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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsAmazon will pay $0 in federal income taxes on $11.2 billion in profit..AOC asks WHY
Alexandria Ocasio-Cortez Retweeted FORTUNE
Amazon is paying $0 in taxes on $11+ billion in profit.
$0 for schools.
$0 for firefighters.
$0 for infrastructure.
$0 for research and healthcare.
Why should corporations that contribute nothing to the pot be in a position to take billions from the public?
@FortuneMagazine
Amazon will pay $0 in federal income taxes on $11.2 billion in profit.
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spanone
(137,366 posts)
Dennis Donovan
(23,722 posts)<snip>
"Amazon is on its heels," said Zephyr Teachout, a professor at Fordham Law School and a critic of Amazon's HQ2 plans in New York who has also opposed one of its chief proponents, New York Governor Andrew Cuomo. "There are many reasons it pulled out, but one of them has to be that they were suddenly getting their entire business model scrutinized after years of mostly glowing coverage."
The goodwill Amazon gained over the years through its fast delivery and low prices evaporated enough that New Yorkers protested its arrival in their city. Large, taxpayer-funded subsidies to bring Amazon to New York may have been a step too far. An Amazon spokesman did not comment for this article beyond its public statement.
"They treat sellers like Monsanto/Bayer treats farmers; workers like Walmart, and politicians like Foxconn," Teachout said. "It's a triple negative that will only grow as people learn more."
It's possible Amazon's HQ2 180 won't be viewed as a failure in the future. Amazon put relatively little money into the project, and it hasn't broken ground on any businesses. The Fire Phone probably cost Amazon more money than HQ2 in the end.
But Amazon took one on the chin Thursday. It's a financial success story now, but Amazon's reputation has been damaged.
riverine
(516 posts)Amazon, the ubiquitous purveyor of two-day delivery of just about everything, nearly doubled its profits to $11.2 billion in 2018 from $5.6 billion the previous year and, once again, didn’t pay a single cent of federal income taxes.
The company’s newest corporate filing reveals that, far from paying the statutory 21 percent income tax rate on its U.S. income in 2018, Amazon reported a federal income tax rebate of $129 million. For those who don’t have a pocket calculator handy, that works out to a tax rate of negative 1 percent. 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.
....
In fact, the Trump Administration and its congressional allies included lavish new giveaways such as immediate expensing of capital investments. Multiple analysts scored the tax law as a huge revenue loser, giving away far more to big corporations in rate cuts than it takes in loophole-closers.
If true, it allows Amazon to immediately expense their vast investments in data centers for Amazon Web Services - their biggest money maker.
TexasBushwhacker
(20,617 posts)I understand that for a multinational company, income will be earned in many different places and therefore income taxes will be due all over the globe. HOWEVER, Amazon made billions here in the US too. Therefore, they should be paying taxes here in the US, not getting tax rebates.
The previous maximum tax rate of 35% was misleading because, with all the loopholes and deductions, no companies paid that marginal rate. Trump dropped the tax rate to 21% without getting rid of all the loopholes and it will cost us over $1 Trillion per year until it's fixed.
Blue_true
(31,261 posts)The problem is that once it is changed, corporations find the loopholes that lobbyists got built into the new tax code.
One tax code change would be to charge Amazon and others income tax where an item is sold, with the country where the item was sold collecting the tax. Amazon and others would not be allowed to writeoff taxes that it paid to say, Switzerland against it's US taxes, and it would be responsible for every penny of tax on items that it sold here. In terms of writing off investments and equipment, companies like Amazone should only be able to write off that which was responsible for USA sales. I bet it's tax bill would not be zero after that.
RussBLib
(9,551 posts)or rationalized. I don't hear anyone even trying to justify it.
We let corps get away with bloody murder in this country. Remember of the people, by the people, and for the people?
bhikkhu
(10,754 posts)They built up a huge global company in a relatively short period of time at great expense, and ran huge losses up until a few years ago. That's common in businesses starting out, though the scale of Amazon is pretty uncommon.
Corporate taxes are only on profits. If you don't have profits you don't pay taxes. If you have a loss one year you can carry that over to the next year. So if you lose $100 million in one year, no taxes. On the books that gets recorded as a "tax credit". If you make $100 million the next year you can apply that tax credit. Technically you figure the amount owed as per normal and it goes on the books as "tax", but its "paid" by using the tax credit from previous losses rather than with actual money.
Amazon, in their 2017 financials, had something like $855 million in losses they were carrying forward as available tax credits. That will last them a little while, but not long really at the rate they are going.
All of which has been normal for all kinds of businesses everywhere since we had corporate taxes. The thing that would make a difference, I think, would be to tax gross income rather than profits. Even a .05% tax on gross income would be a huge game-changer.
Tax corporations more like people. I'm taxed on my full income, even if I don't make enough to live on. If I have no "profit" (no money left over after necessities are paid for), the tax man still gets paid. Fair would be either tax people like corporations are taxed, or treat corporations the same as people.
KentuckyWoman
(6,845 posts)Exactly this.
Blue_true
(31,261 posts)As an individual, if you lose big on investments one year, but the next year you clean up, guess what, you can't charge all of last year's loser against the big pile this year, there is a limit. I am not an accountant, but if Amazon charge tax loses dollar against dollar of present year taxes owed, that is something that individuals and small business owners can't do, that is wrong.
TexasBushwhacker
(20,617 posts)is using the infrastructure of the US. It's interests are protected by our military. It benefits in any number of ways from things that are provided by our federal government. Therefore it should PAY for them.
They could do the tax on gross sales as an Alternative Minimum Tax, but I think it should be higher, at least 1 %. For Amazon, with $200 Billion in sales, that would mean a $2 Billion tax payment, not subject to any kind of credits or exemptions.
radius777
(3,768 posts)We need a way to fairly tax corporations, so that they support the public sphere (roads, bridges, schools, etc) which helps make their private enterprise possible - while not having such onerous taxes/regulations that it creates an anti-business atmosphere that stifles growth.
panader0
(25,816 posts)These things are what cause revolutions.
onenote
(44,089 posts)I don't pay any more in taxes than the law requires me to pay and I don't know anyone else who does. And I don't expect Amazon to pay more than the law requires. The problem is with lawmakers who have enacted a tax code under which Amazon is able to avoid paying taxes.
jodymarie aimee
(3,975 posts)she uses the word WHY..
gtar100
(4,192 posts)of corporate lobbyists pushing for those rules. "Tax incentives" are literally defined by them and the lawmakers turn around and work to put it into the code (not likely out of the goodness of their heart or sound reasoning in the public interest...but I digress). To imply they are just following the rules and it just happened to work out that they don't have to pay any taxes on profit is misleading. Being a lobbyist for major corporations is a very well-paid position for a reason.
onenote
(44,089 posts)gtar100
(4,192 posts)If only more would resist.
Blue_true
(31,261 posts)Anytime humans are involved in something, expect corners to be cut.
Kurt V.
(5,624 posts)Someone that rich thinking they shouldn't be paying some tax isn't exactly innocuous.
AOC's action changed none of that. She did, however, chase 25,000 new jobs out of NYC.
JHB
(37,322 posts)Blas & Cuomo cut a top-down deal and there was local resistance they didn't bother to bring on board. What does any of that have to do with AOC?
Last edited Sat Feb 16, 2019, 11:36 PM - Edit history (1)
She jumped in front of it and grabbed the headlines (as usual).
Honeycombe8
(37,648 posts)"we could use that $3 billion for our district."
She doesn't have a basic understanding of these deals to lure new business. I take your word that it wasn't in her district. But more than that, there is no $3 Billion. The $3 billion was NEW MONEY being brought in, that does not exist. In addition to the billions of other dollars the deal would have brought in.
Amazon will be better off going where it's wanted. Maybe they'll go to Dallas, TX...mid-center of the country with a major airport and lots of land and lots of workers. And the state, whatever its faults, is expert at cutting deals to lure big business. They know how to strike the balance...the state makes sure it wins in the long run, but the companies get good deals to lure them in. The residents are also business friendly. They get downright excited whenever a new big business moves in. Jobs jobs jobs. New stores spring up. Real estate booms. A big influx of money into the area.
marybourg
(13,015 posts)and public officials may be the start of changing that.
Honeycombe8
(37,648 posts)Or that Exxon and GE didn't pay taxes, either, in some years. This is reported in the news every now and then.
DeminPennswoods
(15,937 posts)For one, I'm glad AOC is able to and is shining a light on these corporate tax giveaways.
Horizens
(637 posts)That corporations receive tax giveaways is well known. She didn't shine the light on any deep secrets.
DeminPennswoods
(15,937 posts)People might know about the giveaways and grumble about it privately, but AOC has given this issue a national spotlight and conversation that it hasn't had before.
Adrahil
(13,340 posts)Also, AOC’s giddy celebration at the loss of 25,000 jobs in NYC is going to play over and over on screens next fall. Sometimes we are our own worst enemy.
pangaia
(24,324 posts)whether there really WOULD ever be that many or whatever number of jobs, what they would pay, etc etc etc... and other issues.
But I agree, her 'celebrating' is not the way to go about it..
I'm still way on her side..... but, yeah, a little new at this, perhaps.....
Adrahil
(13,340 posts)Honeycombe8
(37,648 posts)there's a huge snowball effect in other ways, besides just the business.
They bring in some of their own employees, and hire new ones locally. The new employees need housing (a localized real estate boom, which increases state property tax revenues), new products and services businesses open to service them, retail sales go up, new grocery stores open, the unemployment rate goes down, sales taxes on products and services increase, the area improves infrastructure if needed to support the new businesses.... More airline flights to support the new international business.
The trick is not to give more of a break on taxes to the new business than the state and area can recoup in a reasonable length of time. $3 Billion didn't sound like that much for a business that size (La. gave a business a $20 Billion break over 10 years, which was too large). But I don't know.
Some people don't understand how this sort of thing works...luring big businesses to the state and area.
gtar100
(4,192 posts)These large corporations move in to a place always with the promises of jobs and time after time the long-term effect is the the dissolution of small businesses and the uniqueness of the community.
Large corporations, particularly those whose purpose is distribution and not manufacturing, certainly create a greater efficiency and ratio of income to expenses but isn't it obvious by now that we are losing the benefits of individual contributions to what makes our lives worth living? Big corporations are powerful wealth generators but are they really always a net positive to the quality of life as a whole? The inequity of wealth distribution reveals a great danger in blindly believing big is better.
Adrahil
(13,340 posts)Keeping in mind that this was a headquarters... bringing in relatively high paying jobs that would have likely spurred the creation of local businesses.
I hear people lamenting consolodation, but what's the answer? This debate has raged for hundreds of years.
gtar100
(4,192 posts)regulations that do not pass hidden costs onto local communities (i.e., environmental impacts, etc.). Taxation that compensates communities for impacts and fair use of local services. Incrementally assess those impacts at state and federal levels. Copy the success of nature which is a result of biodiversity, not monoculture, suited to local conditions. Our economics should be emulating that instead of the simplistic profit motive of unregulated capitalism. That's the gist of it, details would take an essay or book. Better minds than mine have come up with all sorts of good ideas.
Adrahil
(13,340 posts)For ensuring larger corporations carry their fair burden. I'm all for it.
But for the kind of stuff Amazon sells? I don't wanna have to go to 5 little local shops that might or might not have what I want/need. Amazon is winning because people PREFER them.
gtar100
(4,192 posts)We decide our future on every decision we make. It is what it is...and it will lead where it leads. As far as I can tell, all this convenience is wrecking unique cultural expressions throughout the country and making most places homogeneous across the states. People prefer these big retail chains for many reasons - convenience and prices probably the top two. But this trend has clearly not been kind to local communities as money is circulated less locally. The phenomenon of Walmart essentially sucked the money out of localities to the point of destitution in many places. But we're adjusting...to lower wages and the normalization of such practices. People are growing up now not even knowing an alternative way of life.
New York City has retail areas that still retain many small businesses and it's undeniable that they can be a lot more interesting on a cultural level compared to, say, Target where the address may as well be 123 Main Street, Anytown, USA. Amazon and online ordering may make it unnecessary to go out to shop anywhere - the "kind of stuff Amazon sells" is practically just about anything. Convenient, absolutely. Net effect - suck the money from every corner of the world into a centralized business. What do we get? Economic inequality.
What does nature demonstrate to be a sustainable model? Diversity and a uniqueness to each place. Why don't we build our economic models with this in mind? Obviously there would be fewer billionaires; is that a problem?
radius777
(3,768 posts)and higher prices.
Small businesses have a role to play, but for the most part over the past 40 years consumers have spoken clearly, that they much prefer big stores and big brands over small ones.
gtar100
(4,192 posts)Consumer preference does drive our economy. I'm not arguing that. But our implementations are very short-sighted. Doesn't the stink in the air, the trash on the streets of our cities, or the poisons in our rivers mean anything to anyone anymore? Fuck the future! I got a great deal on big screen!
Blue_true
(31,261 posts)Instead of potentially opening the vault to the likes of Anaon and other big corporations (all of them play that game), why not set up a soveign wealth fund using a piece of each year's tax revenue (say $150 million per year for six years). Use the wealth fund to back local startups for an ownership stake, have a society minded VC (Venture Capitalist) that know how to spot good ideas run the group that does the investing. In a decade, an effort like that will return for more revenue to the state and city that paying companies like Amazon to locate there. And once a startup becomes large, the city and state sell their ownership stakes and leave some in the fund while using the rest for public needs like repairs, roads, repairing the subway, ect. The VC will earn a lot and some people will scream about that, but if the VC launches several companies that will become significant, that is money well spent.
comradebillyboy
(10,403 posts)The Truth Is Here
(354 posts)L
In It to Win It
(8,969 posts)I think AOC has a point when she says Amazon should not be subsidized. They would have been using the city's and the state's resources so they should help pay for them.
PeeJ52
(1,588 posts)However the blame does lie with Congress and our tax structure and the Republican party most of all. This must be fixed. They knew they weren't fixing these loopholes when they lowered the tax rates. I'm OK with lowered tax rates. Let's close those loopholes and make them pay their 25%!
DemocracyMouse
(2,275 posts)against small business, they should being paying more, not less.
We need to go back to a 35% corporate tax rate AND close loopholes. US corporations are also going multinational and parking themselves in low-tax countries run by politicians on the payroll. We need an international political, nonviolent revolution to address this.
Corporations are sitting on trillions of dollars in cash while I cannot afford to send my child to college without sacrificing my retirement fund. That's a fucked up choice. I'd rather CHOOSE higher taxes on the wealthy by voting for informed, rational Democrats (otherwise labeled "liberals"
.
See Robert Reich on Corporate tax myths:
http://robertreich.org/post/57431623768
Adrahil
(13,340 posts)But small businesses are just not gonna compete with the Amazons of the world if they are just selling the same stuff Amazon does.
DemocracyMouse
(2,275 posts)which favor small business and civic activity, we will destroy the social fabric. As the grandchild of a civil engineer and a community activist, and a fan of Jane Jacobs, I am quite bothered by the digital equivalent emerging on the internet: all roads and tax policies favor large, cold business.
It's no wonder kids shoot up their schools. Everyone is alienated.
Adrahil
(13,340 posts)Of small town America? Sounds practical.
DemocracyMouse
(2,275 posts)SWBTATTReg
(23,833 posts)and pathetically, government blames us for not paying enough SS taxes to maintain SS (so they claim) and are always looking for other ways to increase taxes on the rest of us (vs. Amazon and the rest of corporate America). Remember the so called 'everybody will get a $4K bonus back from the 2017 tax cut and jobs act? I think it (the act) was named incorrectly, it should have been the '$4K to Corporate America' Tax Reassignment Act'.
No special kick to the economy has been detected. No special kick to the stock market. No massive pay raise has been given to the middle class. No cuts in prices of new cars, appliances, anything (except the opposite, prices are increasing instead) despite businesses have a big cut in the costs/taxes.
Nothing.
Note: There may have been a few instances where folks got something, but per news cycle of the last couple of weeks, the benefits of this tax cut pretty tapered off to zero by this year.
What gets me is why didn't Amazon pay any tax with the alternate minimum tax? I thought this was still around?
TexasBushwhacker
(20,617 posts)SWBTATTReg
(23,833 posts)income too (the AMT) on an annual basis. With $11 Billion Dollars in income, how in the heck did they get a break?
I thought Corporations were supposed to be treated like citizens like you and I so in my manner of thinking (I got hit with the AMT a couple of times over last 10 years) why, with this insane amount of money, nothing?
D_Master81
(1,892 posts)They said they off set this by limiting net operating loss deductions. But I imagine no AMT will be used far more than limited loss deductions.
SWBTATTReg
(23,833 posts)if oper. losses for company equals $1 million, can only take $500K of oper. losses. Of course if you apply this to 1000 businesses that all had losses (1000x$500000)=$500 million in total losses that the 1000 businesses can not take (1/2)? Thanks.
D_Master81
(1,892 posts)You can tell the tax code was written by the rich for the rich. Sure they will throw some crumbs to the bottom in the form of child tax credits and Earned Income credit. but much of the code is slanted to benefit those with power and influence.
Blue_true
(31,261 posts)excise taxes and auto loan interest payment deductions. I know that when I was just out of college and bought my first car, those were meaningful. I think they went away in 86 or 90. After that republicans have been Nickle and diming middle and lower class taxpayers ever since.
IronLionZion
(46,804 posts)to create 25,000 jobs.
Give me lots of money! I'll create some jobs too 
Blue_true
(31,261 posts)You only need maybe ten of them to make it to be walking in tall cotton (a southern term for doing well).
Autumn
(45,900 posts)of the tax revenue it generated. I worked for a company that did that. I had state taxes withheld from my paycheck that the company kept, my state taxes did not go to the state. Yet I always got a refund from the state for my state taxes. Taxes that the state did not get.
Response to Autumn (Reply #29)
Hassin Bin Sober This message was self-deleted by its author.
LAS14
(14,335 posts)They are not taxable, but here in the Boston area they pay big bucks to the municipalities they reside in for the services they get like police, fire, sewage, roads, etc., etc., etc. Why doesn't Amazon do that? Do they, maybe?????
Is there a technical term for this sort of contribution?
Response to LAS14 (Reply #32)
Apollyonus This message was self-deleted by its author.
bdtrppr6
(796 posts)Serious bullshit. And that is not new.
It's not that I don't want to, I'm in favor of taxes for roads, schools, healthcare, but why is it the poor and barely middle class pay for everything?
JudyM
(29,491 posts)That is one of her standout strengths, and we need it.
Using news to blast rethugs’ tax plan in a timely enough way to contribute positively to water cooler convo’s.
This is how we how we do it, baby.
still_one
(95,301 posts)by either voting third party or not voting
In those critical swing states every Democrat running for Senate list to the incumbent, establishment Republican, and those Democratic were progressive by any standard
Elections have consequences
Garrett78
(10,721 posts)I know some don't want to acknowledge as much, but Amazon is a shitty company.
marlakay
(12,064 posts)But they will open somewhere else in America and people will be getting those jobs.
I think AOC is doing a great job of opening the eyes of a lot of things congress usually doesn’t talk about afraid not to get re-elected.
Yes she makes some mistakes being young, but we need her energy.
If she helps get some better environmental laws passed and healthcare, then go girl! If it steps on the shoes of leaders afraid to piss off their donors that is on them.
redstateblues
(10,565 posts)There have been no protests.
fescuerescue
(4,464 posts)I've seen dozens of posts and articles about this.
But not a single one explains truly why. All I've seen are vague references to credits.
Id love to see some detail. WHAT credits and deductions?
Blue_true
(31,261 posts)The republican rep that wrote the tax farce, Sessions got defeated, but McCarthy was in on the scam.
Amazon is just using the law as it is written, as are other large corporations like Apple and others.
at140
(6,117 posts)which is do not base taxes on profits on convoluted & complex corporate tax returns.
How much manpower do you think it requires to properly audit taxes of Amazon?
Too complex, too many tax loopholes to jump through, and end up ZERO tax on
$11,200,000,000 profit? Asinine & stupid are too mild to describe this.
Instead, charge retail outfits (may be all outfits) a flat rate based on gross collections.
May be make 2 exceptions...food and drug sales can be taxed at much lower rate.
Amazon should pay 5% of revenues, A grocery chain can pay 1%.
Even a new IRS accountant could audit Amazon taxes in one 8 hour work day.
Apollyonus
(812 posts)This will only increase the losses.
When one opens a store or a business, it takes at least two years before it starts breaking even.
at140
(6,117 posts)and guess what, other corporations filled in to take care of consumer markets.
Studebaker car company went bankrupt, did that make a shortfall in car supply?
Pan Am went broke, TWA went broke, Continental went broke, yet is there are more
flights today than ever.
Why do we wish to keep poorly run corporations afloat with tax breaks? Why should
you and me and other 150 million tax payers be asked to pay more to make up for
the tax loss carryovers of poorly run corporations? How does that benefit working
Americans who get paychecks get no such benefit? What if I spend more than my
paychecks, should I get a tax break like the corporations.
Believe me we will never run out of corporations to make products and services we need
and are willing to pay for it.
Apollyonus
(812 posts)It is not about perpetually money losing companies but businesses that are just starting out.
Let's say you have $50K to start a restaurant and you're a great chef.
In the first year you have gross revenues of $200,000 and lose $30,000 ... in the second year, you have gross revenues of $250,000 and lose $20,000. Now you have depleted your capital but you'll make a profit the third year.
Under your system, the revenues will be taxed even when the business is losing money. So the first year, after taxes, you'll lose $40,000 and will have only $10K left for the second year and you won't be able to stay in business and so you'll never see the third year of profitability.
Every new business startup has these losses at the beginning and they can be claimed as deductions in profitable years. It is only fair right? You should be able to recoup your $50K in losses in the profitable years?
at140
(6,117 posts)But why should gigantic ESTABLISHED businesses like Amazon should get away paying NOTHING?
Blue_true
(31,261 posts)But a business does not have to be poorly run to be losing money. But I concede that a mistake was likely made somewhere. I bought my first business from another person, I thought that I had everything covered properly. Turns out I did not, the books that I didn't see had been cooked. I tripled revenue in the first year, but still had failed by the third year, I lost money every week during that time except a couple of weeks. My average revenue needed to be 33% more than the highest level that I reached. So, I did an excellent job of running the business, how many businesses triple revenue? But, the mistake was not hiring a business evaluation expert and getting my personal accountant involved. So you are right in that I ran things poorly with the poor decisionmaking before buying the business, but you are wrong about the operational end, I did an outstanding job.
Pretty much all startups lose money, like the poster pointed out. Many of those companies are excellently run, it just take a few years for them to get a toehold. Your tax solution would choke them to death in the cradle. Please don't take that last sentence as hostility, you have an excellent argument overall, very profitable companies are abusing things and something needs to be done, the question is what and how do we insure that it works as planned.
Blue_true
(31,261 posts)A lot of people think that businesses are instantly profitable. But anyone that has run a business know that is not the case. My rule that I will tell anyone is that if they plan to startup a business or buy a business, first of all, get expert help to allow proper evaluation of the prospects for success, then carefully estimate annual revenue and expenses. If a person does not have enough free cash in reserve to survive 3 years without making a penny in revenue , that person should simply walk away immediately.
Apollyonus
(812 posts)at140
(6,117 posts)then there never will be a shortage of businesses to supply the product.
I am talking about ESTABLISHED corporations with 3+ years history behind them.
Especially LARGE businesses like Amazon, GE, and others who are notorious in paying
smaller tax percentage than a Walmart low level employee.
If a small business starts, you are correct it may not be instantly profitable.
So we give them a 3 years grace period. No one should start a business if
they cannot sustain the business without profit for 3 years in a row. If your business
keeps losing money year after year, you are in the wrong business.
Blue_true
(31,261 posts)A company can startup up in any high demand field AND have the best product available and still lose money for several years. One way to get ahead is to advertise a product, but how many small startups that are not backed by millions of dollars and connections can do that? Even if a company has the best product, it has to go through the "failure cycle" before starting to gain ground and big revenue. What the "failure cycle" is, is that potential customers will often overlook a company's product while they try products from bigger companies or ones with splashier advertising, it is not until they have failed to get satisfaction from the products that they tried will they try the product by a company that they have ignored, so failure to get what they desired leads them to the best product. Product reviews help speed things along, but unfortunately maybe 1 in 500 customers write reviews, if that many. So a company has to have cash to survive while it gets largely ignored, even when making the best product available.
Amazon truly lost a lot of money for a lot of years. It may be benefiting from that now, but the republican written tax laws are only making things worst for Joe and Jill Taxpayer.
Blue_true
(31,261 posts)A lot of businesses lose money to start out. If you tax the profit they make on each sale, you just put them out of business faster or eventually. I say treat corporate net income the way people's paychecks are treated (your pay is always net income, unless you own the business). The one area where corporations and companies should get treated differently is on investment in equipment and non-consumable supplies, things that will be used for more than one year - in those cases allow them to write off either 50% per year or 33.33% per year until the non-real estate asset is written off. whichever allows them to operate and gives the government tax money. Real estate assets would have only tax and physical plant improvements written off each year and if the real estate is sold, then a final tax accounting would be done then, either a gain gets taxed, or a loss gets written off.
at140
(6,117 posts)going to college for 4 years. It is specifically individual based. One can't keep changing colleges and get that tax credit after it has been used for 4 years.
I understand completely it is very hard to start a small new business and be profitable immediately.
So I have no problem giving an individual 4 years exemption form tax based on revenue. Every person deserves support to start a business. But it should be good for only 4 years total no matter how many more businesses the same individual starts.
My problem is with companies with GE & Amazon and many others, who are notorious for low taxes. Amazon is so much bigger now than it was just 7 years ago, that it is hard for me to believe they lost anywhere near the amounts they are making now. My guess is they are getting tons of write offs for building new warehouses and other things.
Keep in mind, the tax I am talking about is based on revenues, such as 5% of gross revenues. That would eliminate income tax based on profits with a myriad of write-offs and loopholes. I hate to guess how man-hours are spent by IRS to audit taxes of a behemoth corporation going through thousands of write-offs and checking each one for accuracy. So much cleaner to compute tax based on revenues. Simple as sales tax.
Blue_true
(31,261 posts)Business calculate something called a Gross Margin, any business with a Gross Margin of 50% or less is headed for trouble, even if it is profitable.
A Gross Margin of 1% means that a business has covered all non tax operating expenses (labor costs, supplies, utility costs, ect), but it just might as well close it's doors if it can't get a loan. A Gross Margin of 50% means that the business has covered all of it's operating expenses except taxes and has almost enough to start the next batch of product, but it can't expand or buy more equipment because it does not have the money for that unless it gets a loan. Most established companies shoot for an operating Gross Margin north of 60%, because then they have money to pay taxes and invest a little in expansion. New companies that can get away with it (have a very good price competitive product) should try for gross margins well beyond 60%, because they may be growing fast, or don't have access to loans at decent rates, so they have to pay as they grow.
If you tax revenue, you start the tax at item #1 of sales, there by putting the company deeper in the hole because that item #1 sale price included money that the company sunk in making the item. Now that works if the cost of making the item was very low, there are consumer products where big companies take advantage of that and charge market rates for something that cost almost nothing to make, I can point out two that come to mind (not Amazon or GE or AT&T) but I won't. But most companies are constrained by competition, so their level of pricing reflects that reality.
Business taxation is hard, sometimes things are not nearly as bad as they seem or even bad at all, and sometime things are as horrible as they seem. I don't know which one applies to Amazon unless their books get published, which won't happen.
Honeycombe8
(37,648 posts)Their tax rate is already based on revenue, like ours. Then they get too many deductions (subsidies).
at140
(6,117 posts)the IRS code for deductions is so vastly complex. How many man hours IRS must spend in checking tax returns of large corporations such as Amazon, Apple, GM, GE, IBM etc. All that goes away with a flat tax on revenues.
Sales tax is so simple....a flat percentage and there is no ifs and buts.
Eliminate corporate income tax, charge flat % tax on revenue,
and give a 5 year tax exemption to every new business owner based on his/her social sec #.
The government will collect more corporate tax, and it will be equal to all.
Apollyonus
(812 posts)Amazon has amassed massive amounts of losses in its formative years and is now claiming them as deductions under Net Operating Loss (NOL) carryover. (My speculation)
Every business, large and small, can avail of this deduction and when the NOLs run out, the regular tax rate kicks in.
There probably are jobs credits, renewable energy credits on installation of solar etc. that result in lower taxes.
The refund it got was again from estimated tax payments already made by Amazon. The government doesn't cut you a check no matter how much you owed unless you have paid more than what you owed beforehand. (Like every person's tax refund)
Amazon is not responsible for paying for schools and firefighters, infrastructure are paid from state and local taxes.
AOC needs to understand more about taxes.
Yes, the taxes on corporations should be increased but singling out one company for scoring political points without looking at the specific tax situation is unfair. Amazon is a public company and its financials are on line. Anyone can research it.
scarytomcat
(1,706 posts)they have been getting tax brakes from the beginning just like oil companies
the riches companies pay no taxes some even get subsidies
Blue_true
(31,261 posts)It amassed some scary looking book losses, but was able to keep raising money to stay afloat. Bezos was a successful VC before starting up Amazon, so his street cred likely allowed him to raise enough capital to keep running, sort of like Elon Musk and Tesla now (a successful big onetime wonder gets a lot more chances than an unknown). I believe, if I remember correctly, that Amazon has only become profitable in the last five or six years, it is just once the profits starting rolling in, they like the losses grew fast. Like someone pointed out, Amazon is likely benefitting from the carry forward of the losses that it piled up for more than a decade. Sucks, but that is how the tax code has been written for like the last 100+ years.
scarytomcat
(1,706 posts)Amazon also got an exemption as a start-up on-line business until recently I believe
a wealth tax on Bezos and others would be a very good idea
Blue_true
(31,261 posts)But how does that get implemented, people basically would have to figure out their amount of actual wealth and self declare. How many that will get taxed would do that? AOC's idea of taxing income is good with some adjustments, the income must be personal income or business income above a certain amount, and ALL income must be taxed (now CEOs and others can hide from higher taxes via issurance of restricted stock). I would like to see a tax on individual income of more than $20 million and business net income of more than $75 million, but I would not want to see a 70% tax on business, more like 45-50%, with that dropping to 30% if they provide proof that they have agreements to invest in new plants in the USA proper.
In It to Win It
(8,969 posts)Add $0 for the military.