- Jeff Bezos, CEO of Amazon, offered his support for Biden’s corporate tax plan last month.
- But Amazon and other big companies avoided paying their share of taxes for years.
- The Biden administration has to close corporate tax loopholes, otherwise companies like Amazon will continue to bypass the bill.
- Jason Boyce is the author of The Amazon Jungle and founder of the Amazon managed services agency Avenue7Media. Previously, Boyce was an 18-year-old Top 200 Amazon Seller.
- This is a split opinion. The thoughts expressed are those of the author.
Last month, Jeff Bezos, CEO of Amazon, offered his assistance in raising the corporate tax rate to pay for President Joe Biden’s infrastructure plan.
At first glance, confirmation of the corporate tax hike from one of the country’s most influential corporate titans seems like welcome news. Ultimately, however, it will matter very little if Amazon and Big Tech are allowed to continue to use nifty loopholes in accounting to avoid paying their fair share of taxes – loopholes that small businesses, who create nearly half of all U.S. jobs, are are poorly prepared.
During the 17 years I’ve lived as an Amazon seller, my small business has paid significantly higher federal tax rates than Amazon and other billion dollar technology companies. As a business owner, it was hard to pay a tax rate greater than 30% while Amazon and others paid little to nothing.
Big companies don’t pay their taxes
To pay for his comprehensive infrastructure proposal, Biden must aim just as high. The new government has now proposed raising the corporate tax rate to 28% and breaking new ground to curb the flow of companies moving profits offshore. The Treasury Department and the Joint Tax Committee have estimated that changes to offshore taxation would raise around $ 700 billion.
This number shouldn’t come as a shock; Some of the most profitable companies – often those representing the future of the economy – have long sought ways to circumvent their tax burdens. For example, a recent study by the Institute for Taxes and Economic Policy found that 55 of the largest companies paid no federal taxes on their profits for 2020, resulting in tax avoidance of $ 8.5 billion and earned tax breaks of $ 3.5 billion. Dollar led – total cost of $ 12 billion.
Unfortunately, there will be little to no point in increasing the tax rate unless the government can truly guarantee that the same companies will pay their taxes – unconditionally. Many of the most powerful tech companies have used networks of lobbyists to drive beneficial results in Washington, DC and the country’s state capitals. Amazon tops the list of corporate lobby spending, pouring nearly $ 19 million into convention halls last year alone to gain influence.
Amazon is one of the worst offenders
As one of the companies that has benefited the most from the pandemic, Amazon has historically been one of the most egregious tax evaders. As someone who works with Amazon sellers, and as a former Amazon seller, I am familiar with the company’s ongoing attempts to impose its tax responsibilities, including sales tax, on others. For years, the company somehow managed to avoid paying federal corporate income taxes. And in 2020, they dodged $ 2.3 billion federal income tax despite generating immense profits sparked by an unprecedented surge in online shopping.
Specifically, given Amazon’s impact on local infrastructure in the communities where Amazon operates, the company should pay back its portion of taxes. Thanks to the lucrative economic development incentives the company had to offer legislators, cities receive little funding from Amazon to solve local infrastructure problems. Even the taxes that Amazon pays rarely fall on the local level. Fortunately, Biden hasn’t shied away from blowing up Amazon’s tax avoidance systems and highlighting the company after its infrastructure plan was revealed. He hit the nail on the head when contrasting Amazon with middle-class families who were forced to pay more tax dollars than many giant corporations. Although Amazon’s warehouse workers manage to pay their fair share, the company evades its tax liability through an army of accomplished accountants and lawyers.
The whole point is that our current tax system will not work if companies do not want to participate financially. Our system benefits when all companies – especially those with high profit margins – pay their share. However, when the richest companies take advantage of lucrative loopholes, the average American by the rules falls further behind without funding to support important public programs. We need a practical way to generate much-needed revenue that works for all Americans – whether they’re in the boardroom or the warehouse.
The Biden government has proposed a minimum tax of 15% on book income or publicly reported income to shareholders of large companies like Amazon that report high profits but have low taxable income. Meanwhile, the Treasury Department is considering additional changes in the structure of research and development loans that Amazon has long relied on to help lower its tax burden. These fixes would close some of the tricky avenues Amazon used to lower its tax liability through accounting gaps.
Biden can raise the corporate tax rate as high as he wants, but if there are gaps it won’t affect the largest companies. Lawmakers must ensure that big tech companies like Amazon don’t abuse loopholes and bypass meaningful government attempts to generate revenue. Loopholes that lead hardworking Americans to take over the Fortune 500 list. In order for our nation to truly ensure that everyone pays their fair share, it is time these companies finally got their money.
Jason Boyce is the author of The Amazon Jungle and founder of the Amazon managed services agency Avenue7Media. Previously, Boyce was an 18-year-old top 200 Amazon seller.