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Technology

Longtime tax target Amazon now leads charge for reform

  • Amazon has defended its policies, engaging in heated debated with political leaders at times, saying that its investments offset taxes as intended by the tax code.
08 Apr 2021

WASHINGTON: A longtime lightning rod for critics of corporate tax avoidance, Amazon now wants to lead the way on reform.

Amazon chief executive Jeff Bezos this week endorsed a higher corporate tax to help fund infrastructure as part of a "balanced solution that maintains or enhances US competitiveness."

The move by Amazon comes after years of criticism by activists who claim it pays little or no corporate taxes.

According to the Institute on Taxation and Economic Policy, an advocacy group, Amazon had an effective 9.4 percent federal income tax rate last year on profits of $20 billion after two years of paying no taxes.

The low rate is partly explained by the Trump-backed 2017 reform which cut business taxes. But Amazon also benefitted from "depreciation breaks" on its investments and on stock options, according to the institute.

President Joe Biden, who is proposing a $2 trillion infrastructure program funded in part by increasing the corporate tax rate from 21 percent to 28 percent, last month singled out Amazon as an example of corporate tax avoidance.

Biden referred to a 2019 study showing many of "the biggest companies in the world, including Amazon... pay not a single, solitary penny of federal income tax," the president said.

Amazon has defended its policies, engaging in heated debated with political leaders at times, saying that its investments offset taxes as intended by the tax code.

"We pay every penny we owe. Congress designed tax laws to encourage companies to reinvest in the American economy," Amazon tweeted in response to a 2019 comment from Biden as a candidate.

Amazon noted that its tax provision from last year -- the closest approximation to federal taxes paid -- was $1.7 billion, and that it paid billions more in payroll taxes, customs duties and state and local taxes.