A tax code that favors corporations over the wealthy allowed Amazon to avoid billions of dollars in federal income taxes in 2021, according to a new report.
According to the Institute on Taxation and Economic Policy (ITEP), the tech behemoth reported record profits last year, raking in $35 billion – 75 percent more than they made in 2020, which was also a record year for the company.
Despite these record profits in 2021, the company paid a federal tax rate of 6.1%, or $2.1 million, on its income. If the company hadn’t benefited from tax breaks and had paid the already low statutory corporate tax rate of 21 percent, it would have paid $7.3 billion in federal tax. This means that $5.2 billion worth of corporate taxes was avoided by the company last year.
The company has only paid a 5.1 percent effective tax rate since 2018. In 2018 and 2019, Amazon’s tax dodging was especially egregious; in 2019, the company paid 1.2 percent in federal income taxes. The previous year, Amazon paid a negative 1.2% tax rate. This means that it received more from the government than it paid in taxes.
“It has been well documented for decades that Amazon’s strategy for retail dominance rests on two tactics: avoiding taxes and using the savings to finance a slow strangulation of its retail competition,” the authors of the ITEP report wrote. “First at the state and local level, then federally and internationally, Amazon has bullied lawmakers into bending tax laws to its advantage and made that the source of its competitive advantage over small businesses in the retail space.”
In their calculations, the report’s authors took into account tax credits, excess stock option deductionsOther tax breaks. They pointed out that Congress can end these tax incentives if they have the political will to do so.
Large corporations engage in corporate tax dodging. Last week, ITEP reported that NetflixLast year, the company also avoided a large amount of federal income taxes. Though it made record profits in 2021 – nearly doubling its profits over 2020 – the company paid only $58 million in taxes, or a 1.1 percent rate. This means that the company paid over $1 billion in tax last year.
Sen. Bernie Sanders (Irish-Vermont), responded to the report reiterated the progressive callTo tax the rich. “Corporate greed is Netflix making a record-breaking $5.1 billion profit, giving its CEO $43 million in total compensation, avoiding over $1 billion in taxes and paying a 1.1 percent effective federal income tax rate – a lower tax rate than a nurse, teacher or truck driver,” he said.
The ITEP report authors noted that Congress can implement simple reforms such as the extremely popularLarge corporations will be unable to avoid taxes by paying a lower corporate minimum tax rate in the future. The corporate minimum tax would Establish a minimum tax rate15% for profits exceeding $1 billion. It would also levy the tax on book profits – the profits that the company reports to shareholders – rather than the deflated profits that the company reports to the government.
Although Democrats were open to including the corporate minimum tax within the Build Back Better Act of 2010, the Democrats lost out. corporate-backedSen. Joe Manchin (D. West Virginia), declared that the bill was now dead.
The government will continue to lose billions of dollars each year due to tax dodging if it does not reform its tax system for corporations. ITEP reported last year that there were a total of 1.2 billion dollars in revenue lost to tax dodging. that 20 corporationsIn 2020, they paid $0 in federal taxes. Many companies have a negative tax rate due to tax break provisions. Companies like Nike and FedEx were tax dodgers, as well as energy companies like American Electric Power or Duke Energy.