Jeff Bezos endorses higher corporate tax to fund infrastructure

Washington, April 8 2021: Amazon which has in the past often been criticized for using tax evasion tactics, is now on the track to lead higher corporate taxation reforms.

The rationale behind the tax reform is to build infrastructure by adopting a “balanced solution that maintains or enhances US competitiveness.” 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. This is partly attributable to the Trump-backed 2017 reform which cut business taxes.

Amazon also benefited from “depreciation breaks” on its investments and on stock options. After unveiling his $2Trillion dollar development program, President Joe Biden, singled out Amazon as an example of tax evasion. In 2019, he said “the biggest companies in the world, including Amazon… pay not a single, solitary penny of federal income tax.”

On the other hand, 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. They say American tax laws have been designed so businesses reinvest in the economy. They say the company paid billions more in payroll taxes, customs duties and state and local taxes. Experts say Amazon and other firms often use tax planning tools to outmaneuver authorities, but mostly are just taking advantage of what the law allows.

Amazon’s desire to now lead the charge on higher corporate taxation comes amid a debate on harmonizing international tax rates for multinational firms to limit use of tax havens. Corporate tax dodging hurts ordinary Americans by reducing resources for public infrastructure development and the tax code is constantly being pressured as companies take advantage of incentives designed to spur growth.

Accounting allows for asset investments to be deducted from profits before taxation so Amazon can take advantage of its massive investments in warehouses and other services. A company that is growing can pay less current tax and more as they have matured. Some firms may use losses from one year as a write-off of profits in the following year or deduct stock options which create a tax liability for the executives receiving them. Even more threatening is the practice of shifting or transferring profits globally.

Analysts believe Amazon’s support for a higher tax rate might not make a major difference if the company is still able to deduct similar expenses. Amazon may be looking to win favor with the Biden administration in international negotiations as some countries seek to impose new taxes on US digital platforms, hence the need for government support to avoid double taxation.

Stay tuned to BaaghiTV for latest news and Updates!

Fighting anti-Asian racism, one story at a time

Disagreement in Spanish parliament over controversial bail out of Venezuela-linked airline

Authorities concerned over spike in Corona virus cases in Michigan

 

 

Leave A Reply

Your email address will not be published.