Amazon Founder, CEO, President and Chair Jeff Bezos, the world’s richest person, has issued a statement stating the multinational technology business is backing US President Joe Biden’s call for an increase in the corporate tax rate.
Biden has proposed hiking the US corporate tax rate to 28 per cent from 21 per cent to help pay for the cost of his US$2.3 trillion infrastructure proposal, an idea that opposition Republican leaders are stating will be harmful to economic growth. The corporate tax rate had been cut under previous President Donald Trump to 21 per cent from 35 per cent as part of a 2017 tax law.
“We support the Biden Administration’s focus on making bold investments in American infrastructure. Both Democrats and Republicans have supported infrastructure in the past, and it’s the right time to work together to make this happen,” Bezos said in the statement.
“We recognize this investment will require concessions from all sides – both on the specifics of what’s included as well as how it gets paid for (we’re supportive of a rise in the corporate tax rate). We look forward to Congress and the Administration coming together to find the right, balanced solution that maintains or enhances US competitiveness.”
Bezos’s statement – he was careful not to endorse a specific plan – came after Biden singled out Amazon for criticism about how much it pays in federal taxes when he recently unveiled his US$2.3 trillion infrastructure proposal, which is spread over eight years. It also was a notable show of approval after the business community warned that it could threaten the economic recovery.
In 2019, then-former Vice President Biden singled out Amazon for its history of using tax credits and deductions to reduce its corporate income tax bill. The company responded, stating, “We pay every penny we owe,” adding it had paid US$2.6 billion in corporate taxes since 2016.
Then Presidential candidate Biden said last year Amazon “should start paying their taxes,” as part of a broader critique of large, successful businesses. Amazon states it follows all applicable tax laws.
Amazon recently hit back with Senator Elizabeth Warren, who has advocated for raising taxes on big corporations. She said in a tweet: “Giant corporations like Amazon report huge profits to their shareholders – but they exploit loopholes and tax havens to pay close to nothing in taxes. That’s just not right.”
Amazon replied: “You make the tax laws @SenWarren; we just follow them. If you don’t like the laws you’ve created, by all means, change them. Here are the facts: Amazon has paid billions of dollars in corporate taxes over the past few years alone.”
Biden singled out Amazon again last week during his infrastructure announcement in Pittsburgh, slamming the company for using “various loopholes where they pay not a single solitary penny in federal income tax.”
In response, Amazon’s top spokesperson, Jay Carney, said in a tweet: “If the R&D Tax Credit is a ‘loophole’, it’s certainly one Congress strongly intended. The R&D Tax credit has existed since 1981, was extended 15 times with bi-partisan support and was made permanent in 2015 in a law signed by President Obama.”
For the 2017 and 2018 tax years, Amazon’s financial filings showed that it expected to receive money back from the federal government, not that it owed money in income tax. For the 2019 tax year, Amazon said it owed more than US$1 billion in federal income tax, a figure experts said amounted to little more than one per cent of its profits, CNN reported.
In 2020, Amazon paid US$1.7 billion in federal taxes, the company said in its response to Warren. Its net income for the year was US$21.3 billion.
In 2020, Amazon paid an effective federal income tax rate of 9.4 per cent, according to the Institute on Taxation and Economic Policy.
The Institute on Taxation and Economic Policy, a not-for-profit non-partisan think tank, also reported at least 55 of the largest corporations in the US paid no federal corporate income taxes in their most recent fiscal year, despite enjoying substantial pre-tax profits. The tax-avoiding companies, in various industries, collectively had almost US$40.5 billion in US pre-tax income in 2020, according to their annual financial reports. The statutory federal tax rate for corporate profits is 21 per cent. The 55 corporations would have paid a collective total of US$8.5 billion for the year had they paid that rate on their 2020 income. Instead, they received US$3.5 billion in tax rebates.