Amazon and Taxes: A Simple Primer
19th February 2019
Tyler Cowen, a Real Economist, explains it all to you.
The main reason Amazon as a corporate entity does not pay much in taxes is because the company so vigorously reinvests its profit. The resulting expensing provisions lower their tax liabilities, in some cases down to zero or near-zero. That is in fact the kind of incentive our tax system is supposed to create, and does so only imperfectly, noting that many economists have suggested moving to full expensing.
Jeff Bezos has deliberately chosen a business strategy that minimizes nominal profit. That value, rather than being siphoned off by the government, goes toward increasing share value for shareholders. Look at a chart of Amazon’s share price over the last ten years if you don’t believe it. That’s why Jeff is now the Richest Guy In The World;; his wealth is primarily in Amazon stock.
Amazon pays plenty in terms of payroll taxes and also state and local taxes. Nor should you forget the taxes paid by Amazon’s employees on their wages. Not only is that direct revenue to various levels of government, but the incidence of those taxes falls somewhat on Amazon, which now must pay higher wages to offset the tax burden faced by their employees.
Remember that the next time that proglodytes lie to you and say that Amazon pays no taxes.