“They care little about what their ability is to reduce their taxable income,” said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy (ITEP). “The Biden administration can try to advance everything, raising the corporate tax rate to be the one that does the least harm to them.”
And this is why those who advocate increasing the amount paid by corporations say that the change in corporate tax rate is more than just any tax law passed by Congress. It should increase how much income is subject to taxes and how much shelter there is from taxation.
“Raising the tax rate would be a sadly incomplete method of repair,” Gardner said.
The ITEP analysis also shows that the average effective corporate tax rate paid by profitable Fortune 500 companies was only 11.3% in 2018, the year in which Trump applied the 21% rule. And the Congressional Joint Committee on Taxation found that American multinational corporations paid less than the average: 7.8%.
“This beating on Amazon is slightly higher than other companies,” said Martin Sullivan, a non-partisan, nonprofit publisher of tax analysts and commenting on tax law. “Other companies are transferring far more income to the foreign tax regime. To me they are on the border line of good people.”
Gardner said that possibly ongoing criticism prompted Bezos to support higher rates.
“It indicates that they are not completely deaf to the political situation,” he said.
Amazon defends its tax bill
Amazon’s lower federal tax bill comes due to several tax breaks, none of which are disclosed by the company.
It is likely that the most significant break was Amazon’s ability to immediately reduce its taxable income from its capital spending. It is likely to get some breaks for hiring, depending on how many of its new employees come from disadvantaged backgrounds. It added 500,000 workers worldwide in 2020 as it expanded its network of distribution centers.
Tax breaks for research and development spending and money spent on green energy projects also probably helped Amazon, according to experts.
The company says the reduction in its tax bill is due to the provisions of the tax code which are good for the country and the economy.
The company’s statement said, “Our investment has developed a $ 315 billion economy over the past decade.” US tax laws were designed to really encourage what Amazon does to advance the American economy. Has been doing.”
Biden’s plan proposes to reduce some of the ways that companies reduce their taxable income, although many breaks that potentially provide significant savings to Amazon would not be at risk.
As part of the administration’s plans, Amazon’s biggest increase in taxes could be seen by the company’s proposal to impose a 15% minimum tax on reported funds by the company in pretax income. With this, Amazon’s tax bill could double to $ 3.6 billion. There is also a separate provision for levying a minimum tax on foreign income of companies.
Experts say the proposed minimum tax on pretax income will not be a large source of additional tax revenue as there are other provisions of Biden’s plan, with no impact on Amazon overall.
“Closing the loopholes that encourage the increase in the statutory rate and changes in profit abroad,” said Frank Clement, executive director of Americans for Tax Fairness, where you have the biggest bang for the buck. ” Collection.
But Gardner said a minimum tax on perceived pretax income is important because it promotes a sense of fairness, and prevents companies from avoiding higher taxes by sheltering all of their income.
“It should be clear that 21% is as much as 28% of nothing,” Gardner said.