Amazon paid $0 in income taxes last year

Published on: February 20, 2019 / Updated on: February 21, 2019 – Author: Konrad Wolfenstein

Amazon paid $0 in income taxes last year – @shutterstock | Sundry Photography

For the second year in a row, Amazon paid zero dollars in federal taxes despite doubling its profits, according to a report published last week by the Institute on Taxation and Economic Policy, which raises serious questions about the tech giant's tax-paying habits. In 2017, its pre-tax profit was $5.6 billion, rising to $11.2 billion last year. The statutory income tax rate in the U.S. is 21 percent, and Amazon reported a $129 million income tax credit, which equates to a tax rate of -1.2 percent.

In 2017, the company also received a $140 million tax break, equivalent to a tax rate of -2.5 percent. Senator Bernie Sanders was among those who criticized Amazon following the ITEP report, tweeting: “If you paid the $119 annual fee to become an Amazon Prime member, you paid more to Amazon than it paid in taxes.”.

Amazon made headlines last week after it scrapped plans to open a large new corporate campus in New York City. The decision to postpone the move was welcomed by critics, including many Democrats who opposed the massive subsidies the city offered to attract Amazon. Mayor Bill de Blasio was a staunch supporter of the campus, claiming it would bring enormous economic benefits and create 25,000 jobs. On Sunday, he criticized Amazon's decision to close the deal, calling it "an example of corporate power abuse.".

For the second year in succession, Amazon has paid zero dollars in federal taxes, despite doubling its profits. That's according to a report released last week by the Institute on Taxation and Economic Policy which raised serious questions about the tech giant's tax-paying habits. In 2017, its pretax profits were $5.6 billion and they soared to $11.2 billion last year. The statutory income tax rate in the US is 21 percent and Amazon reported an income tax rebate of $129 million. That works out at a tax rate of -1.2 percent.

In 2017, the company also experienced a tax rebate to the tune of $140 million, making for a -2.5 percent tax rate. Senator Bernie Sanders was among those criticizing Amazon in the wake of the ITEP report and he tweeted that “If you paid the $119 annual fee to become an Amazon Prime member, you paid more to Amazon than it paid in taxes”.

Amazon was already in the headlines last week after it axed plans to open a major new corporate campus in New York. The decision to shelve the move was welcomed by critics, including many Democrats, who were against the huge subsidies the city was offering to lure Amazon. Mayor Bill de Blasio was an avid supporter of the campus, claiming it would have huge economic benefits and create 25,000 jobs. On Sunday, he criticized Amazon's decision to pull the deal, calling it “an example of an abuse of corporate power”.

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No taxes despite billion-dollar profits

Amazon reported $10.8 billion in pre-tax profit (before deducting US federal taxes) for 2018. Despite this, the company didn't have to pay any taxes – quite the opposite. According to an analysis by the Institute of Taxation and Economic Policy (ITEP), the company received a tax credit of $129 million. This marks the second consecutive year that Amazon has had a negative tax rate. However, even in previous years, the company paid relatively modest amounts to Washington. From 2009 to 2018, the tech giant paid $791 million in taxes on profits of approximately $26.5 billion – equivalent to an effective federal tax rate of three percent.

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