Amazon is one of the world’s largest companies, raking in billions of dollars in revenue annually. In fact, this year’s total was $10 billion. The fact that the world’s third-largest corporation paid no federal taxes in 2017 or 2018 may therefore come as a surprise.
Matthew Gardner, a liberal economist and thinker, says this is not a case of tax evasion or fraud in any sense. Because of a provision passed by Congress, Amazon will be tax-exempt for two years. The government gives tax credits to companies that operate at a loss in order to reduce their future tax burden. Amazon has benefited immensely from this policy, as the corporation suffered losses of close to $3 billion in its early years.
After then, there was a dramatic shift in profits and losses, culminating in a $241 million loss in 2014. Since then, Amazon has made enough money to cover these losses and many more times over. As a result, they were able to avoid paying federal taxes on many of their international sales.
According to a 2017 bill, they even bought equipment for which they could claim tax credits. In addition, they earned tax credits for research and development. There were $137 million in 2017 credits, and $129 million in 2018 taxes. As a result, the corporation was able to avoid paying any taxes this year.
It is argued by policymakers that such a rule is in place to encourage massive corporations like Amazon to increase their investment levels in research and development. They think it helps the business expand and, in the long run, it will result in higher tax revenues. The argument goes that if they were forced to pay more taxes, they would generate more jobs that would benefit the general public, but Matthew Gardner disagrees. The non-payment of federal taxes by Amazon has sparked a wide range of viewpoints.