Amazon made $11.2billion in profits in 2018 but paid no federal tax. This tech giant is the leading online shopping MNC with an annual revenue of $232.887billion. However, it recently scrapped plans to build a second headquarter in New York after facing backlash over a proposed $3billion in tax subsidies. Opponents questioned why a company as successful as amazon should be lured to NY with taxpayer’s cash. Especially after the report by the Institute on Taxation and Economic Policy (ITEP) published a report showing Amazon was not paying a single cent in income taxes for the second year in a row.
In 2018, Amazon nearly doubled its profits, from $5.6bn to $11.2bn. But far from paying the statutory 21% income tax rate, it reported a $129m federal income tax rebate for the year – a tax rate of -1%.“You can’t lay the blame too much on Congress,” said Gardner. “It wasn’t Congress that came up with these ideas. They are the product of a lobbying blitz from these companies. These companies wrote the law in many cases.”
In a statement sent to the Guardian after the publication of this article, Amazon said it “pays all the taxes we are required to pay in the US and every country where we operate, including paying $2.6bn in corporate tax and reporting $3.4bn in tax expense over the last three years. “Corporate tax is based on profits, not revenues, and our profits remain modest given retail is a highly competitive, low-margin business and our continued heavy investment.”
Given this enlightenment, it is fairly obvious the power that MNCs hold when it comes to lobbying for policies that are in their favour. If a company like amazon cannot be accounted to pay taxes than the burden of generating tax revenue becomes heavier for the average citizen. Yes, a company this big is positively productive for the economy as they generate jobs, investments and pay other stake holders in the supply chain. But, this company’s operations does not economically add any value to anyone not affiliated with amazon. However, the billions that they can provide in taxes can be used to finance several social projects and infrastructure development.
References
Rushe, Dominic (2019) Amazon made an $11.2bn profit in 2018 but paid no federal tax. Retrived from
https://www.theguardian.com/technology/2019/feb/15/amazon-tax-bill-2018-no-taxes-despite-billions-profit