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Amazon (Finally) Had to Pay Federal Taxes in 2020

Dan Clarendon - Author

Mar. 11 2021, Published 4:02 p.m. ET

If you haven’t realized how Amazon manages not to pay taxes, consider this March 1 tweet from Gravity Payments CEO Dan Price: “As a small business owner, I pay more in federal income taxes than Amazon, which is worth $1.6 trillion more than my business.”

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Price, the same businessman who famously cut his salary by a million dollars in 2015 to pay his employees a minimum wage of $70,000, went on: “So what would really help small business owners like me compete with big corporations? Tax them.”

How did Amazon not pay taxes?

In 2018 and 2019, Amazon paid $0 in federal taxes, despite its taxable income rising from $5.6 billion in 2017 to $11.2 in 2018, according to CNBC. In fact, the retail giant got a federal tax refund of $129 million in 2019.

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Jeff Bezos
Source: Getty Images

Amazon CEO Jeff Bezos

“For those who don’t have a pocket calculator handy, that works out to a tax rate of negative 1 percent,” the Institute of Taxation and Economic Police pointed out in a report. “The fine print of Amazon’s income tax disclosure shows that this achievement is partly due to various unspecified ‘tax credits’ as well as a tax break for executive stock options.”

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The ITEP report also said that the Tax Cuts and Jobs Act of 2017 failed to “close a slew of tax loopholes that allow profitable companies to routinely avoid paying federal and state income taxes on almost half of their profits.”

Amazon did note in a corporate filing, though, that it would pay $756 million for state and international taxes in 2019, according to CNBC.

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How much did Amazon pay in taxes in 2020?

Amazon couldn’t get out of paying federal taxes in 2020: The company had to pay $162 million in federal income, or about 1.2 percent of its $13.9 billion of pre-tax income, as CNBC reported at the time.

That 1.2-percent tax rate is a far cry from the 21-percent federal corporate tax rate, though, and CNBC speculates that the company again used tax credits and deductions to avoid most of its tax burden.

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Amazon’s tax bills have come under fire in recent years. In 2020, U.S. Senator Bernie Sanders (I-Vt.) tweeted, “If you paid $12.99 a month for an Amazon Prime membership, you paid more to Amazon than it paid in federal income taxes over the past 3 years combined — after making nearly $30 billion in profits. Yes. It’s time to make corporations pay their fair share of taxes.”

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And in 2019, then-presidential candidate Joe Biden tweeted about Amazon’s $0 tax bills. “I have nothing against Amazon, but no company pulling in billions of dollars of profits should pay a lower tax rate than firefighters and teachers,” he wrote at the time. “We need to reward work, not just wealth.”

Replying to Biden’s post, Amazon tweeted: “We’ve paid $2.6 billion in corporate taxes since 2016. We pay every penny we owe. Congress designed tax laws to encourage companies to reinvest in the American economy. We have. $200 billion in investments since 2011 and 300,000 US jobs. Assume VP Biden’s complaint is with the tax code, not Amazon.”


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