increasing the price. There are equations and theories giving more information about how to test this and use the results.

Either way, companies change the prices based on their own calculations. If the tax rate goes up by 5 percentage points but the company expects that increasing the price will cause demand to fall, they will bring out the calculators to figure out whether that's a good idea. Some companies will decide that increasing the price will cause demand to go down too much, so they'll have to absorb the tax increase. Unhappy execs and shareholders ensue. Other companies will decide that they can handle the increase and prices go up. However, if the tax rates didn't increase, the companies may have done the calculation (they do that all the time as part of routine work) and increase the price anyway. So it is true to say that tax increases may increase prices, but incorrect to state it as a certainty.

[Potemkine!]

It's a well known fact: past a certain level, the richer you are, the less you pay.

[Anonymous Coward]

Any sentence that starts 'Its a well known fact' always deserves fact checking

It's a well known fact: past a certain level, the richer you are, the less you pay.

Not according to this https://www.bbc.co.uk/news/uk-politics-39641222

25% of UK income tax is paid by the top 1% and apparently that's getting risky for a stable UK income revenue as the more you are paid the more volatile your earnings become.

[Mark 65]

Re: Any sentence that starts 'Its a well known fact' always deserves fact checking

Have a look at the 0.1% or the 0.01% and how much they pay rather than the 1% which would equate to the top 30,000 and 3,000 taxpayers respectively rather than the 300,000 which would include middle to upper-middle income earners.

I think you'll find that those 0.01% (i.e. the billionaires) don't carry their fair share of the burden, as the whole spectrum of avoidance techniques is available and effective for them, and the bulk of the distribution will sit further down the wealth spectrum as inferred by the O.P.

[Blackjack]

"If the R&D Tax Credit is a “loophole," it's certainly one Congress strongly intended. The R&D Tax credit has existed since 1981, was extended 15 times with bi-partisan support and was made permanent in 2015 in a law signed by President Obama."

And people then wonders why Trump happened. If both parties are basically the same, who are you gonna vote?

[Anonymous Coward]

They're not the same, but who's silly enough to tax away innovation? It'll just go to another country. The moralising never addresses this.

[sgp]

That argument is hardly new. Any research that proves it?

[Mark 65]

No, but plenty of hard lobby dollars.

[Anonymous Coward]

This is an old trick, going back to Roman empire days. People who pay no tax demand higher taxes on others, because their companies will benefit from the increased government spending that follows, and will mean government contracts.

In the 350s AD the emperor Julian was campaigning in Gaul to fight off Germanic invasions which had destroyed the cities. He was amazed to find his officials kept coming to him with proposed edicts to levy more taxes on the ruined cities. Of course any taxes raised would stick to official fingers. He refused; but they kept trying.

The rich pay no taxes. They cannot be made to do so, because every country in the world is run by rich people. When a billionaire praises new taxes, he doesn't expect to pay a penny. Those new taxes are for you and me to pay. It means only that he wants his company to get some fat new government contracts. Paid for by us.

[Cliffwilliams44]

Of course, while the Democrats like to scream and yell about Amazon not paying taxes they will be sure to include many hidden gems in the new tax code for him to keep legally not paying taxes so he can continue to donate to their campaigns! While the small to medium sized businesses devastated by their ineffective lock-downs will bear brunt of the Biden tax increases.

Democrats: Party of the ultra-Rich. Always has been, always will be.

[Mark 65]

I think we can safely say both sides of US politics are "of the ultra-rich", they just differ in how they serve their masters.

[Anonymous Coward]

Isn't it just time to go full corporate and get rid of government. We are pretty much there anyway so why continue to pretend.

But then again who would be the villians? That's partly the role of politicos.