Amazon, the e-commerce giant helmed by the world’s richest man, paid no federal taxes on profit of $11.2 billion last year, according to an analysis of the company’s corporate filings by the Institute for Taxation and Economic Policy (ITEP), a progressive think tank.
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Thanks to a variety of tax credits and a significant tax break available on pay handed out in the form of company stock, Amazon actually received a federal tax rebate of $129 million last year, giving it an effective federal tax rate of roughly -1 percent.
It is the second year in a row the company has enjoyed a negative federal tax rate on a multibillion dollar profit. That would place the company’s effective federal tax rate below the rate paid by the poorest 20 percent of American households, which had an effective federal tax rate of 1.5 percent in 2015, according to the Tax Policy Center.
“Amazon pays all the taxes we are required to pay in the U.S. and every country where we operate, including paying $2.6 billion in corporate tax and reporting $3.4 billion in tax expense over the last three years,” said an Amazon spokeswoman, Jodi Seth, in a statement. “We have invested more than $160 billion in the U.S. since 2011, building a network of more than 125 fulfillment and sortation centers, air hubs and delivery stations as well as cloud-computing infrastructure and wind and solar farms.”
(Amazon founder Jeffrey P. Bezos owns The Washington Post.)
Matthew Gardner, an ITEP senior fellow, called the situation a failure of American tax policy. “Their U.S. profits doubled in the last year. If anyone is ever going to be subject to the corporate income tax, you would hope it would be Amazon,” he said.
From 2009 to 2018, the company earned roughly $26.5 billion in profit and paid approximately $791 million in federal taxes, for an effective federal tax rate of 3.0 percent for the period, according to ITEP’s analysis. That is well below the statutory 35 percent corporate tax rate in effect for most of that period, as well as the 21 percent rate ushered in last year with 2017′s Tax Cuts and Jobs Act.
Like many other large companies, Amazon reduces its effective tax rate each year using a variety of credits, rebates and loopholes. For Amazon, the most lucrative of those was a tax break for pay given out in the form of stock options, which allowed the company to shave roughly $1 billion off its 2018 tax bill, Gardner said. That would represent nearly half of the total federal tax bill levied on the company’s profit of $11.2 billion, he said.
Previous ITEP analysis has shown that between 2008 and 2015, profitable Fortune 500 companies paid an average effective federal tax rate of 21.2 percent, well under the statutory 35 percent rate in effect in that period. One hundred of the companies had paid zero or negative tax in at least one profitable year, and 58 of them had multiple zero-tax years while being profitable.
“By all indications, Amazon appears to be using the tax breaks that Congress has made available,” Gardner said.
But he added that in the long-standing environment of federal budget deficits, when a company such as Amazon avoids billions in taxes, that money will ultimately have to come from somewhere. “It could take the form of two billion cut out of infrastructure spending,” he said. “Or it could take the form of tax hikes down the road at some level on someone else, probably middle-income families and small businesses.”
Gardner says that most of the tax breaks used by profitable businesses to reduce or eliminate their tax burdens were instituted at the behest of deep-pocketed and well-connected corporate lobbyists. “In a political system that runs on private money, it’s always going to be hard to vote against the folks who have the money,” he said. “Companies haven’t been shy about pouring millions of dollars to prop up a system that benefits them.”
Research has shown, for instance, that congressional offices give serious consideration to input from business groups in crafting legislation. Surveys have shown that many staffers acknowledge changing their minds on issues after speaking with lobbying groups, and that they view correspondence from businesses as more representative of constituent opinion than letters from regular citizens. Political scientists think these factors partly explain why, in cases in which business interests and public opinion diverged, Congress has often come down on the side of the former.
Amazon recently canceled plans to build a campus in New York City after fierce opposition from local activists, unions and politicians incensed over the $3 billion in state and local incentives promised to the company to sweeten the deal. “Rather than seriously engage with the community they proposed to profoundly change, Amazon continued its effort to shake down governments to get its way,” New York state Sen. Michael N. Gianaris (D-Queens) said in a statement. “It is time for a national dialogue about the perils of these types of corporate subsidies.”
FAQs
Thanks to a variety of tax credits and a significant tax break available on pay handed out in the form of company stock, Amazon actually received a federal tax rebate of $129 million last year, giving it an effective federal tax rate of roughly -1 percent.
How much did Amazon pay in federal income taxes last year? ›
Amazon (ticker: AMZN) reported $35 billion in U.S. pretax income for fiscal 2021, but is taxed at a federal income-tax rate of 6%, according to a report from the Institute on Taxation and Economic Policy, an advocacy group. The Seattle company paid $2.1 billion in taxes that year.
Why did Amazon not pay federal taxes? ›
The biggest reason is pretty simple. When companies pay their employees with restricted stock, as Amazon does, the tax code allows them a deduction for the value of the restricted stock when the employees have full access to that stock, and can actually sell it (on the vest date).
What corporations paid no taxes in the US? ›
In fact, at least 55 of the largest corporations in America paid no federal corporate income taxes on their 2020 profits, according to the Institute on Taxation and Economic Policy. The companies include names like Whirlpool, FedEx, Nike, HP and Salesforce.
Did Amazon pay no taxes in 2018? ›
In 2018, Amazon posted income of more than $11 billion, but the company paid $0 in federal taxes. In fact, thanks to tax credits and deductions, Amazon actually received a federal tax refund of $129 million. That was a year after Amazon received a $137 million refund from the federal government for 2017.
Why are Amazon taxes so high? ›
Amazon is the world's largest online retailer and must comply with state tax codes in many different jurisdictions. Third-party sellers on Amazon are responsible for paying state taxes in states where they have a significant presence or "nexus."
Who pays the most taxes in the US? ›
Although most Americans believe the middle class bears the heaviest tax burden, it's actually the top 1% who pay the highest federal tax rate, at 25.9%, the Tax Foundation analysis found.
Why do billionaires not pay taxes? ›
Billionaires (usually) don't sell valuable stock. So how do they afford the daily expenses of life, whether it's a new pleasure boat or a social media company? They borrow against their stock. This revolving door of credit allows them to buy what they want without incurring a capital gains tax.
What company pays the most taxes? ›
These are the companies paying the most in taxes:
- ExxonMobil. • Income tax expense: $31.05 billion. ...
- Chevron. • Income tax expense: $20.00 billion. ...
- Apple. • Income tax expense: $14.21 billion. ...
- Wells Fargo. • Income tax expense: $9.10 billion. ...
- Wal-Mart. • Income tax expense: $7.98 billion. ...
- ConocoPhillips. ...
- JPMorgan. ...
- Berkshire Hathaway.
Currently, wealthy households can finance extravagant levels of consumption without even paying capital gains taxes on the accruing wealth by following a “buy, borrow, die” strategy, in which they finance current spending with loans and use their wealth as collateral.
The corporations that paid little or no taxes in 2021 include some of the nation's biggest companies, such as Amazon.com, AT&T, Charter Communications and AIG, according to the report, which analyzed financial filings for Fortune 100 companies.
Who doesn't pay taxes in the USA? ›
Who Does Not Have to Pay Taxes? Generally, you don't have to pay taxes if your income is less than the standard deduction, you have a certain number of dependents, working abroad and are below the required thresholds, or are a qualifying non-profit organization.
Where in the US has no taxes? ›
Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming do not levy state income taxes, while New Hampshire doesn't tax earned wages. States with no income tax often make up the lost revenue with other taxes or reduced services.
Why does Amazon not pay any federal taxes? ›
Amazon largely pays no corporate tax precisely because it reinvests those profits into its operations. Under a scenario where Amazon had no corporate tax breaks, it would disincentive the company from reinvesting and thus creating greater opportunity for the businesses and cities in which it operates.
How to not pay tax on Amazon? ›
Individuals or businesses may qualify to make tax-exempt purchases. Our Amazon Tax Exemption Program (ATEP) supports tax-exempt purchases for sales sold by Amazon, its affiliates, and participating independent third-party sellers. The Amazon Tax Exemption Wizard takes you through a self-guided process of enrollment.
Does Amazon Prime have no taxes? ›
Your Prime Membership may be subject to sales tax in some states. To know more about taxes, go to Tax on Amazon Prime. To cancel your Amazon Prime membership, go to Manage Prime Membership.
How much did Jeff Bezos pay in federal taxes? ›
For instance, ProPublica's report showed that between 2014 and 2018, Bezos paid $972 million in total taxes on $4.22 billion of income. Meanwhile, his wealth grew by $99 billion, meaning the true tax rate was only 0.98% during this period.
What company pays the most in taxes? ›
These are the companies paying the most in taxes:
- ExxonMobil. • Income tax expense: $31.05 billion. ...
- Chevron. • Income tax expense: $20.00 billion. ...
- Apple. • Income tax expense: $14.21 billion. ...
- Wells Fargo. • Income tax expense: $9.10 billion. ...
- Wal-Mart. • Income tax expense: $7.98 billion. ...
- ConocoPhillips. ...
- JPMorgan. ...
- Berkshire Hathaway.
Amazon annual gross profit for 2023 was $270.046B, a 19.94% increase from 2022. Amazon annual gross profit for 2022 was $225.152B, a 14.01% increase from 2021. Amazon annual gross profit for 2021 was $197.478B, a 29.28% increase from 2020.
Does Walmart pay federal taxes? ›
Walmart annual income taxes for 2024 were $5.578B, a 2.55% decline from 2023. Walmart annual income taxes for 2023 were $5.724B, a 20.35% increase from 2022. Walmart annual income taxes for 2022 were $4.756B, a 30.65% decline from 2021.
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